Following the 2012 election which saw Barack Obama re-elected as President of the United States, after his economic policies increased the national debt to $16 trillion and grew food stamp and Medicaid rolls to the highest they have ever been, it is clear that the American voting public has little understanding of economic issues or concepts.
Therefore, the Prudence Paine Papers introduces a new category: Economics With Prudence.
Here we’ll provide quick takes on economics issues of the day and seek out the best economics learning tools available on the Internet. To maintain a free nation, we have to fully understand that government money doesn’t magically appear out of the air or a politician’s promises. It’s a real thing (even if the government does create mass amounts of it out of paper and ink) and it has real consequences that affect the lives of real citizens of all income-levels.
To set the starting point, let’s mark where we are economically as a country with a tidbit from a National Review Online column by Mark Steyn, titled “The Edge of the Abyss”:
In the course of his first term, Obama increased the federal debt by just shy of $6 trillion and in return grew the economy by $905 billion. So, as Lance Roberts at Street Talk Live pointed out, in order to generate every dollar of economic growth the United States had to borrow about five dollars and 60 cents. There’s no one out there on the planet — whether it’s “the rich” or the Chinese — who can afford to carry on bankrolling that rate of return. According to one CBO analysis, U.S.-government spending is sustainable as long as the rest of the world is prepared to sink 19 percent of its GDP into U.S. Treasury debt. We already know the answer to that: In order to avoid the public humiliation of a failed bond auction, the U.S. Treasury sells 70 percent of the debt it issues to the Federal Reserve — which is to say the left hand of the U.S. government is borrowing money from the right hand of the U.S. government. It’s government as a Nigerian e-mail scam, with Ben Bernanke playing the role of the dictator’s widow with $4 trillion under her bed that she’s willing to wire to Timmy Geithner as soon as he sends her his bank-account details.
If that’s all a bit too technical, here’s the gist: There’s nothing holding the joint up.
The situation is dire.
Before we can solve the problem, we have to understand the problem. We’ll try to provide that information in as simple a manner as possible. No math degrees required.
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