Free Republic

We should remember the now modern proverb of Nixon-era economic advisor Herb Stein to the effect that what cannot go on (without destroying the nation), simply will not go on.In some sense, the country for recent years has been cruising on the fumes from prior and likely better wiser generations and institutions. In 2024, the tab for our current apathy, toxic politics, and incompetence will come due.

Like Detroit, things that can’t go on forever don’t. By Charles Krauthammer If there’s an iron rule in economics, it is Stein’s Law (named after Herb, former chairman of the Council of Economic Advisers): “If something cannot go on forever, it will stop.” Detroit, for example, can no longer go on borrowing, spending, raising taxes, and dangerously cutting such essential services as street lighting and police protection. So it stops. It goes bust.

The increasing attention paid to growing U.S. current account deficits has bred nightmare scenarios of a sharp decline in the foreign-exchange value of the dollar and rising U.S. interest rates. Financial markets, by contrast, appear more sanguine. Inflation-indexed bonds in the U.S. are yielding only about 1.5% in real terms, and the IMF's estimate of the long-term world real interest rate is about 2%. Capital markets rightly estimate low current real rates of interest, though the outcome affords little comfort. Alan Greenspan has termed the fall in long-term rates in the presence of a rising federal funds rate a "conundrum."...