Blessed Debt

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There were a few interesting comments to my post on Louts.  Take a look, if you wish.  A Followup post, Teeter-Totter, will be this weekend.

As I write, Wednesday morning, Oct 13, 2021, the chatter on the television is all from or about 90 year old William Shatner, just returned from his 3 minutes in space.   This is all about privatization of space, for the already rich.  There won’t be many common folks ready to pony-up $250,000 for a seat on later flights.  Some billionaire has already gobbled up all the seats for the first moon-shot, to come some day.  It is a fantasy world “bucket list”.

Not that fantasy is restricted to the rich.  Earlier this morning I was driving home from my daily walk, past the under construction ‘woods’ of new houses.  Off-screen to the right was the advertising board for these new houses, listed for $609,000. There is a market, apparently.

Woodbury MN Oct 13, 2021

In D.C. the hearings continue about January 6; talk about refusal to honor subpoenas and what to do about that.  And talk about the national debt which is (depending on who is in control) irrelevant, or a horror, spun incessantly.  (In a side comment about Shatner’s space trip, someone got in a shot at the Obama administration, which apparently slowed down the private sectors race toward space, after trying to clean up the financial mess left in the wake of the near collapse of our economy in 2008.).

I am not an economist, but today seems a good time to try to translate some numbers to help understand reality which is, after all, where most of us have to live.

Personally, I have come to believe that Debt is essential to those who already have wealth and want to increase it.  Debt is profit.  The only question is who benefits from the debt.  I could elaborate, but won’t.

There are about 330,000,00 of us in the United States, easily, still, by far the wealthiest collection of people in the world.  There are about 7 billion of us on the planet Earth.  Last numbers I have, from 2017, the U.S. has about 4% of the world’s population and 23% of the wealth: Wealth of UN Countries.   (I was good friend of the man who generated this list for his important book on UN Reform.  He was a world class academic and extremely careful in his presentation of data.  He died three years ago, and his work lives on. More about him and his work here: https://www.workableworld.org.)

Now, to a few basics (errors are mine, help me correct them).

$3 per person gets us to about a Billion dollars.

$3,000 per person gets us a Trillion.

Surely, that’s serious money…but if you take a serious look at personal debt, now or in the past, for yourself, personally, somewhere in your history is probably a lot of debt.  It could be for that new house, or car, or college or other expenses, or whatever.  But our society has long been organized around debt management.  That’s because debt is essential to wealth of the wealthiest.  You know the refrain, “credit” seems preferred to cash in this day.

Take those $600,000 houses in the picture above.  The odds are pretty slim that their buyers will be paying cash money for them.  There will likely be large mortgages (loans).

If you’re reading this you can make lots of words out of this single picture.

A whole bunch of those Trillions we already have incurred as “national debt” were gifts from previous Presidents and their necessary enablers in Congress.   It is Congress, after all, which controls debt.  It’s in the Constitution (basically Article I Sections 7 and 8).  You might remember those huge tax cuts in 2017.  These were gifts to the already wealthy and biggest businesses; they came via Congress, signed by the President.  There was no hand-wringing by the winners, then – rather victory laps.  But the tax cuts took huge amounts of income off the books, thus leading to increase in debt….

A bit before that, 2008 and the years prior, we spent like drunken sailors on assorted wars, and dismissed the problem of debt.  “Go shopping” was a refrain for recovery from 9-11-01.

For all sorts of reasons, good and not so good (like buying that house) debt grows.  Depending on one’s bias, any particular item of debt is blessed, or evil.  Depends on how YOU see it.  Here’s one chart that seems reasonably unbiased and gives a general idea, anyway (and is the first one when I googled).  I just add it to give you an idea.  Comments?

Succinctly, there are people far more knowledgeable than I who know what debt really means in context of the fiscal health of ourselves and our nation and our world.

All of the rest are useless sound bites uttered daily.

What is your personal debt, compared with your personal wealth?  That’s the first question we should ask ourselves.

When we translate this to a nation and a world, all we are doing is adding a whole bunch of zeroes.

Be aware.

COMMENTS (also at end of post):

from Jeff: Blessed Debt: at first I thought this was a post on the phenomenon of church mortgages.  These are a separate grouping within the banking industry I discovered a few years ago.  Loaning to churches to build is an interesting business.

Debt: I am no expert, but on the national debt and the current spending of the Federal govt, the biggest portions are Defense and social entitlement spending.  The rest of budgets and debts are mostly small potatoes.  So it really is Medicare, Medicaid, other aids to people in poverty or on the borderline and the defense budget.  “Guns and butter.”  as the economists used to say.
Many say the debt, the spending is unsustainable.  I think the key thing is to watch the ratio or % of the debt to the GDP of the USA , as long as it remains in a % basis that is “serviceable”…. just like a home mortgage…then debt is not a big problem.
As long as the spending is something that provides a return ….good health care that is preventative can be very profitable for a country, child care, PreK education, reducing student debt, physical/power/cyber infrastructure all provide a good return on investment.
So like a home purchase or getting an education, they are wise.  With the caveat that you keep the spending and debt within the % acceptable for a GDP…it makes sense.
Tax cuts:  the main thing people do not understand is that tax cuts are “spending”, the govt is essentially giving money to certain groups.   When you consider that the majority of tax income in the USA is paid by the wealthiest it is clear that the tax cut spending is lavished mostly on the wealthy.   The Bush tax cuts and the Trump tax cuts were also spread over 10 years in the budget, together they amount to 3.4 trillion dollars.  That sounds very familiar to the current Biden budget plan ….3.5 billion,  which I believe will eventually come down to somewhere in the 1.8 to 2.0 trillion when the Senators of AZ and WV have given their imprimaturs.   Both the tax cuts and the biden plan are spending .
Final thought and why Republicans are fighting so hard.  Things like PreK education and child care reimbursements, and possibly dental care under Medicare would be wildly wildly popular ….much like Medicare is today.  They understand this, and understand as well this could be the start of a generational change in priorities… we have spent 40 years trying to unravel the New Deal , and this is essentially the
first step in reinstating some of that social spending again.   In the last fiscal year the defense budget was 775 billion dollars, if you spread that over the next 10 years that would be 7.75 trillion dollars of defense spending… yet no one ever sees that debated ad infinitum or being discussed as a life or death bit of spending for the USA….
Church mortgages might have been a holier discussion.
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from Fred: You and the contributors have done a nice job in linking privatizing outer space, housing construction, and national debt to the policies of the two parties. In simplified terms, we’ve been seeing recent GOP administrations adding to the debt with give-away benefits to entrenched US “haves,” followed by Democrats working to repair the damage done. Obama got the job of saving the economy from the Bush “Great Recession”. We can still recall the near panic in US financial sector and those financial houses that were “too big to fail,” and corporations that paid no taxes. The Dems, as always, worked to even the playing field with programs tailored to the working class and poor. In the past both sides in Congress worked together to divvy up the budget’s available allocations. Now we’re seeing extremes on both end of this struggle demanding the entire pie. The GOP has already won this game of give and take by refusing to play it. The current socialist side of the Progressive movement has returned to its early 20th century roots and is trying to achieve the change for which their predecessors fought. But we Old Timers remember the likes of FDR’s Brain Trust, Norman Thomas (the great socialist and the nation’s conscience), Upton Sinclair’s utopian vision for California, Henry Wallace, Wisconsin’s LaFollettes, MN’s Floyd B. (I’m a radical) Olson, and North Dakota-based Nonpartisan League (NPL). They all made splashes on the American Left—the NPL perhaps the most noteworthy—and some progress for the little guy, but not the lasting impact for which they yearned.