Our Nation’s Debt

A response I had to a friend of mine who said the nation’s debt and deficits were not a big deal:

C’mon, man you’re too smart to say something like that. I know you’re a Keynesian superstar, and the level of government spending for a country during a recession is one of the most highly debated topics in public economics and finance, but to suggest that a debt of $16 trillion is nothing to worry about is insane. The bonds that finance this spending must be repaid down the road, and a default by the U.S. Treasury on these supposedly “default-risk free” bonds would send shockwaves through the financial system that would make ’08 look like a walk in the park. Plus, shouldn’t the mighty government which liberals champion so dearly to be a harbinger of moral superiority and behavior espouse the most fundamental principles to which the citizens in which it derives its sovereign are held accountable… e.g. financial responsibility? At some point, regardless of the holder, one’s debt will be called, and $16 trillion is an awful lot of insolvency to risk. Financing dubious projects at home with the dollars of foreign nations is pleading for manipulation, dependence, and control, not to mention the debt owed to private companies and the crowding out and opportunity cost for the future which occurs by reckless government spending. As for Big Dick… I’m amazed that the Bush years have gotten by so long as a talking point for the left. When you really look at the beliefs and actions of Neo-Cons like Bush, McCain, Cheney, etc… they’re more like Obama than true Libertarians and Conservatives when it comes to fiscal ideology. Throw in a few other things like inflation, interest rate volatility, failure to make medicare/social security payments, compounding interest on the payable debts and the inevitable tax hikes to repay them… then perhaps there is something to worry about. The government has done a tremendous job of desensitizing the public to the word “trillion.” People tend to discount problems until they bite them in the ass…