Former Indiana Governor Mitch Daniels writes in the Washington Post about the coming “collapse of the U.S. public debt market and the dollar’s world reserve status.” Daniels believes that “It’s past time to prepare” for the “cataclysmic reckoning, including double-digit damage to Americans’ income growth” that lies ahead due to federal deficits and the national debt.
So worried is Daniels, and so certain is he about what’s ahead, that he’s provided names for “next summer’s program organizers” for conferences that he thinks should be the theme of next summer’s “Deep Thinking Season.” Daniels plainly wants readers to know he thinks deeply about the U.S.’s national debt, and as such, wants others to think and feel as he does. He suggests conference titles with names including “Preparing for Armageddon,” “Climbing Out of the Ashes,” and “The Day the Dollar Died.” In reality, Daniels is irresponsibly leading the easily gulled and distracted away from the real problem.
To see why, contemplate Daniels’s focus: it’s on the debt and the problems that lie ahead. Wrong. Plainly lost on Daniels is the real problem, which is Treasury’s extraction of precious wealth right now from the private sector.
Distracted while unwittingly trying to distract others, Daniels vainly tries to draw a distinction between wealth taxed away by Treasury, and wealth borrowed by Treasury. There’s no difference. Wealth extracted is the always and everywhere sin. And it’s a burden in the here and now.
Which speaks to the danger inherent in how Daniels thinks. Obsessed with debt instead of the real problem that is wealth extraction, Daniels is unwittingly telling members of his flock to avert their eyes from the horrors of central planning backed by trillions worth of taxed and borrowed wealth. This is what Daniels should be talking about, while then pivoting to the real, and sick-inducing burdens that await future generations: endless unsolved problems in concert with a massive government. The simple truth is that government spending is a now problem as progress slows immeasurably, and the “burden for the grandchildren” is not deficits or debt, rather it’s the immense amount of work we’re leaving unfinished for future generations, not to mention the staggeringly large government they’ll inherit.
Instead of discussing what matters, Daniels writes as though the “cataclysmic reckoning” is next summer, or soon after the Deep Thinking Season. No, not at all. Government extraction of precious wealth is now, and it’s the ugliest of Bastiat’s “unseens” precisely because of what we’re not seeing in a progress sense as the warring ideologies fight over taxation and debt as though they’re different.
What about the dollar? Daniels just knows, and he knows because he feels so deeply, that the dollar is poised for a collapse that will bring on “double-digit damage to Americans’ income growth.” It all sounds so awful, but for the inconvenient (for Daniels) truth about the U.S.’s total debt, which is $35 trillion and counting.
Does Daniels seriously believe that Treasuries are the most owned income streams in the world because the dollar is going to collapse? Daniels is quite literally proposing conferences with names like “The Day the Dollar Died” at the same time that the whole world is aggressively buying debt that pays out dollars at some of the lowest interest rates in the world. Which is but a hint to Daniels that, as opposed to all the federal debt foretelling “the death of the dollar,” markets anticipate quite the opposite.
Anticipate is italicized above as a reminder to Daniels and those who think as he does that markets are a look ahead. And the fact that the U.S. has $35 trillion in debt at rates quite a bit lower than those charged to Treasury when total federal debt was $900 billion signals that the U.S. has neither a debt problem, nor a looming “death of the dollar” problem.
Still, the U.S. does have problems. Daniels’s challenge is that he’s distracted by symptoms, not the actual problems. Please be on the lookout for my next book, The Deficit Delusion, to understand why.
