Without progressivism it would be a lot smaller.
But we can reassure our impoverished posterity that we cared so very much and meant well!
The hair-pulling about the national debt is interesting, as there are very few, if any, actual “symptoms” that the debt is currently hurting us.
Traditionally, in Keynesian economics, deficits were reflected in rising interest rages (virtually zero), higher labor costs (low), commodities prices rising (not silver, gold, or most of the metals), food prices skyrocketing (here we see a small amount of price increase, not much), and fuel prices rising (no. About where they were 8 years ago).
I have worked on a hypothesis for some time to explain this, and it has to do with astronomically rising productivity that is NOT being captured in real-world values. One example: the cell phone. Traditionally the way of measuring the increased productivity of a phone is to compare it to a previous generation for price, speed, ease of use, whatever. Well, a cell phone bears no resemblance whatsoever to a phone of 1970. It’s not even a phone. It’s a GPS, game device, computer, e-mail service, stereo, camera, on and on.
The proper way, in this instance, to measure a cell phone’s added value would be to line up every single one of the products that USED to do those functions and price the gains over each, then add the gains together.
Hold on. I’m getting back to debt.
It’s not just phones. A car now is a sound system, has it’s own GPS, some have TVs, some have cameras-—replicating many of the things a phone does. On-board computers, as pesky as they are, keep fuel costs down, improve safety, and help watch maintenance.
So here’s the point. In every single area of life, from grocery stores to hospitals, computers in the last 25 years have so geometrically expanded the productivity of devices that traditional valuations just could not keep pace.
Remember econ 101? What’s inflation? “Too many dollars chasing too few goods.” Well, we have had, for several years I maintain, massive deflation with “too many/too high-quality goods chasing too few dollars.” The valuations are wrong. The market hasn’t begun to catch up to these real valuations.
Our national debt is still measured in 1900s standards. Just for one example, any gold the US holds is measured in dollars of the year it was purchased. Same with real estate.
If the feds chose to correctly market value our land alone, the US would have a massive surplus. “Yeah, but you can’t sell the Washington Monument.” No, but you can sell overpriced office buildings in DC and move to less expensive facilities at the savings of hundreds of millions of dollars. You can sell fed land in the West that it has no business owning.
In short, the reason there are no symptoms of debt-disease is because the debt in REAL valuations is still not up to American assets, let alone valuations of productivity.
QE-1, 2, through 100 haven’t made a dent in this because we are still trying to catch up to 25 years of the money supply failing to keep up with productivity.
Just my hypothesis. Not very popular around here.