Junkie Janet Yellen Yellin’ for Her Borrowing Fix
Junkie Janet Yellen Yellin’ for Her Borrowing Fix
Junkies jonesing for a fix say anything to satisfy their addiction.
Big-government addict Janet Yellen, who unfortunately also serves as secretary of the treasury (dangerous combination, that), wants more of her drug of choice, which, in her case, means money created out of thin air or borrowed from sources she does not intend to pay back on her watch.
“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she wrote congressional leaders, appropriately enough, on May Day. “I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible.”
A morbidly obese Uncle Sam again wants a feast, and he wants it now.
Congress raised the debt ceiling 24 times in the last 23 years. The national debt quintupled during that period. The purchasing power of the dollar necessarily cratered. The 2000 dollar possesses the purchasing power of about $1.80 today. Inflation rates exceeded 9 percent less than a year ago, which gives a rational mind pause about increased borrowing. Its effects on interest rates, which played a role in the second-biggest banking collapse in history this past week, also gives a rational mind pause. Junkies throw caution to the wind and ignore consequences. Yes, dire consequences, of the type not discussed by Janet Yellen in her letter, greet those spending beyond their means.
The federal government has a spending problem.
Federal revenues averaged 17.4 percent over the last half century. They hit 19.6 percent last year. So, the tax intake appears far greater now than in the recent past. Yet, the budget ran $1.4 trillion in the red last year, a shortfall higher than all but four previous deficits.
Why does the federal government run such enormous deficits despite taking in relatively high amounts, historically speaking, of revenue?
The federal government spent $6.3 trillion last year. In other words, the feds gobbled up almost one in every four dollars generated by the economy in 2022.
Budget outlays averaged 21 percent of gross domestic product over the last half century. By reaching just about 25 percent of GDP in 2022, federal spending sent deficits well north of a trillion dollars. Quite clearly, our deficit and debt problems owe not to a lack of available money for the federal government but instead to its incontinence in regard to spending. Our outlays remain abnormally high.
But if we do not allow them to go higher, Yellen insists, we will destroy our credit.
Junkie talk.
Yellen, of course, destroys her credit in demanding more of what put the government in this unenviable position.
The federal government’s inflow does not suddenly stop once its ability to borrow ceases. It took in more money in April than it did for all of 1980, when Ronald Reagan told Americans, “[I]t is time for our government to go on a diet.”
The diet never came. And all these years later a morbidly obese Uncle Sam again wants a feast, and he wants it now. He needs Dr. Now instead.
Revenues without borrowing covers payments not only to service the debt, but to Social Security recipients, for national defense, and for Medicare and Medicaid as well. While ceasing to pay interest owed on the national debt would indeed prove disastrous, no reason exists why the federal government could not pay the $32 billion or so owed monthly on the $420 billion or so in average monthly non-borrowing revenues.
Junkie math says the government cannot pay that $32 billion with only $420 billion. Junkie math says the feds need an additional $120 billion or so monthly in borrowed money to pay that monthly debt service charge.
Like “I need more meth so that I can get sober” or “trapezoids make the sound of blue,” we must borrow trillions to avoid destroying our credit sounds like one of those druggie ideas understood best when high.
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