The Deficit Is Gone but so Is the Country

One theory about the collapse of ancient Rome is that a pair of plagues, probably the bubonic plague, precipitated the end. Now we are dealing with the COVID-19 plague. Conservatives are worried about the deficit as the costs of stimulating the economy add up, but what alternative do they have?

10 thoughts on “The Deficit Is Gone but so Is the Country

  1. As I understand it, deficit spending is okay, going on the assumption (which has held up to now, more or less) that the economy will expand beyond the level of deficit. That is, the deficit from 10 years ago is a drop in the bucket relative to the current economy. It’s okay to keep using the charge cards because you keep getting raises.
    The two big problems? One, you may stop getting raises or lose your job. Two, you may finally not be able to get any more credit line increases.
    All that debt, owed to all those countries around the world? And a global pandemic slowing the economy? The rich will make a killing. But I think (hope?) this time, the poors who are being swindled out of everything they still have left (and also their retirements and pensions as well as any kind of Medicare) will return the favor.

    • Sadly, you are conflating the federal deficit with a household deficit. They are *fundamentally* different.

      The propaganda says “tax and spend” characterizes the fiscal operation of the federal government. But that cannot be true. That would mean people could pay taxes before the government spent the dollars out into the economy. How…?

      The correct way to think of federal spending is “spend first then retrieve some of those dollars spent in taxes.” That’s the operational nature of reality.

      And what do we call the dollars not retrieved in taxes? Answer #1 the dollar financial assets of the population (i.e. their savings). Answer #2 National ‘debt’…

      This is analogous to your bank account, which is your asset, but the bank’s liability (i.e.debt).

      Reducing national ‘debt’ is a very bad idea. Every time we’ve done it (seven times since 1776) it’s followed immediately by a Great Depression-sized hole in the economy. See https://www.huffpost.com/entry/the-federal-budget-is-not_b_457404

      As for “running out of money”…we’ll run out of money when the bureau of weights and measures runs out of inches. It’s a red herring.

      As for the threat of inflation… Also overblown. According to our central bank (the Federal Reserve), it extended $16 – $29 trillion in credit to the financial sector in 2007-8. No indicator, public or private, shows a surge of inflation.

      And the Republicans know this (Dick Cheney: “Reagan proved deficits don’t matter”). Unfortunately, they give the lions share of the money to people who don’t need it.

      • Most Americans don’t have a grasp of how money works.

        I have experienced gaping maws in trying to explain it.

        Job well done, AdamEran.

  2. From my reading of history, the end of the Western Roman Empire wasn’t the quick collapse we seem to be facing, but a decline so imperceptible that most people, even the wealthy and powerful, didn’t realize it was over until well after it happened. The “government” moved from Rome to the more easily defended Ravenna, and its dictums became increasingly irrelevant to the populace, who mostly carried on as they had before. We should be so lucky!

  3. According to Peter Heather’s “The Fall of the Roman Empire: A New History of Rome and the Barbarians” – compendium of the latest archaeology, Rome started farming with slaves, who didn’t care about the soil on the Italian peninsula, so they were dependent on food grown in North Africa. When the Visigoths cut off Rome’s access to these crops, it fell.

    This is analogous to the pre-Civil War South. The farming done there was extractive, not sustainable (as the pre-slavery Roman agriculture was). They needed to move on after they’d depleted the soil. The Western states were not going to permit slaves, so….Civil war!

  4. An interesting coincidence. I was reading Tom Tomorrow’s strip today (that would be yesterday’s tomorrow). And in one of the panels, one of two Trump supports says: “If Biden wins, America will become a chaotic hellscape beset by disease, civil unrest and widespread unemployment–run by a man in obvious cognitive decline, who has no idea what to do about any of it!”
    The joke, of course, is that all of that applies to Trump as well–at least for the liberal/progressives.
    Cue the chuckle.

    But the reality? We have a grossly unhealthy population without access to universal health care and that’s been the case for decades. Civil unrest? I don’t know what textbooks Tom T. is accessing, but civil unrest is cyclical — ranging from medium simmer to full boil — and has been around a long, long time in the U.S. The Ku Klux Klan certainly qualifies as an example of civil unrest (especially from the perspective of the black victims). The 1960s was filled with unrest. Los Angeles has had riots too. And the Bonus Army. Don’t forget all those strikes by the, ah, erm, what did they call them? Oh, right, unions.
    As for unemployment. Ask anyone who has been through it; it isn’t the pink slip, it’s how no one will look at your resume because computers roundfile any document that shows you’re out of work. It’s how your health insurance stops the second you lose your job. It’s how you weren’t making enough to build up an emergency fund. It’s how companies lay you off not because you screw up or they don’t need you but because it’s “good business” to let you go so they can hire someone to do your job for less. It doesn’t matter if unemployment is at 3.5% if the 96.5% with jobs can barely survive.
    That’s the real problem: the Big Three that Tomorrow mentions have all been around for decades. Even worse, he seems to not be aware of that while implicitly seeming to acknowledge that, um, Biden is, in fact, not only losing his marbles but also will not know what to do to fix these problems any more than Trump does.
    I think that’s what did in Rome. The problems simply became too overwhelming and the leadership simply became too underwhelming. We’re coming up on an existential level of trouble and the best we can do is Donald Trump v. Joe Biden. And last time? We let a crooked huckster from Arkansas steal a primary so that she could lose against Trump. You know you’re in serious trouble when even the con artists trip over their own two feet.
    Jesus wept.

  5. “Deficit” is congressional code for: “We only spend money (and LOTS of it!!!) on the 0.001% and the corporate persons they represent. Deal with it.”

    If current day congressional “populists” (i.e the Resistanceâ„¢) has a significantly different ideology, they have miserably failed to make it credibly known. See, for example, Joe (“nothing fundamental will change”) Biden.

  6. The interesting thing about Rome was not that it fell one day (which it didn’t) but that it lasted as long as it did — about 2200 years as a distinct, coherent political entity from the founding of the city until the fall of Byzantium. Until modern banking was invented at about the same time as the Renaissance, there was nothing like deficit spending available to governments; they had to go out and steal what they needed from the people and the provinces, if they had any. One _could_ debase the money, and this was done many times, but it simply led almost instantly to severe inflation. Debt and fiat currency don’t always work that way. I suppose cheap money did get the emperors around some tight corners.

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