The consumer spending scam so handy for politicians is fizzling. As with any scam, reality sooner or later catches up. The economic scam says that when consumers are spending, makers and sellers are busy and the economy is well; when consumers aren’t spending, makers and sellers are hurting and the economy tanks. If you believe that, you support government substitution of its own spending to replace the missing consumer spending and thus keep things gojg as all good Democrats and a lot of good Republicans prescribe. Thank you, Lord Keynes … who knew better, but also knew from whence his bread was buttered.
This is ridiculous since the money used by government to do the replacement spending has to be taken from the very taxpayers who are also the consumers who have stopped spending because they have run out of money. This side of the story somehow, never comes up.
That is the short version of government economic policies in the developed world, the West, what used to be called: “Christendom” or whatever you may wish to call it. Apply any name you please but it still won’t work. Governments have run up huge debts spending on war and welfare, (both unproductive of wealth) and therefore, the recent consumers are now broke and can’t (not won’t) buy as of yore. And now, having spent so much money that it doesn’t have, government is broke and indebted past its ability to pay as its taxpayers don’t have it either.
Politicized economists (whose pay comes from government or politicians in one way or another) can claim that demand is the key ingredient in prosperity. With that claim, using government to replace missing consumer demand sounds reasonable … until one looks for the source of the money needed to pay for the demand. We nor government, have learned how to spend ourselves rich, Nobel economists to the contrary not withstanding. .
The new two-year Congressional budget bill just passed in the House includes some billions in”new spending” or if honesty is wanted, an increase. A corresponding increase in the (humor) ‘debt limit’ is part of it. We wonder what debt the ‘debt limit’ is actually limiting? Unlikely as it seems, someone in Congress must have a sense of humor.
This deal, attributed conveniently to departing Speaker Boehner, removes the budget from the 2016 presidential campaign. Handy for the spenders. We do not doubt that it has been cleared with the new Speaker, Paul Ryan, an establishment sheep in borrowed more conservative garb. “Plus change’ ” …
What is happening in the background is: Worldwide, consumers are spending less because they have less. (Duh!) Politicians are trying to hold off the inevitable while refusing to acknowledge it, military power is redistributing for both political advantage and financial reasons and all the current seekers after the U.S. Presidency are hoping that the coming crash arrives either before they take office or after they leave it. It’s a game of not thrones, so much as musical chairs. Except that the players have to pretend that they haven’t noticed.
“But man, proud man,
Dress’d in a little brief authority,
Most ignorant of what he’s most assur’d—
His glassy essence—like an angry ape
Plays such fantastic tricks before high heaven
As makes the angels weep …”