It seems that our macroeconomic knowledge of how much debt the government of the United States owes is directly proportional to how well today’s political parties educate us on the topic.
Since the majority of us are ignorant to the field of macroeconomics we can not understand nor interpret whether such a large number of dollars is good or bad for the country. Even though we can see and track the U.S. Total Debt on websites our working class minds can not appropriately put such a figure into its proper perspective and so we tend to leave that heightened sense of anxiety to the political punditry (particularly, those in the Beltway who are the political party out of power) who then tell us whether such a fiscal dynamic is good or bad. Of course, the problem with such an educational system is that the reported fiscal progress of the country tends to be wrapped up in the political motives of one’s source.
So what’s our recourse? An intense round of macroeconomic study? Can’t hurt that’s for sure, but even among some of the most notable economic minds there are a diversity of opinion as to whether public debt holdings are good or bad for the United States. For example, in a 2003 congressional hearing, then Federal Reserve Chairman, Alan Greenspan, stated that there was NOT any empical evidence to support the claim that interest rates -the traditional fear related to large national debt holdings- are directly effected by total public debt. My sense after hearing of such an exchange is that macroeconomic theory is not even close to being an exact science and so this leads me to grapple with the only viable asset a bottom-feeder can resort to – particularly if the goal is to acquire macroeconomc understanding – and that is gut instinct.
Incidentally, how do we, the working class, use our gut instincts to relate to the world of economics? I say that we compare like-minded everyday proportions to known norms and then associate that phenomenon to the fiscal subject at hand. Let me elaborate: we are told by financial experts (Simpson-Bowles National Commission on Fiscal Responsibilty for one) that they could balance the budget, excluding interest payments on the debt within 10 years – actually 5 years; they were commissioned to do the study in 2010 and so they claimed that by implementing their “Zero Plan” they could achieve balance by 2015. Now, this balance-the-budget proposal does not mean that they would have eliminated total public debt by such a time, but its reasonable to assume that such a possibility could be 30 years out. Now, if that is even remotely feasible, then such a debt is equivalent to John Q. Public taking out a 30-year-mortgage to buy a house.
Now here is my working class problem with such an association: many financial experts have unequivocally stated that such an investment is a good one! If that is so, then why are the Doomsdayers of today packing me up in my paid off Montero Sport and sending me over the cliff?
It is a working class smell? 