How I Learned to Stop Worrying and Love the National Debt

From the Ezra Klein-led media outlet whose goal “isn’t telling
you what just happened, or how we feel about what just happened,
it’s making sure you understand what just happened,” comes this bit
of brilliant ‘splainin’: “Stop freaking out about the
debt.” Seriously. Because, as narrator Matthew Yglesias
explains in a mind-blowing animated video, “the U.S. government can
never run out of dollars. Unlike you, or the company you work for,
or the town you live in, the federal government prints
dollars.”

I feel satisfyingly explained to, now.

Besides, there are other big numbers, too. “Stop freaking out
about the debt” helpfully points out that debt held by the public
may be $12.5 trillion, but Gross Domestic Income is $17 trillion.
That’s a bigger number. So stop freaking out!

Of course, the U.S. Treasury reports that Total
Public Debt Outstanding is actually $17.5 trillion, which is
bigger yet, but we can make even more dollars.

Vox ‘s video does acknowledge that if you have “too much money
chasing a fixed amount of stuff, that means higher prices. And if
inflation gets out of control, that will slow down the economy by
raising interest rates.” This can, Yglesias admits, have bad
effects. Those bad effects include an apparent Space Invaders
scenario (see below) in which we fight off invading alien
inflation, or something, with laser cannons powered by incinerated
masses of dollar bills.

The way I see it, the Washington Monument is a goner, whether
from Economic Growth Rate bombs or ack-ack from the Federal
Interest Rate. Looks like a good game, anyway, for 1983.

But inflation is the lowest it’s been in 30 years, Yglesias
assures us. And higher taxes or cutting spending “would take money
out of people’s pockets.” So debt it up! Besides, war and
hurricanes (seriously—you have to see the video).

For the record, the Congressional Budget recently revised projections
for Gross Domestic Product downward. That means less wealth
against which to compare that soaring federal debt. The CBO also
warns about
the  debt itself:

Such large and growing federal debt could have serious negative
consequences, including restraining economic growth in the long
term, giving policymakers less flexibility to respond to unexpected
challenges, and eventually increasing the risk of a fiscal crisis
(in which investors would demand high interest rates to buy the
government’s debt).

With GDP sputtering and deficits continuing, the CBO warned last year,
“federal debt would be growing faster than GDP, a path that would
ultimately be unsustainable.”

Bluntly, the prosperous country and powerful Federal Reserve
that can afford to run up bills and fiddle interest rates to push
the day of reckoning into the future is a function of a government
perceived to be reasonably fiscally responsible and
trustworthy—relative to the alternatives, anyway. If the United
States government comes to be perceived as on a hopeless
credit-card spree, it will lose financial options, and climbing out
of the hole will become difficult and very expensive. The dollars
the U.S. government “prints” will be so much toilet paper—worth
even less, since it’s mostly digital and not two-ply.

The U.S. government’s credit rating has
already taken a hit, hinting at more expensive future
borrowing. The Chinese government gleefully
warned the U.S. about debt, and clearly sees some opportunity
in our self-inflicted plight.

Stop freaking out about the debt? Fine. How about just resigning
ourselves to idiots trying to bankrupt us.

Pour a drink and see the full video here.