Friday, October 25, 2013

The Republi-CON "The End Is Near" Myth

UPDATE:  Lo and behold, I reference false prophets of doom, and on the same day so does one of my favorite economic op-ed columnist.  Great minds think alike, although he gets paid a lot to write a column for The New York Times and won the Nobel Memorial Prize in Economic Sciences.  I'm just another schlep with an unread blog:

"Once upon a time, walking around shouting “The end is nigh” got you labeled a kook, someone not to be taken seriously. These days, however, all the best people go around warning of looming disaster. In fact, you more or less have to subscribe to fantasies of fiscal apocalypse to be considered respectable.

And I do mean fantasies. Washington has spent the past three-plus years in terror of a debt crisis that keeps not happening, and, in fact, can’t happen to a country like the United States, which has its own currency and borrows in that currency. Yet the scaremongers can’t bring themselves to let go. . .

[T]here are two remarkable things about this kind of doomsaying. One is that the doomsayers haven’t rethought their premises despite being wrong again and again — perhaps because the news media continue to treat them with immense respect. The other is that as far as I can tell nobody, and I mean nobody, in the looming-apocalypse camp has tried to explain exactly how the predicted disaster would actually work. . .

Why, then, should we fear a debt apocalypse here? Surely, you may think, someone in the debt-apocalypse community has offered a clear explanation. But nobody has.

So the next time you see some serious-looking man in a suit declaring that we’re teetering on the precipice of fiscal doom, don’t be afraid. He and his friends have been wrong about everything so far, and they literally have no idea what they’re talking about."

Read The New York Times, Addicted to the Apocalypse.

"Hedge fund billionaire Stanley Druckenmiller is really, really worried about the future of the United States. He is doing an event at Georgetown next week making the case that entitlement spending will form the next mega-financial crisis, and not for the first time.

This kind of quasi-apocalyptic talk is breathtakingly common. His is of a thread with a lot of commentary that suggests that the whole world economy is just a shell game being propped up by profligate government spending and central bank money-printing, that it’s all a scam that will implode soon enough.

It is embedded in the writing of David Stockman, who views the world as being on the precipice of an 80-year central banking bubble that will pop any day now. Hamilton Nolan at Gawker has made an entire side-career out of writing 'Bubble Watch' posts. . .

The poster advertising Druckenmiller's speech last week argues that the "true national debt" is more than $200 trillion. What the sponsor  seems to be doing is looking at the liabilities side of the balance sheet, but not the asset side. Yes, Social Security and Medicare are on the hook to pay out a lot of money in the future. But they are also on track to collect many trillions in tax revenue in the future. . .

Crises are real. And they can be destructive. Policymakers should be on the watch for potential triggers of crises, and thinking deeply about how to avoid bubbles that waste human potential and result in damaging recessions. But when everything is a bubble, and apocalypse is always now, the terms becomes meaningless."

Read the Washington Post, Another billionaire is predicting doom. Ignore him.

Social Security and medicare would remain solvent with some minor adjustments, unless of course you don't want the programs to remain solvent.