I sure wish someone would say that to Paul Ryan when he says shit like this:
MILWAUKEE — U.S. Rep. Paul Ryan warned in a speech Monday that the nation was headed for a debt crisis, its finances at a critical juncture.
“We’re coming into what I would call a tipping point,” he said. “The more concerning tipping point is a cultural one, where we have more takers than makers in America.”
We face a crushing burden of debt. The debt will soon eclipse our entire economy, and grow to catastrophic levels in the years ahead.
The next generation will inherit a stagnant economy and a diminished country.
Bullshit, bullshit, bullshit! Oh, and also bullshit!
This is ridiculous, of course, because we can always roll over previous debt and pay interest on it as it comes due. In fact, during the past 11 years as Ben Strubel shows, we’ve rolled over $437 Trillions in debt. And as Mike Norman says,we’ve rolled over $32 Trillions thus far in Fiscal 2012 alone.
We’ll always be able to roll over our public debt if that’s what we choose to do because a debt instrument is the functional equivalent of a savings account, and frequently those who hold USD including foreign nations have the effective choice of keeping their USD in a reserve account or buying a debt instrument. They’d rather buy the debt instruments because they earn interest. However, low the rate of interest is, it’s better than the rate they’ll get if they keep their USD in their reserve account, unless the Fed decides to pay Interest-On-Reserves (IOR).
Can our national debt increase indefinitely? The short answer is: yes it can. The reason is that a Government like the United States with a fiat non-convertible currency, a floating exchange rate, and no debts in any other nation”s currency, has no solvency risk because it can always create money to pay its obligations. Its debt instruments therefore are nearly risk-free. They’re a safe harbor for investors who’d rather earn a return on the USD they hold, then content themselves with keeping it in a reserve account, that typically earns no interest.
Paul Ryan is a professional liar. He’s very good at it, though more and more it’s clear that he’s not wearing any clothes. If you’re tired of this kind of Republican F.U.D., give generously to Rob Zerban’s campaign against Ryan. Give until it hurts.