We're All Going to Die

This from a blog titled, "A Tiny Revolution" -- please follow link to original - then read a bunch of stuff -- it's good for you!
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We're All Going to Die

Living in the United States is like being over Iowa on a cross country plane trip heading west when the captain gets on the intercom and explains that there's a tunnel through the Rocky Mountains and they're going to use it to fly through to the other side. You just have to PRAY TO JESUS CHRIST that they know they're lying to you.

For instance, here's an article about Robert Lutz, who used to be vice chairman of GM:

"We are no longer the richest, most all-powerful nation in the world, where we can afford to pay each other high salaries and high wages and high benefits and import $19 DVD players from China," Lutz said in an interview.

"That is not going to work. We pay for it in IOUs called Treasury bills..."

The scary reality is that Lutz almost certainly believes this, and doesn't understand the difference between the U.S. trade deficit and the U.S. federal budget deficit. That would be a drag but wouldn't matter too much if he were a normal person, but it's dangerous considering that he's at the pinnacle of American power.

The trade deficit is the difference between the value of things we sell to the world and the value of things we buy. We have to make up the difference by selling U.S. assets, but there's no reason they have to be treasury bills—they can be real estate in New York, movie studios in Los Angeles, or even stock in GM. The trade deficit was gigantic toward the end of the Clinton administration even as the federal government was running a surplus.

That's not to say the trade deficit, which is huge, isn't a real problem. It is. But the textbook way to solve it is by letting the value of the dollar fall. However, most U.S. elites hate that idea because, while that would increase the long-term well-being of most Americans, it would make U.S. elites relatively less powerful compared to foreign elites in the short run.

But people like Bob Lutz somehow have gotten it into their head that budget deficits are bad and trade deficits are bad and they're the same thing and he was just at a fundraiser with Mitch McConnell and they had a great discussion about how the only way to restore manufacturing in America is to finally by god cut that damn Medicare.

Anyway, the point is that we're all going to die when Bob Lutz and friends confidently plow this plane straight into the side of the Rockies.

—Jonathan Schwarz