“Cast you out, into outer darkness, where there will be weeping and gnashing of teeth.” – Matthew 25:30
child care for adults
Sometimes things have to get worse before they get better. For example, reducing deficit spending and eliminating government waste will initially have a negative impact on GDP and employment. But this is exactly what is needed to restore America’s economic health.
U.S. government spending has been running riot for over 50 years. Over the last 20 years it has gone completely berserk. In fact, since 2004, the national debt has ballooned from $8 trillion to $36 trillion.
All this debt-based government spending has created massive distortions in the economy. The prices of consumer goods, the glut of unproductive government jobs, the shape of economic growth, and more. The impact of government spending is very far-reaching.
Without a doubt, government spending is responsible for inflation in consumer prices. But inflation in key government statistics is also to blame. Especially GDP and employment.
By 2023, nearly 25% of all additional jobs were government jobs. And over the past 12 months, government jobs have increased by an average of 43,000 per month. Additionally, government spending accounted for 30% of annual growth, according to the latest GDP figures.
If Elon Musk and Vivek Ramaswamy make good on their intention to hit the delete button on numerous federal agencies and eliminate $2 trillion in government spending, two notable things will happen. GDP will collapse and unemployment will soar.
Nonetheless, if you care about the long-term fiscal and economic health of the United States, this is the best thing that could happen. A job that is nothing more than a daycare center for adults should not exist.
egg hunt
Statistics like GDP or employment can be misleading if you don’t consider what goes into them. Is it the totality of real economic activity, or is it made up of fakes?
In short, when GDP and employment statistics are inflated due to reckless fiscal policy, they become a measure of self-destruction rather than a measure of economic health.
How did we get here?
The fall from grace can be traced to several sources. The passage of the federal income tax in 1913 and the creation of the Federal Reserve Bank were certainly part of the beginning.
However, the rationale for using deficit spending to increase GDP and employment was sparked by the publication of John Maynard Keynes’ book in 1936. General theories of employment, interest, and money.
This book is not only strictly indecipherable. It also has the opposite effect of making readers dumber. Unfortunately, Keynes’ nonsense became the standard for reckless economic thinking that still drives economic policy to this day.
Many politicians and established economists are still fascinated by Keynes’s ramblings. They love providing an academic rationale for governments to do what they love best: borrow money and spend it on ridiculous programs. Central planners also like that it provides an economic basis for carrying out outrageous designs.
For example, Keynes advocated filling bottles with money and burying them in coal mines for people to mine as a way to end unemployment. According to Keynes, this would provide jobs and money for the unemployed. Anyway, this public works egg hunt will create an economic boom and make everyone rich.
alien invasion
Over the years, this reasoning has inspired numerous government efforts to save the economy itself. The American Recovery and Reinvestment Act of 2009 and the American Rescue Plan of 2021 are the two largest Keynesian spending bills passed this century. America will never be able to overcome the consequences of these foolish programs.
In reality, the implementation of Keynesian-inspired spending programs has never delivered on its promise of economic vitality. Debt will eventually outpace GDP growth by leaps and bounds.
In 1980, federal debt was about $1 trillion and GDP was $2.8 trillion. Today, the federal debt is over $36 trillion and GDP is about $29 trillion. So over the past 44 years, GDP has increased tenfold, while federal debt has grown thirty-six times.
With this record of economic growth lagging far behind the growth of government debt, any justification for using deficit spending as a means to get out of debt and grow the economy is sheer nonsense. Nonetheless, Nobel Prize-winning economists remain frantically committed to pursuing Keynesian economics.
Just over 10 years ago, Paul Krugman, a Keynesian believer, adopted the logic of Keynesian economics and rushed to the outer limits of the universe. In the process, he lost his mind.
After leaving Earth righteously, Krugman continued: cable television He explained that the right way to push the economic growth chart in the right direction is to borrow huge amounts of money and use it to prepare for the future. alien invasion.
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Decades of outrageous fiscal policies have resulted in an economy and hundreds of thousands of employees heavily dependent on government spending. This is the economy that President-elect Trump will inherit when he takes office.
He is faced with an impossible task. He must address a massive debt crisis, partly of his own making. The last time Trump was president, the national debt had increased by $8 trillion.
The only way to fix the economy and America’s finances at this point is to burn them down first. The distortion accumulated over decades is too great. You can’t cancel without first making things worse.
Many years ago, Ludwig von Mises human behaviorTrump has presented an unpleasant team of picks to make.
“There is no way to avoid the final collapse of the credit expansion boom. The only alternative is whether the crisis will come sooner as a result of the voluntary abandonment of credit expansion, or whether it will come later as a final and total catastrophe for the monetary systems involved.”
It is an alternative to the coming crisis that Musk and Ramaswamy are advocating as part of the Department of Government Effectiveness (DOGE). “More quickly as a result of voluntary abandonment of credit expansion.” Obviously, a crisis is a severe recession or depression.
Given Washington’s poor financial situation, this is the right choice. But is it already too late to avoid total dollar catastrophe?
There is no way to know for sure. Here’s what’s known:
Mass murder of federal workers. Radical eradication of deficit spending. GDP collapse and unemployment rises. These things are needed to get America back to a healthy place.
But the interim period, which will last for a generation or two, will involve much crying and gnashing of teeth.
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