My last two columns were all about financial thriftiness and bashing communists, so it’s time to do a complete 180-degree turn to the left. I am writing to explain why we should increase spending rather than decrease it.
Yes, I am well aware the national debt is $14 trillion. You may also argue the stimulus failed, too, which is another reason you think we must drastically cut spending.
Contrary to what you may think, the stimulus failed because it was not big enough. You may be screaming, “Our national debt almost equals our GDP!” Well, I say, shush!
The reason why we have to keep spending is based on the Keynesian laws of economics. These laws state that the private sector sometimes screws up.
It further states that when the private sector screws everyone over, the government has to step in and help. And it takes this stance with regard to the national debt, because foreign economies depend on our excessive appetite for consumption and are left with little alternative but to invest in the world’s largest economy.
Foreign economies are essentially dependent on Americans as mass consumers. This brings me back to the financial model. If banks have no one to lend to, then how would they make money?
This is the same for government. Foreign governments are forced into buying other nations’ debt because they need to do something with their money.
The sheer dollar volume involved (trillions) makes it impossible to be absorbed by the private sector, and so the only alternative is to lend to the world’s largest economies, no matter how fiscally irresponsible they may be.
So, I say we stay the current course! Let’s have another round of stimuli, this time with targeted areas being jobs, education and healthcare.