Great news: Debt as percentage of GDP rises to post-WWII high

28. Most Keynesian economists teach that Federal
deficits don’t matter, except when the deficits are not
large enough to stimulate the economy.

30. Most economists believe that economic growth will
enable all Federal debts to be rolled over at relatively
low interest rates.

33. Most economists have said that Federal Reserve
policy in 2008 was necessary: a doubling of the monetary
base.

34. Most economists have remained either supportive
or silent about the Federal deficits in 2008, 2009, and
2010.

35. Most economists deny that either hyperinflation
or long-term deflationary depression is possible for the
United States.

39. Austrian School economic theory teaches that
politicians defer solutions until the problems cannot be
solved at politically acceptable prices.

40. Austrian School economists teach that government
makes existing problems either more expensive to solve or
illegal to solve.

41. Austrian School economists teach that government-
imposed solutions create new problems.

42. Austrian School economists teach that government-
created problems are likely to be cumulative until a fiscal
or monetary crisis leads to a default on government debts

43. Austrian School economists note that the one
exception — Great Britain after 1814 — was not a mass
democracy with Social Security and Medicare.

44. Austrian School economists also note that there
was an international gold standard from 1815-1914.

45. Most non-Austrian economists dismiss Austrian
School economics as: (a) outmoded, (b) ideological, (c)
methodologically amateurish, (d) pessimistic, and/or (e)
crackpottery.

53. Most Americans say they do not trust Congress,
but they trust the FDIC, Medicare, Social Security, and
Homeland Security.

63. Few Americans understand that monetary inflation
produces price inflation.

64. Few Americans understand that price inflation can
be a way for the government to disguise its default on its
debts.

68. Most Americans believe that Chinese workers will
sell them cheap goods forever.

69. Most economists believe that China’s central bank
will continue to buy Treasury bills at close to a zero
interest rate indefinitely.

70. Most Americans and most economists therefore
believe in free Chinese lunches (“hold the MSG”).

71. Most Americans believe that Franklin Roosevelt
saved capitalism from itself.

72. Most Americans believe that without tax-funded
education, millions of American children would never learn
to read or do arithmetic above a second-grade level (as if
they were graduates of inner-city high schools).

73. Most Americans believe that without government-
funded safety nets, millions of Americans would be trapped
in lifelong poverty (as if they were fourth-generation
welfare clients).

76. Some Americans are beginning to doubt that
Federal deficit spending on stimulus programs will restore
economic growth.

77. Hardly any economists have doubted this.

78. Most economists believe that high rates of income
taxation on the rich will not reduce investment and
economic growth.

79. Most voters agree that the rich should pay their
fair share, which is at least double the rate most Americans pay.

87. The Federal Reserve doubled the monetary base in
late 2008.

88. Only bankers’ unwillingness to lend money has
kept this increase from doubling M1.

95. The U.S. government owns Fannie Mae and Freddie
Mac, which supply at least 90% of home mortgages.

96. The rate of foreclosures is increasing.

97. Banks are refusing to lend money to local
businesses.

98. Local businesses supply most of the new jobs.

99. The unemployment rate is close to 10%. (This isn’t the real unemployment number, but the Federal reported one.)

100. Employment supports the housing market.

101. “Things that cannot go on forever have a tendency to
stop.” — Herbert Stein

Gary North on Thoughts about the Economy.

Tim Burton on June 30, 2010 at 1:33 PM