9 thoughts on “Cartoon of the day

  1. “The earth belongs to each of these generations, during its course, fully, and in their own right. The 2d. generation receives it clear of the debts and encumbrances of the 1st. The 3d of the 2d. and so on. For if the 1st. could charge it with a debt, then the earth would belong to the dead and not the living generation. Then no generation can contract debts greater than may be paid during the course of its own existence.” — Thomas Jefferson, 1789 letter to James Madison

    The sad irony, of course, is that the next generation has been convinced, mostly by their left-wing college professors, to vote enthusiastically for their own enslavement.

      • “Can Capitalism survive? No. I do not think it can.” Thus opens Schumpeter’s prologue to a section of his 1942 book, Capitalism, Socialism and Democracy. One might think, on the basis of the quote, that Schumpeter was a Marxist. But the analysis that led Schumpeter to his conclusion differed totally from Karl Marx’s. Marx believed that capitalism would be destroyed by its enemies (the proletariat), whom capitalism had purportedly exploited, and he relished the prospect. Schumpeter believed that capitalism would be destroyed by its successes, that it would spawn a large intellectual class that made its living by attacking the very bourgeois system of private property and freedom so necessary for the intellectual class’s existence. And unlike Marx, Schumpeter did not relish the destruction of capitalism. “If a doctor predicts that his patient will die presently,” he wrote, “this does not mean that he desires it.” — Library of Economics and Liberty

          • I know. I just wonder if they are even capable of seeing their true interests at this point. Or, have they surrendered entirely to their own religion.

          • Having grown up among them, I’m convinced it’s the latter. Mark Perrys are quite rare in the academy.

  2. Cynically, I think people take some comfort from the idea that their children will be paying their bills. Or better, other people’s children. Most likely, the children will be poorer, but will not pay.

    Future retirees are buying US Treasury bonds, often indirectly through mutual funds. Their intent is to enjoy goods and services in the future when they need it, or to reduce the amount their children would need to pay to maintain the retiree’s lifesyle in retirement. If there is default, or more likely high inflation, then it is the retiree who is going to have less purchasing power, who will have less to consume in retirement.

    Children will certainly recieve less from their retired parents, but they will not be paying more to support the bonds owned by their parents.

    Consider that the government is not showing any restraint in taxing the population. Politicians are collecting as much tax as they can. There is an equilibrium. Still, government debt is increasing rapidly.

    Some people imagine that the following argument will collect even more tax. Politicians supposedly will point to the Treasury Bonds sold to the retirees, and will say that the government must collect more tax to satisfy the promises of those bonds. That is not a winning argument. No one will work harder or pay more.

    Rather than be voted out, politicians will support money creation and high inflation to lower the real amount thay pay on those bonds to retirees, and to collect a greater stealth tax through that inflation. Of course, economic organization will be disrupted and even less real revenue will be collected.

    The retiree bond owners are the ones who will lose. They are not participating in a cunning scheme to get the children to pay for them. They are participating in a cunning scheme by politicians to directly steal from them.

    The children will also lose by inheriting a badly organized, badly working, and unstable economy. Everybody loses except current politicians who gain power despite the spreading misery.

    • “Inflating your way out of debt works if you’re planning to run a pretty sizeable budget surplus–big enough that you won’t have to roll your debt over. Otherwise, your debt starts to march upward even faster, as old notes come due, and you have to roll them at ruinous interest rates. Hyperinflation might wipe out that debt, but also your tax base.” — Megan McArdle

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