economics

National Debt: Not Just a “Problem” — A Crisis

April 15, 2023 by tornado Leave a Comment

Here is a chart (click to enlarge!), tracking interest paid by the government on the national debt, since 1990. This fraction of the federal budget also is growing. That’s because the national debt is getting bigger. For other purposes, it may, but for this, it really doesn’t matter which supposed “side” of the debt-bloating duopoly you prefer. Administrations (purple, my addition) and Congresses of both parties have been in place during debt-growth periods, and therefore, increases in interest payments.

Ignore and/or mock those who claim the national debt is not a problem. They are naive, unknowing, shallow, woefully and likely willfully ignorant of basic economics, and are not to be taken seriously.

Why federal debt not just a problem…but a crisis? Among a vast many other things, the proportion of the budget taken up by interest payment balloons, all other aspects get crowded out. As the fraction of the budget that goes to interest gets larger, less and less money will be left over for every other Federal budget aspect. Hard choices must be made. Austerity must be undertaken. That ultimately includes your favorite budget programs, and mine.

Austerity doesn’t win votes, so the can keeps getting kicked, money keeps being printed, inflationary times raise interest rates, the national debt grows larger (raising interest payments even when rates stay the same or fall), and this budget parasite swells up still further.

It’s a vicious cycle that media is almost wholly ignoring. It’s not sexy. It doesn’t involve Hollywood celebrities, British royalty, the “transgender” fad, prosecution of politicians, failure to prosecute politicians, famous pro athletes, whiny Tik Tok influencers, or other titillating clickbait that passes for “journalism” now. And it’s over 30 trillion times more important than all that put together.

The time will come, maybe in my lifetime but certainly in my children’s, when:
* Republicans’ favorite spending targets — military programs, home-district pork, the secret state, endless overseas wars — get crowded out of the budget by debt interest. Then what?
* Democrats’ favorite spending targets — social-entitlement programs, home-district pork, the secret state, endless overseas wars — get crowded out of the budget by debt interest. Then what?
* Bipartisan-supported beneficial and popular functions of government that take up very small budget fractions — air-traffic control, meat inspections, railroad safety, natural-disaster response, national parks, and yes, dangerous-weather forecasting — get crowded out of the budget by debt interest. Then what?
* We cannot afford even basic defense of the nation from foreign attack or takeover. Then what (besides the need to learn Mandarin)?

Those times are coming. Maybe in two decades, maybe in five. When they do, however, and the government no longer can afford to fulfill whatever you think or the Constitution directly mandates is its function, this republic is lost, forever.

I used to wonder why the end-times prophecies of Revelation never mentioned nor even hinted at an overseas superpower akin to what the U.S. has been, far from the Middle East. Between our own malignant moral and cultural decrepitude, and the upcoming fiscal implosion of debt-interest dominance of the budget that self-destroys the nation as anything relevant or powerful on the world stage, now I know.

There are solutions — painful, sacrificial, all-encompassing ones that yes, involve intense austerity — but as long as politicians pander to their bases and want votes, and the populace/lemmings don’t question things in a critical mass big enough to matter, we’ll keep marching toward the cliffs in ignorance of the fall that awaits.

Pray for your children and grandchildren. Even without an asteroid, no matter what happens with climate, regardless of anything going on abroad: tough times are on the way, the likes of which this nation has never experienced.

Scattershooting 230128

January 28, 2023 by tornado Leave a Comment

Happy new year! Several topics have cropped up of late, not demanding a full-form entry, so I’ll resurrect an old category for a 2023 kickoff encore. As usual, topics are highlighted, so you can skip what doesn’t interest you.

Scattershooting while wondering why so many otherwise intelligent ignoranti fall for obvious, textbook conformist cult tactics employed by purveyors of the secular “social justice” ideology…

AMAZING DALLAS FIREWORKS SHOW on NEW YEAR’S NIGHT: Several times, when not setting them off myself, I’d go up Reunion Tower to watch Trinity River fireworks shows and assorted pyros doing their thing around town on July 4 & New Year’s. Now they’re launched from the tower, with lighted drones in formation as accompaniment. Spectacular! I ought to go see and shoot this sometime.

‘TWITTER FILES” REPERCUSSIONS and SO-CALLED PANDEMIC “MISINFORMATION”: Over the past couple months, several independent journalists, with the full cooperation of current Twitter owner Elon Musk, have exposed a hardline left-wing censorship agenda of Twitter users and linked content, by the corporation, in collusion with high-level government bureaucracy (mainly but not entirely FBI). This includes labeling pandemic content, by licensed medical doctors and scientists, as “misinformation”. This also includes information from peer-reviewed studies that was flagged or relegated to sight unseen. Yesterday’s ”conspiracy theories” sometimes do become today’s news. They affirm comments I made to some folks many months ago about non-expert bots and poorly educated basement dwellers—censoring posts from real-life scientists and physicians in fields such as immunology, epidemiology, virology, and general medical practice. Some low-wage tech contractor in the Philippines, nor high-level company executives without medical degrees, have no business censoring degreed, licensed physicians on medical topics! Yet these were the tactics social media employed to limit what you were being told about a crisis situation to Big Brother’s official Party line—even when the line clearly was flawed then or turned very wrong later. Thank God for watchdogs, gadflies and leakers — even if it’s the new owner dishing it out on prior management at great cost to himself.

MATURITY, SELF-RESTRAINT AND DISCIPLINE ON SOCIAL MEDIA: Speaking of Twitter, a libertarian I follow there, Curtis Scoon, posted these wise words: “I don’t want to be the person on social media who has something controversial to say about every headline just for attention. It’s definitely close to being an ambulance chasing personal injury attorney.” (My words now) …or virtue signaling to either spectral extreme. I have huge respect for such self-discipline & maturity. I aim the same. Not every topic needs instant opinion from every person. I’ve expressed my extended thoughts on this before, in this space, with, “Silence is Not Complicity nor Agreement.” I’ll comment on the issues of my choosing, at the time and place of my choice (and nobody else’s). The context was “hot takes” on the Tyre Nichols incident in Memphis. There’s more to it, but next is what I’ll say for now, in this medium of my choice:

DISTILLING the TYRE NICHOLS KILLING to the SIMPLE PLAIN TRUTH: Often, videos like the Tyre Nichols police-brutality footage from Memphis (which I won’t post here) miss crucial “before” context. In this specific case, I don’t think such context matters. I’m having a hard time imagining what “context” would justify treating any handcuffed man with such relentless, 5-on-1 savagery — basically 5 strong dudes tossing the guy back and forth between each other like a medicine ball and taking turns slugging him full force. No excuse for that, whatsoever. Even if he had violently resisted before being restrained (and that info wasn’t available from the video I saw)…once handcuffed, that’s that. His wrists are locked together with steel, behind his back, and he can’t use his arms. That was basically a gang-beating of a helpless man, in this case the gang being cops. These now ex-cops have been charged with murder and official abuse. The justice system is working as it should here. Unfortunately, this incident is being spun every which way and twisted like taffy by people with bigger social agendas. What it is, plain and simple, is homicide, and any and all who commit homicide (including cops on duty, regardless of how they look) must be held responsible.

COMMON GOTCHA AGAINST ECONOMIC LIBERTARIANISM ISN’T a GOTCHA AFTER ALL: I had to laugh recently at a stupid meme some airheaded male celebrity sent out, thinking it was a “gotcha”. The meme implied libertarians are hypocrites because Ayn Rand accepted her Social Security checks. Clearly this wasn’t the product of a critical thinker, or much of a thinker at all. You see, those checks were her money anyway, extorted from her for years before in taxes. So she had no reason (and neither do you) to feel at all guilty about getting some of it back. Too bad she, and you, couldn’t have just kept it in the first place, instead of being forced to process it through a massive, inefficient, distant, detached bureaucracy that skims so much off. And I’m still waiting in futility for anyone, anywhere, to show me where personal entitlement spending of any sort is an enumerated Federal power in the literal, black-and-white words of our Constitution.

DO YOU HAVE STUDENT LOANS? PAY THEM. This entry is brought to you by tough love from a fellow (former) debt holder. And not just any ex-student, but one from poverty: first-generation college graduate here, raised inner-city poor in Dallas with no air conditioning, who remembers with razor-sharp clarity the sounds of wailing sirens and the feel of roaches crawling up sweaty legs many summer nights. There’s not a college student anywhere in this land who has a thing new to say to me about being “economically disadvantaged”. I arrived at university with assets valued in two digits, not counting a beater car that was worth maybe $200, no parental aid whatsoever, and scholarships for which I had busted my tail, but were still woefully insufficient. I left grad school with even less: $16 to my name, and five figures in student loans. Inflation-adjusted, they match magnitudes from many sob stories I hear today. I paid off every last one in under 10 years by working rotating shifts, in a real career, for which my major of choice was chosen specifically to prepare me, using something called foresight and something else called sacrifice. Hint: my major wasn’t “gender studies” or similar useless bullshit. Unless one was targeted by illegally predatory lending, which I do oppose, I have a very hard time feeling sorry for anyone who demands that government (in other words, all of us but not him or her self) pay off debts he/she voluntarily chose to accrue. There’s a word for that, and it’s “freeloading”. My message, therefore, is clear: Yes, it is a loan. Pay it back. I’ve been there. I did, and I’m nothing special. So can you. Make better choices.

THE FED, BRETTON WOODS, GOLD STANDARD, and the RISE of CHINA: Finally, here’s a provocative, yet deeply historically informed, long-form essay by the aforementioned Curtis Scoon on how the Federal Reserve came to be, and its relationship with both American decline and the rise of Red Commie China as an economic and military power. I don’t necessarily buy into every detail he posits, but there’s a lot of basic truth here. This is well worth 15 minutes of time to read carefully and consider critically.

Gasoline Prices: A Layered Issue

June 26, 2022 by tornado Leave a Comment

Oil prices: it’s not just Ukraine, nor “big bad oil companies”. Not is it even mere supply and demand. I’ve seen a lot of people on social media (including friends) fall for some fantastic fallacies and pop-appeal “malarkey” offered by politicians and celebrities, that are wildly ignorant of economic fundamentals as applied to the crude-oil markets.

First and foremost, oil is a predictive market — strongly futures-influenced. You can call it “speculative” if you want, but you’d be misrepresenting things; “speculation” implies guessing without basis, and therefore is as worthless a term as calling weather forecasts “speculation”. Both can be wrong, and often are to varying extents, but are still well-educated predictions by experts in their fields, and are near the mark more often than way off it. Unexpected spikes and falls happen due to unexpected and/or severe events, whether geopolitical (invasions, etc.), mechanical (major-refinery failure) or natural (tsunami, northern Gulf hurricane, protracted deep freeze or heat wave).

Because oil prices are rooted significantly in futures, current and recent Federal government policy (yes, that includes executive orders as well as things Congress threatens to do, much less actually passes) absolutely influences prices. Yes, canceling pipelines and imposing moratoria on new leases and drilling don’t change the current supply. Each does, however, threaten to curtail future supply. Again, prices are based on futures. Then when a major producer (USA) isn’t producing to its capacity, that dwindles current supply and prices, as well as raises futures. An obvious solution, purely economically, is: produce more!

Overlay these factors, along with other global supply threats like a war involving a huge and boycotted oil producer (Russia), and we get what we see. Throw in ambient price inflation due to unrestrained money printing (watch this this slightly over 1-hour lecture by Milton Friedman for a full explanation), and the resultant devaluing of the money relative to goods and services, and that adds to the problem. In turn, rising fuel costs add to inflation, and it becomes a sort of slow-motion death spiral. Hence, the Fed steps in and raises interest rates, which historically curtails inflation over the span of months to years, but harms the Federal budget through higher interest payments on our incomprehensibly enormous national debt.

Oil companies aren’t innocent here, but not for the reasons you may think. All companies have the right to make a profit; otherwise they go bankrupt and fail shareholders (including many Americans’ 401Ks and pension plans). Blaming profiteering or price gouging by oil companies is populist bullshit! Utter economic quackery, and most of the politicians who say this know it…they’re just pandering for votes from the mass ignoranti. Nothing more.

Oil companies can profit off low prices at high volume, just as off high prices at lower volume. Instead, where they went wrong was in their experts’ inability to foretell supply (and supply-chain) problems and adjust accordingly beforehand, including through greater refining and production capacity. Part of that is their fault through lack of foresight and poor planning. Penny-wise, pound-foolish! But a lot of it is not.

What is one reason refining and production are slow to move? Wait for it…governmental regulation (a.k.a. interference). Every unfunded governmental mandate adds to the cost of doing business, no matter your business. It just does. This is fact. You experience this when you spend lots of time (time is money!) doing your taxes, which is mandated, or buying software to help you. Business owners see this in many more ways.

Magnify that by hundreds of thousands of regulations — federal, state, and local — baked into the cost of extracting and producing petroleum-based products of all kinds, including gasoline. Compliance corporately is a huge drag on cost, additively. Indirect attacks, such as regulating banks that lend to the oil industry, further add cost. [Look up “Biden Administration Restricts Leasing for Overseas Fossil Fuel“, which of course the Sierra Club loves. I presume none of them ever have been poor and needed to drive a petroleum-powered vehicle to work.].

It’s fair to argue what regulations are needed and what aren’t, but the fact is, they *add cost* regardless. Take a look just at biofuel mandates, for example. Threats of still more regulation, prohibitions, and actual executive orders, drive up futures. Futures heavily move current prices. Therefore, the oft-seen mantra, “Presidents don’t influence prices” is garbage. They absolutely, positively do. While the Biden “I did that!” sticker you see on gas pumps isn’t completely true, it has some merit.

It’s irrational how people who support one party’s candidate or the other subscribe wholesale to whatever that candidate spouts off. Whither independent thinking? Those who claim Biden policies have nothing to do with inflation as a whole, or of fuel in particular, have turned off a key part of their brains. Same with those who ignored Trump’s straight-up factual lies on other topics. Yet these men were both pretty honest about what they were going to do, and they did it.

Biden fulfilled promises that have direct and short-fused influence on petroleum inflation. If you like that, it shows either your ignorance of basic ECON 101 concepts, or reveals a pampered, soft, privileged status of not being poor enough, and being hurt enough, by inflation to change your mind. I was in a poor household, in the ’70s to early ’80s oil crises, and can testify the effects are real even to renters, on prices of basic needed goods, electricity, and so forth, as well as rent itself.

Stop falling for and repeating political lies because you voted for the liar — of either party. It hurts your own credibility in argument. To wit, the current administration’s turn from “Putin’s fault” to “price-gouging oil companies”, for the very same event, has been remarkable. Both excuses are way, way overplayed, with only a partial, lower-order speck of truth in the case of Putin. It’s just a distraction and diversion to take your attention from the tangible effects on futures (thus on current prices) of this administration’s executive orders and this Congress’ statements and bills directed at future availability.

Finally you can say we should get off oil. Fine. Over decades, I agree. I think we should too, and in America, go all in on lowest-carbon, highest-efficiency, smallest-imprint, least-waste-volume nuclear energy long term. Others claim renewables someday, somehow, will be a steady and dependable source. Whatever. That’s then. This is now. Until we can, and do, we are dependent on fossil fuels, especially for transportation and lubricants — like it or not. High prices in all those drive up costs for all goods and services, and hurts the poor the most.

Perhaps, just perhaps, that’s by design. After all, even if not deliberate, the more people in poverty, the more dependent they are on central governmental authority. And by extension, the easier they are to control. We are clearly headed for a digital (therefore trackable by centrally controlled AI) currency. Do some critical thinking about that as well. When you do, current events make more sense, including what China is doing with their mass tracking and “social credit” tyranny. I’ll leave the specifics of that exercise to you, to the extent it can be applied here.

Finally I’ll finish with a quote from a recent President’s State of the Union address. How I wish the same claim honestly could be made today.

“Nowhere is the promise of innovation greater than in American-made energy. Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my Administration to open more than 75 percent of our potential offshore oil and gas resources. Right now, right now American oil production is the highest that it’s been in eight years. That’s right – eight years. Not only that – last year, we relied less on foreign oil than in any of the past sixteen years.” — Barack H. Obama