A man was asked why he kept hitting himself on the head with a hammer.
"Because it feels so good when I stop," he replied.
20 January 2013
09 January 2013
Seriously? A Trillion Dollar Coin?
My Dear Reader,
A couple people have asked for my take on the Trillion Dollar Coin meme, so I'll do my best to give you my honest assessment.
THE WHOLE MATTER IS CRAP.
First of all, there's nothing magical about a single coin. It could be a thousand Billion Dollar Coins (which would be easier to mint, but not easier to put in a headline or sound bite). It's just too...too...contrived.
Second--and I really don't want to make this political--but I'm mystified by how much excitement this has gotten, when it's really quite absurd. The left sees it as a way to get around those unreasonable "spend closer to what you actually have" Republicans, and the right sees it as Byzantine maneuvering by completely out of touch liberals.
Here's how I see it: we have a very serious, very real problem, and this nonsense is a distraction from the tough conversations we ought to be having. We cannot afford the promises we've made. We can't tax enough to pay for them, and the consequences of cutting those promises (e.g. cutting "spending") are dire.
No quick fix is even responsible to consider. This coin business is actually insulting to have to write about, and indicates just how far we've devolved when it comes to serious conversation about:
- Why we feel compelled to over-promise and underfund;
- What we're going to do about it going forward;
- Why would we rather discuss absurd fantasies than deal with the actual problems that we've created;
- What we do with $16,500,000,000,000 in already existing, real debt. That's not a coin fantasy, that's money we actually owe.
Most Treasury debt is actually short term (yes, we borrow mostly on our national credit card rather than taking out a mortgage), but imagine for a moment that we had to pay that $16.5T back over 30 years, like a mortgage. That would amount to "mortgage" payments of about $73B PER MONTH, or $876B per year, assuming 3.4% interest over 30 years. We only take in about $1.5T in cash each year from taxes, etc, so $876B is HALF of our national tax receipts. We spend about $3T or $3.5T (hence our annual deficit; remember, "deficit" is our annual gap, but "debt" is forever). We spend far beyond our means; like about 4x our means, if you imagine ever paying off the debt. Even if we pay it off over 100 years, and interest rates magically stay at 3.4% that whole time (a ridiculously low rate), we'd have to spend $576B a year...and that's to pay it off in 2113. Still a huge portion of what should be our budget.
And from whom do we borrow all this money? Between $1.5T and $2T a year? Well, conveniently, the Fed is buying about $1.2T in debt from the Treasury this year for its Quantitative Easing program. So borrow it from ourselves, minted out of thin air. Yes, that's as bad as it sounds, and don't let anyone talk to you about the "velocity of money" as evidence that it's GOOD for us all. It's actually had little or no effect, as you've seen and felt from the Quantitative Easing we've "enjoyed" over the last several years. It's mostly a clever way to debt finance our annual deficit. The rest comes from all the dollars we spend overseas (buying disposable goods that don't increase our national wealth), and the new owners of those dollars (like China) have to put them somewhere, so they buy our debt.
These are the conversations that we should be having. Not some idiocy about a miracle coin that's going to save us. If anything, all that should show you my Dear Reader is that we've gotten to the point where money is meaningless, and is backed by wishes and fantasy. That should concern you greatly, because the effects of such a monetary regime can be disastrous.
If the coin subject comes up, ask people if they know about the numbers a couple paragraphs up, and how much of our national budget would go to debt service if we were serious about paying off our debt. And don't be tempted to imagine that Uncle Sam can solve its problems as easily as printing a platinum coin. This coin thing is a psychological phenomenon, not an economic phenomenon, and it's dissociative irresponsible, childish, and counterproductive to the work we actually have ahead of us.
04 January 2013
On Microblogging
It turns out unemployment has its advantages. I get to walk more, think more, and sneak in little snippets of life.
01 January 2013
On Cliffs: Fiscal and Otherwise
It's hard to break old patterns. Sometimes, we set up artificial goals in order to "motivate" ourselves to break the patterns in which we're stuck. At one point or another, each of considers creating an artificial "cliff" to scare ourselves into change. I'm speaking, of course, about my own personal patterns. Specifically, of not writing and of finding almost anything else to do--solitaire, non-profit work, for-profit work, dinners, errands, whatever.
I'm also speaking, of course, about this ridiculous "fiscal cliff" we've all tumbled over today. Funny how inner journeys are repeated in the outside world. In the case of our elected representatives, their old patterns of spending and taxing (and never relating the two to each other--heavens no!) have resulted in an addiction to an unsustainable pattern of behavior--denial and procrastination. So they set up an artificial goal for themselves, much like many of us do this time of year to "motivate" our new behaviors.
But here's the problem, as I see it: surface level goals don't address the underlying causes of the problems. Writing each day, or even several times a week (see how quickly these goals get mitigated?), doesn't address the reason I DON'T write--any more than creating an artificial fiscal cliff, entirely manufactured by congress and entirely arbitrary in it's timing and scale, will address the underlying problems in the current composition of our government.
Thus, Dear Reader, we are placed in the position of compromise. And it strikes me as appropriate that compromise comes up this time of year. Resolutions are promises we make to ourselves, and compromise has that damn "promise" built into the word. Funny, it strikes me as a "co-promise", doesn't it?
And maybe that's what's missing here. A little bit of co-promise. Each of our intractable halves of government (don't be fooled, there are more flavors in the cookie jar than two, but two is all were given until we demand more options) needs to come together. Both are being unreasonable. You can't keep spending the way we do, even if we tax the bejeezus out of everyone. And we can't protect everyone from being taxed at all--even if we cut current spending to zero we'd still have $17,000,000,000,000 in debt to pay off, and that means SOMEBODY has to pay SOMETHING. So there's the rub: both sides are wrong on sticking to their positions. Both sides need to make some promises to themselves, and to the other side.
And like your resolutions, Dear Reader, our esteemed legislators know what they need to do to get healthy and meet their obligations. They just don't want to. Because, you see, you and I have let them set their own deadlines--let them set their own "cliff", if you will. Perhaps it's time we set a cliff of a different sort for our elected representatives--FIX THIS PROBLEM OR BE VOTED OUT OF OFFICE. THAT'S the cliff we should be talking about, not some arbitrary series of cuts and tax increases that were not made in good faith. This fiscal cliff is the opposite of compromise--it's mutually assured destruction. Neither side believed the other would actually go through with it (PS neither did Wall Street, that weird combo of bookie and blood-thirsty audience for this WWF... our Washington Wrestling Farce).
We cannot elect intractable people to offset the other guy's intractable people and expect governance of any sort other than what we've gotten. And it's you and me who put these fools where they are, with each side ratcheting up its rhetoric with each new extreme nut-job elected to the House. It's time for mutual disarmament, I say, and not the nuclear sort--this would be a disarmament of our elected buffoons. Imagine what it would be like if we had reasonable people with reasonable positions who compromised (there's that co-promise again) in ways that built our nation rather than set it against itself.
Naive, Dear Reader? No more than any resolution is; no more than any effort to change an established pattern, or to make the world as we've had it more like the world as we'd like it. And all of us know the principles of this grand bargain--we've all got to chip in, and we can't all have everything we want. That's a microcosm of life, and as each of us sets out to make our resolutions manifest in this lucky '13, I think we'll be more likely to achieve our goals--our resolutions--if we begin to work on our own psychologies with as much fervor and verve as we use on criticizing each others'.
I'm also speaking, of course, about this ridiculous "fiscal cliff" we've all tumbled over today. Funny how inner journeys are repeated in the outside world. In the case of our elected representatives, their old patterns of spending and taxing (and never relating the two to each other--heavens no!) have resulted in an addiction to an unsustainable pattern of behavior--denial and procrastination. So they set up an artificial goal for themselves, much like many of us do this time of year to "motivate" our new behaviors.
But here's the problem, as I see it: surface level goals don't address the underlying causes of the problems. Writing each day, or even several times a week (see how quickly these goals get mitigated?), doesn't address the reason I DON'T write--any more than creating an artificial fiscal cliff, entirely manufactured by congress and entirely arbitrary in it's timing and scale, will address the underlying problems in the current composition of our government.
Thus, Dear Reader, we are placed in the position of compromise. And it strikes me as appropriate that compromise comes up this time of year. Resolutions are promises we make to ourselves, and compromise has that damn "promise" built into the word. Funny, it strikes me as a "co-promise", doesn't it?
And maybe that's what's missing here. A little bit of co-promise. Each of our intractable halves of government (don't be fooled, there are more flavors in the cookie jar than two, but two is all were given until we demand more options) needs to come together. Both are being unreasonable. You can't keep spending the way we do, even if we tax the bejeezus out of everyone. And we can't protect everyone from being taxed at all--even if we cut current spending to zero we'd still have $17,000,000,000,000 in debt to pay off, and that means SOMEBODY has to pay SOMETHING. So there's the rub: both sides are wrong on sticking to their positions. Both sides need to make some promises to themselves, and to the other side.
And like your resolutions, Dear Reader, our esteemed legislators know what they need to do to get healthy and meet their obligations. They just don't want to. Because, you see, you and I have let them set their own deadlines--let them set their own "cliff", if you will. Perhaps it's time we set a cliff of a different sort for our elected representatives--FIX THIS PROBLEM OR BE VOTED OUT OF OFFICE. THAT'S the cliff we should be talking about, not some arbitrary series of cuts and tax increases that were not made in good faith. This fiscal cliff is the opposite of compromise--it's mutually assured destruction. Neither side believed the other would actually go through with it (PS neither did Wall Street, that weird combo of bookie and blood-thirsty audience for this WWF... our Washington Wrestling Farce).
We cannot elect intractable people to offset the other guy's intractable people and expect governance of any sort other than what we've gotten. And it's you and me who put these fools where they are, with each side ratcheting up its rhetoric with each new extreme nut-job elected to the House. It's time for mutual disarmament, I say, and not the nuclear sort--this would be a disarmament of our elected buffoons. Imagine what it would be like if we had reasonable people with reasonable positions who compromised (there's that co-promise again) in ways that built our nation rather than set it against itself.
Naive, Dear Reader? No more than any resolution is; no more than any effort to change an established pattern, or to make the world as we've had it more like the world as we'd like it. And all of us know the principles of this grand bargain--we've all got to chip in, and we can't all have everything we want. That's a microcosm of life, and as each of us sets out to make our resolutions manifest in this lucky '13, I think we'll be more likely to achieve our goals--our resolutions--if we begin to work on our own psychologies with as much fervor and verve as we use on criticizing each others'.
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