There's a saying in business, politics and sports that applies to the general way that we Americans look at problems. That phrase is, "In the weeds." Pretty much everyone understands that when a project or team or political party is in the weeds that they're down in the rough going, beating through the underbrush, trying to find a clearing. Being in the weeds is, therefore, not where you would like to be.
That's where we are as a country right now. Everything is point counterpoint, detail this, data overload on that. But then you look at a picture like this one and start to realize that we are pretty darn small specks on that vast world, and that world is only the fifth largest of the eight that make up our little solar system. A solar system that is one of maybe 100 billion solar systems in the Milky Way galaxy, which is one of 200 billion known galaxies in the visible universe. Think about that for a second.
Okay, times up. Time for more politics. There is, of course, a reason for my billions and billions rant. Our political system, joined at the hip as it is with the media, has put us all in the weeds when it comes to understanding the economy and its current troubles. We need to take a step back and take in the curvature of the economy, as if seeing it from space. And by the way. This ain't rocket science. Anybody can do it. Even the politicians.
The situation in Europe, in particular the French election of the Socialist Party candidate, points out that not only doesn't austerity work to pull an economy out of recession, austerity also pisses off the voters who, if angered enough, will throw the austerity pushers out of office. Here in the good old U.S.A. we have the austerity crowd as the out of office challengers. They believe that austerity works. They are wrong!
Now, just to be clear, what I mean by austerity is simply, reducing spending by the Federal government below current levels. Remember, we're taking the long view from space here. If we start to address which programs are good, or which are bad, or which are wasteful, or which we just don't like, then we descend back into the weeds. From way up here in space we can't see all those petty differences. A dollar of Federal spending is... a dollar of money spent into the economy. Period.
"But wait a minute," you say. "Some things that the government spends on are stupid and wasteful." At which point starts the list. The list of BAD GOVERNMENT PROGRAMS. Bridges to nowhere, counting spotted tree frogs in the swamp, volcano monitoring and space exploration are on that list. Or not, if it's somebody else who made the list. That's a big part of the problem. Every dollar of spending that I like, somebody else hates, and so on. But that just keeps us in the weeds.
Take a step back. That dollar of Federal spending, no matter what for, gets paid to someone or to some corporation which pays someone. Every dollar that stays in the country goes to somebody's pocket. So, here's the thing. If we a facing high unemployment, (we are) and are coming out of a recession, (yep) why would anyone even suggest that we cut government spending and thus, take dollars out of those pockets?
"$16 trillion in debt and getting worse," you scream. Well, okay, that is a problem over the long haul, but can we take that step back and look at it from a distance. Right now, even after one of the rating agencies downgraded our bonds, we are borrowing money in the world market for just slightly more than 0% interest. And we're not having to chase investors. They're coming to us and throwing heaping gobs of money at treasury bonds which will make then basically nothing over their investment. Why? because we're still the biggest, baddest, and safest economy on the planet. That being said, it means that even though we have to borrow $0.40 of every dollar the government spends, it's incredibly cheap money. It is so incredibly cheap that we should be spending even more of it on the infrastructure of the nation. We can justify the increased spending with another old saying from business. "You have to spend money to make money."
But that's for my next posting.