Class Note 1964
Issue
March-April 2021
Your classmates met the challenge when asked how concerned they should be with the soaring national debt. Not a one offered the canard that we owe it to ourselves. We have some thoughtful classmates, but no easy solutions.
Roger Nastou sensibly points out that debt for infrastructure should be less concerning than for consumption and that we have taken on debt recently in the battle against Covid.
Paul Hale notes that “modern monetary theory, which conveniently states that deficits don’t matter, rules the day.” Ivars Bemberis says that the “long-run impact of the high debt is lower growth, higher prices mostly offset by higher pay, savers will get screwed (that’s us), and economic inequality will increase.” Will Madden adds that U.S. debt is almost $80 trillion. Hard to fathom, it equates to $109 million a day since the common era began. He notes that politicians will let it increase “just to keep the handouts flowing. Our generation grew up knowing that if you borrow money, you have to pay it back. The latest generation now thinks that is outdated and unnecessary.”
Don Mutterperl comments that “someday the party might end and we’ll be left with a huge mortgage on our future as well as a reduced credit standing in the world. Leaving the problem either ignored or unsolved isn’t a reasonable legacy for our heirs.” Lance Keeler adds that we are fortunate to benefit from low-interest rates as the dollar is the preferred reserve currency for the world. It’s been easy to sell our debt, but, as he says, “this can change and lead to a weakening of the dollar, contribute to inflation, and put pressure on interest rates.” Tony Orr says, “Higher interest rates are likely and payment of interest on the debt will increase dramatically, causing hard political choices.” Increased payments on our debt may force our aging population to accept cuts in Social Security and Medicare. Steve Blecher says, “Don’t let anyone tell you it’s different this time!”
Meanwhile, an assertive China is pushing to substitute the yuan for the dollar. This major threat needs to be addressed. We can fight to support the dollar or shift the effort to promote a new, world currency, blocking China’s efforts. Send in your thoughts.
—Jay Evans, 512 Winterberry Lane, Duxbury, MA 02332; gjevans222@gmail.com
Roger Nastou sensibly points out that debt for infrastructure should be less concerning than for consumption and that we have taken on debt recently in the battle against Covid.
Paul Hale notes that “modern monetary theory, which conveniently states that deficits don’t matter, rules the day.” Ivars Bemberis says that the “long-run impact of the high debt is lower growth, higher prices mostly offset by higher pay, savers will get screwed (that’s us), and economic inequality will increase.” Will Madden adds that U.S. debt is almost $80 trillion. Hard to fathom, it equates to $109 million a day since the common era began. He notes that politicians will let it increase “just to keep the handouts flowing. Our generation grew up knowing that if you borrow money, you have to pay it back. The latest generation now thinks that is outdated and unnecessary.”
Don Mutterperl comments that “someday the party might end and we’ll be left with a huge mortgage on our future as well as a reduced credit standing in the world. Leaving the problem either ignored or unsolved isn’t a reasonable legacy for our heirs.” Lance Keeler adds that we are fortunate to benefit from low-interest rates as the dollar is the preferred reserve currency for the world. It’s been easy to sell our debt, but, as he says, “this can change and lead to a weakening of the dollar, contribute to inflation, and put pressure on interest rates.” Tony Orr says, “Higher interest rates are likely and payment of interest on the debt will increase dramatically, causing hard political choices.” Increased payments on our debt may force our aging population to accept cuts in Social Security and Medicare. Steve Blecher says, “Don’t let anyone tell you it’s different this time!”
Meanwhile, an assertive China is pushing to substitute the yuan for the dollar. This major threat needs to be addressed. We can fight to support the dollar or shift the effort to promote a new, world currency, blocking China’s efforts. Send in your thoughts.
—Jay Evans, 512 Winterberry Lane, Duxbury, MA 02332; gjevans222@gmail.com