National Debt – Kicking The Can Down The Road

I’ve heard this phrase repeatedly cited, regarding the “national debt”.  It’s called “kicking the can down the road”.  I’ve heard it in the USA, Europe, and other contexts.

“Kicking the can down the road” is a lie.  There is no such thing as a free lunch.

When the government prints money for X, that isn’t free.  The cost is inflation.  The cost is not deferred to the future.  The cost is immediately paid via inflation.

In the USA, the Federal government has a budget deficit.  Politicians raise the national debt limit a little.  A few months later, they have the exact same debate again.  The politicians play a game of chicken with other people’s money.  “Give me what I want, or I’ll ruin this massive extortion racket we both profit from immensely!”

In Europe, many governments are insolvent.  Those governments are given new money and loans, but only enough to last a few more months.  A few months later, the same thing happens again.

In Europe, the bailout money isn’t going to the people.  It’s going to banksters and insiders.  In a corrupt financial system, one of the rules is “A ‘too big to fail’ always gets a bailout.”  By “too big to fail”, politicians really mean “too politically connected to fail”.  If money is directly given to banks, that is too obviously corrupt.  Instead, money is given to the banks’ creditors, and the net effect is the same.

The “crisis” with European government debt is not “OMFG!  These governments are bankrupt!”  The real crisis is “OMFG!  Our bankster friends will be bankrupt, if the government defaults!”

Why is government debt sacred?  Why can’t governments default?  Insiders make a ton of money off government debt.  The only time a government is allowed to default, is when insiders sell and short-sell the debt before the default.

In a paper monetary system, insolvency can always be postponed.  Insiders can always print new paper, and bail out their friends.

The only cost is inflation.  Until hyperinflation occurs, insiders can always print new money and give it to themselves.

Unfortunately, the global financial system is coming dangerously close to hyperinflation.  Insiders think “We just stole $X.  Why not steal $2X?  Why not steal more and more?”

“Kick the can down the road” is a fnord phrase.  It means “We’re printing new money to bail out our friends.  Maybe we won’t do that the next time.  We’ll be responsible eventually.”  They say that each time, and keep doing it.

In a paper monetary system, you can’t “kick the can down the road”.  If new money is printed to finance a bailout, there is an immediate cost of inflation.  There is no free lunch.  The cost is not deferred to the future.  The cost is immediately paid via inflation.  The phrase “kick the can down the road” helps obfuscate what’s happening.

2 Responses to National Debt – Kicking The Can Down The Road

  1. Actually, kicking the can down the road does make sense in a different context:

    Selling off the unborn as collateral for debts incurred by the State today aka hollowing out the future to fill in the gaps of today.

    Voters will not vote for a politican that raises taxes. They want the goodies for free. Government has so many dependant classes that any politician running to cut funding to X group to pay Y or create program Z will immediately have massive incentive to not vote for said politican that threatens their State gravy train. So when governments cry out “austerity” as they try to cut the dependent classes, this means X, Y, and Z vote against each other.

    So what is a politican to do? Simple. Sell off the unborn. Offer the unborn US tax cattle as collateral to the Chinese for loans. The money sold abroad is….you.

    When the eoonomy is in a boom, the problem is not so obvious as the can *CAN* be kicked down the road. However, when there is a contraction, that can *CANNOT* be kicked that far, if at all.

    Inflation doesn’t immediately hit all classes of society at once. If it did, it would make the problem of inflation obvious to all. There are ripple effects as the money printed up today takes a while to make its way out to all classes. The people who get their hands on the freshly printed money benefit the most. Those who get that money last suffer the most.

    • With progressive tax rates and inflation, tax rates increase every year if politicians do nothing. The “Bush tax cuts” were given an expiration date, so politicians can “cut taxes” again after they expire.

      Even if you sell the unborn into slavery in exchange for new money, that causes inflation. You’re getting real goods and services now, but only make a vague promise of payment later.

      This is a common misconception “Via a birth certificate and SSN, politicians and banksters own you.” However, you can’t get freedom just by refusing a birth certificate or SSN. Even if your parents got you a SSN, that doesn’t mean you have to act like a slave.

      Politicians treat “citizens” as their property. That’s a separate issue from “In a paper monetary system, you can have arbitrary high deficits, financed via inflation.”

      Inflation is spread unequally. It hurts people with savings (unless it’s in physical gold and silver). Inflation benefits people with a mortgage, because the rise in home prices is more than the interest rate on the loan. Inflation slightly benefits people with credit card debt, although the interest rate on credit card debt is close to true inflation.

      Inflation benefits insiders, because they get to print and spend new money. Inflation hurts people with savings. Inflation also hurts workers, because salary increases usually don’t keep pace with inflation.

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