The National Economic Council issued a riveting paper this week telling the world that they are doing a good job and that their ideas are terrific for the nation.
Hey, I guess it worked for leaders of the Soviet Union, at least for a little while.
The National Economic Council, headed by climate zealot and former central banker Lael Brainard, and the Council of Economic Advisers, headed by someone with a Ph.D. in social welfare, released a report praising themselves and their support for massive levels of spending on infrastructure, the Green Energy transition, and domestic semiconductor manufacturing.
Hurrah. Hurrah. Hurrah.
It’s a classic case of politicians and government workers praising dirigisme as a practical approach to the economy.
When a government tries to do too much, like a jack-of-all-trades, it becomes a master of nothing. We’re on a march to $50 trillion in debt by 2032 with hundreds of trillions in other unfunded liabilities.
Tack on this basic issue. It will take years of permitting, studies, and other time-wasting activity to deploy these projects. In addition, we’ll need to triple our copper production and boost lithium output 10 times over, all while lawyers at “advocacy centers” sue to stop the expansion of mining activity.
It's very easy to spend other people’s money. But these people sit around all day and “re-imagine” things. I like to imagine these people sitting around a table drinking tea, dressed as the characters from Alice in Wonderland.
Only in a magical place like this can they praise themselves and fail to recognize the collision course that they’re putting America on – a course that ends abruptly within 10 years. You only need one chart to see it.
They would know – based on this chart – that massive amount of government spending through debt leads to depreciating returns. This has been the case since the early 1970s, and went into hyper mode at the onset of the 21st century.
Globally, nations have taken on $150 trillion in debt in a little more than 20 years, yet they’ve only generated about $45 trillion in growth.
And they keep doing it… over and over.
It’s blatantly obvious that our debt levels are unsustainable… that growth will be sacrificed… that investment will need to divert to interest payments… and that inflation awaits us once they keep printing. I discussed this yesterday with Dr. Barbara Kolm of the Austrian Economic Center. I’ll release the interview next week for readers here at the Florida Republic.
And Now for Something Completely Idiotic
The U.S. government lost its case in the Supreme Court to forgive student loan debt. Rather than take the loss, the Education Department will now automatically forgive $39 billion in loans for 804,000 borrowers.
So, get ready, because the government has effectively injected another $39 billion into the economy. Now that people won’t have to pay these loans, they’re going shopping.
The deal comes on the heels of a plan to forgive debt after borrowers have spent 20 to 25 years paying it off. There were changes to income-driven payback plans. I found this quote rather funny.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” U.S. Secretary of Education Miguel Cardona said.
So, the system is broken? You don’t say. The government is the only game in town when it comes to student loan origination.
It’s a government system… and it’s broken. So now what?
Keep in mind that this whole problem of high student debt has nothing to do with the private sector or greedy businesses.0
In the United States, a 17-year-old can’t buy a beer, can’t open a brokerage account, can’t get credit cards, and can’t even serve on a Jury.
But the Department of Education will approve $150,000 in loans that will saddle students with debt for the rest of their lives… without assessing the student’s ability to pay back the loan or providing guidance on the types of degrees that will lead to a lifetime of financial success.
All while this mass subsidization helps fuel the constant rising price of college at schools around the country.
All in all, today, the annual cost of attendance at my alma mater, Northwestern University, is $82,908.
While the return on investment for a theater degree at the school now exceeds -$522,273, according to FreeOpp. That’s not a typo, I said negative five hundred twenty-two thousand two hundred and seventy-three dollars.
What a deal.
Stay alert,
Garrett Baldwin
Florida Republic Capital
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.