I used to post on here a lot, but I haven't played BF2 in years. I'm about a year and a half away from getting a PhD in Economics, and I missed posting on this forum.
WARNING THIS POST WILL BE DEPRESSING AS ECONOMICS TENDS TO BE
What we face as a nation right now is something that is greater than the Soviet threat, terrorism, the Nazis, the British... The only event in US history that is on par with what we could (and may very well face) in the next few decades is the Civil War. The enemy we face is not in Tokyo, Berlin, Moscow, or slavery plantations. This one is in Washington DC. They are driving this country into the ground. But, don't be depressed, as I will outline in the end, we will all be ok and the better for it.
THE PROBLEM
The problem is the economic theories of Joyn Maynard Keynes. It was his ideas that essentially gave the keys to the car to the drunk teenager. He gave governments license to borrow money with his economic theories. His theories were essentially that governments should borrow in recessions and save in good times. Almost EVERY politician from BOTH sides considers themselves Keynesians. The problem is, they follow the borrowing part and not the saving in good times part. Keynsianism is on par with Communism as ideas that could work IN THEORY. Just as the Soviet Union collapsed trying to follow the ideas of a bad economist, so will the United States Government (notice I said government, not the country).
Partisians want to assign blame to the opposite party, but NEITHER party has EVER showed consistent fiscal restraint. Bush and now Obama are racking up HUGE deficits. This is EXTREMELY immoral as what it amounts to is this generation is borrowing from PEOPLE THAT AREN'T EVEN BORN YET. When an individual borrows, that individual has to pay it back. When a government borrows, they can leave the problem to future generations! Thats what we are doing, is building a giant pyramid scheme. It will collapse.
WHAT WILL HAPPEN
Inflation is almost assured to be an issue in the next few years. We run the risk of stagflation, which is inflation AND unemployment (which Keynes said couldn't happen but did in 1981). Imagine if five years from now everything is 25% more expensive but people are making only 3% more.
This is also destroying the value of the dollar. If the dollar is worthless, buying oil will be more expensive (we have to convert the dollar to another currency to import oil). The price of gas will go up faster than everything else. $3/gal will be a minimum.
When politicans tell you they can do a "stimulus" to help the economy, they are WRONG! When the government borrows money, it isn't like a normal person borrowing money. They borrow so much that it actually affects the interest rates that everyone else pays for their mortgages, business loans, etc. So, what happens is the government borrows the money, and everyone else ends up having to pay more in interest rates. This is called "crowding out" and economists debate on how complete this effect is (I actually believe its greater than 100%, others believe its less).
WHAT COULD HAPPEN
In a really bad scenario (there will be a worse one!), the United States government could lose its AAA credit rating. This has NEVER happened before. We currently pay about 300 billion a year on interest payments in the federal budget. If the US loses its AAA credit rating, the interest the US gov will have to pay will skyrocket (its like someone that misses a credit card payment) and that 300 billion a year could turn into 500 billion. It would hamstring the Federal Budget for decades.
THE WORST CASE SCENARIO
Ever heard of Zimbabwae? Weimar Republic, 1920s Germany before the Nazis? Both of these countries had the same problem: Hyperinflation.
Hyperinflation is when inflation goes from the normal 2%-3% a year to uncontrollable amounts (think 10000% a year). In the Weimar Republic, everyone was millionaires but people struggled to buy food.
This could only happen under extreme economic incompetence. But it happened to Germany, and they were a nation that is similar to us. They weren't idiots, it happened because people made a series of bad incremental decisions. If we run up huge debts and decide to pay it off by printing money, hyperinflation becomes a possibility.
THE END OF THE COUNTRY SCENARIO
In the worst case scenario, we could face a very different America 40 years from now. We could have a country that is paying off the debts that were incurred by people over a 100 years earlier (think about it, our kids will STILL be paying for Vietnam). Our taxes will be high, our economy sluggish, and our foreign policy weak because we won't be able to afford any teeth. We will become a nation that has enslaved itself.
Future state governments may grow some balls and decide enough is enough. They may say, we're tired of this, we're no longer enforcing Federal Tax laws. If one state does it, and another follows, it would be the end of the Federal Government. Maybe then the states can come together and make up an improved system that WON'T lead to the debt enslavement of future generations.
CONCLUSION
Now, admittedly this post has been doom and gloom. The future isn't written. But this much is sure, if we continue to take on debt we will continue to sink. The worst and most dishonest part is, each generation has realized this was a problem. Each generations solution was to pass the problem down to their children. It is absolutely sickening and you have my permission to slap an old person.
WARNING THIS POST WILL BE DEPRESSING AS ECONOMICS TENDS TO BE
What we face as a nation right now is something that is greater than the Soviet threat, terrorism, the Nazis, the British... The only event in US history that is on par with what we could (and may very well face) in the next few decades is the Civil War. The enemy we face is not in Tokyo, Berlin, Moscow, or slavery plantations. This one is in Washington DC. They are driving this country into the ground. But, don't be depressed, as I will outline in the end, we will all be ok and the better for it.
THE PROBLEM
The problem is the economic theories of Joyn Maynard Keynes. It was his ideas that essentially gave the keys to the car to the drunk teenager. He gave governments license to borrow money with his economic theories. His theories were essentially that governments should borrow in recessions and save in good times. Almost EVERY politician from BOTH sides considers themselves Keynesians. The problem is, they follow the borrowing part and not the saving in good times part. Keynsianism is on par with Communism as ideas that could work IN THEORY. Just as the Soviet Union collapsed trying to follow the ideas of a bad economist, so will the United States Government (notice I said government, not the country).
Partisians want to assign blame to the opposite party, but NEITHER party has EVER showed consistent fiscal restraint. Bush and now Obama are racking up HUGE deficits. This is EXTREMELY immoral as what it amounts to is this generation is borrowing from PEOPLE THAT AREN'T EVEN BORN YET. When an individual borrows, that individual has to pay it back. When a government borrows, they can leave the problem to future generations! Thats what we are doing, is building a giant pyramid scheme. It will collapse.
WHAT WILL HAPPEN
Inflation is almost assured to be an issue in the next few years. We run the risk of stagflation, which is inflation AND unemployment (which Keynes said couldn't happen but did in 1981). Imagine if five years from now everything is 25% more expensive but people are making only 3% more.
This is also destroying the value of the dollar. If the dollar is worthless, buying oil will be more expensive (we have to convert the dollar to another currency to import oil). The price of gas will go up faster than everything else. $3/gal will be a minimum.
When politicans tell you they can do a "stimulus" to help the economy, they are WRONG! When the government borrows money, it isn't like a normal person borrowing money. They borrow so much that it actually affects the interest rates that everyone else pays for their mortgages, business loans, etc. So, what happens is the government borrows the money, and everyone else ends up having to pay more in interest rates. This is called "crowding out" and economists debate on how complete this effect is (I actually believe its greater than 100%, others believe its less).
WHAT COULD HAPPEN
In a really bad scenario (there will be a worse one!), the United States government could lose its AAA credit rating. This has NEVER happened before. We currently pay about 300 billion a year on interest payments in the federal budget. If the US loses its AAA credit rating, the interest the US gov will have to pay will skyrocket (its like someone that misses a credit card payment) and that 300 billion a year could turn into 500 billion. It would hamstring the Federal Budget for decades.
THE WORST CASE SCENARIO
Ever heard of Zimbabwae? Weimar Republic, 1920s Germany before the Nazis? Both of these countries had the same problem: Hyperinflation.
Hyperinflation is when inflation goes from the normal 2%-3% a year to uncontrollable amounts (think 10000% a year). In the Weimar Republic, everyone was millionaires but people struggled to buy food.
This could only happen under extreme economic incompetence. But it happened to Germany, and they were a nation that is similar to us. They weren't idiots, it happened because people made a series of bad incremental decisions. If we run up huge debts and decide to pay it off by printing money, hyperinflation becomes a possibility.
THE END OF THE COUNTRY SCENARIO
In the worst case scenario, we could face a very different America 40 years from now. We could have a country that is paying off the debts that were incurred by people over a 100 years earlier (think about it, our kids will STILL be paying for Vietnam). Our taxes will be high, our economy sluggish, and our foreign policy weak because we won't be able to afford any teeth. We will become a nation that has enslaved itself.
Future state governments may grow some balls and decide enough is enough. They may say, we're tired of this, we're no longer enforcing Federal Tax laws. If one state does it, and another follows, it would be the end of the Federal Government. Maybe then the states can come together and make up an improved system that WON'T lead to the debt enslavement of future generations.
CONCLUSION
Now, admittedly this post has been doom and gloom. The future isn't written. But this much is sure, if we continue to take on debt we will continue to sink. The worst and most dishonest part is, each generation has realized this was a problem. Each generations solution was to pass the problem down to their children. It is absolutely sickening and you have my permission to slap an old person.
