When Steve Elliott and I were out and about we met an economist who tried to tell us that the national debt doesn't exist. It was one of those encounters when a seeming expert lays some counterintuitive bomb at your feet -- "you know, there really is no such thing as cholestorol"; "I bet you didn't realize that these is no social security fund" -- and then smiles impishly. I wasn't buying. Nor was Steve. Nor did we accept that the trade deficit doesn't matter, which he also argued. We both stuck to our instinct that the country's long term massive indebtedness is bad for business.
Here's an economic analysis that agrees, written by an investment analyst for the Nation Institute. It also looks at other factors, like China's rising competition for influence and resources, oil insecurity, and the continuing decline of the dollar despite central bank interventions all last year, and wonders if our economy will be the first thing to collapse from imperial overstretch.
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