In January 2020 this is what the Congressional Budget Office said in its budget report:
“The projected growth in debt would dampen economic output over time and pose other significant risks to the nation’s fiscal and economic outlook. Moreover, the resulting higher interest costs would increase payments to foreign debt holders and thus reduce the income of U.S. households by rising amounts.”
The report also noted that the Social Security Trust has stopped buying treasury bonds and instead is gradually redeeming the trillions it holds.
Then the crisis hit.
We must spend more, we must incur higher deficits, but we don’t have to be irresponsible with that spending. We don’t have to use the crisis to further political social agendas without regard to long-term consequences. The economy is not going to recover overnight, some sectors may never recover, our ability to manage the debt and the interest will be a challenge at least during a long recovery.
In the meantime, the Social Security, Medicare and even Transportation trusts are being depleted and fixing them has largely been ignored by Congress for many years … the same people using or seeking to use the current crisis to spend irresponsibly.
My understanding of history is that many governments have failed due to excessive government debt leading to social and civil unrest. So I tried to google this question so that I can state this as fact. I was surprised at the number of articles from “reputable media”, if you can still consider WSJ and Forbes as reputable and unbiased. They were publishing articles for increasing debt and printing money and why it all doesn’t matter while at the same time reporting how bad it could be. I guess people rather have their head in the sand and believe whatever benefits them the most. As history has shown, one day the politicians will be lynched for lying to the people, when the people should look in a mirror and realized that they were only hearing what they wanted to hear.
When do I get my next $1200 for doing nothing again?
It will be really interesting in a couple of years when the history books are written about the economic impacts of the covid-19 crisis. Who were the winners and who were the losers. How much corruption and fraud took place and how we will deal with all the debt, money printing and however many iterations of the “WHO CARES” acts take place. Right now freee money and even more freee money looks good but at some point there will be a price to pay. I think that people who were responsible and saved for a rainy day are ultimately going to be the payers.
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