“I believe it is better to tell the truth than to lie. I believe that it is better to be free than to be a slave. And I believe that it is better to know than to be ignorant.” -H.L. Mencken
Not just a few months ago our tax-aphobic Treasury Secretary wrote a propaganda piece op-ed in The New York Times called "Welcome to the Recovery". The problem is this -- we've never actually had a recovery. We replaced 10% of the economy annually with government borrowing to a degree that has only been seen a few times in our nation's history. That is not a recovery, that is stealing future production and bringing it forward to today. It is not sustainable, and it eventually has to end either by choice (what I hope we do) or by force (bad results; see Greece, Ireland, etc.).
One could perhaps make an argument for deficit spending IF, and only if, we actually restructured the underlying imbalances in our economy -- a massive overhaul of the tax code, a restructuring of the banking system, a break-up of the "too big to fail banks", a restructuring of the massive debt load at the consumer level, investments in energy independence, etc. But we did none of that. All we did was indescriminantly throw $4.5 trillion into the economy with virtually nothing to show for it except for a can further down the road. It's a tragedy.
Barry Ritholtz shows how big the deficit spending has been relative to other "emergencies" we've experienced. And remember, this deficit spending was supposed to be "temporary" until things got back on track. Only we are now on year 4 of 10%+ deficits. One would think the Treasury Secretary penning a piece with the title he used in the NY Times would be a signal we should be paring back on gov't spending. If not then, when? Perhaps he knows something.
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