Economists Love Deficit Spending

When you hear someone tell you that we should encourage deficit spending, the hair in your ears become just a little more sensitive--as if to say, did I hear you correctly?

Paul Krugman, a Nobel Prize-winning economist and liberal Keynesian journalist for the New York Times suggests in his most recent New York Times column America has just the right amount of debt, maybe not enough.

Here is his article.

To put things into perspective, America will take in $2.3 trillion in taxes and fees this year. We will spend $5 billion. Now it doesn't take a Nobel Prize to realize is unsustainable.

What Krugman fails to realize is the ongoing transition from a capitalist, free market economy to a centralized command and control economy where profits are the property of the state, not the people.

In the new world order, a large portion of our GDP is generated by government spending, not from private industry. If we continue to have a growing population base, with even a stable or worse yet, declining GDP, we are in fact dying as a nation. It will not take long for the percentages Krugman talks about to turn on a dime. 

My point is this. If I have a stable, production oriented economy, with a stable, healthy population, it is reasonable to have a higher percentage of debt. However, if you have a declining, consumer oriented economy with a growing, graying population, it is not reasonable to have a higher percentage of debt.

To further illustrate my point. Medicare, at one time had 6 workers for every one retiree. Today, we have 3 workers for every one worker. In twenty years, we will have one worker for every retiree. If our GDP is designed from consumption, but all of our income in taken in taxation to pay for Medicare, a high level of debt will crush our country.

Tomorrow, I will create a more lucent, coherent thought on this subject. Just know for now that if it sounds crazy, it generally is. Paul Krugman's theory is crazy.