Credit availability has been used as a lever to mask market distortions for over a century. The unintended consequence of credit availability expansion has been the necessity of debt use to achieve “middle class” milestones for nearly 50 years.
The West has distorted housing construction markets with such onerous regulations and taxes that it is reaching the limit of what credit availability can be stretched to. It’s even contributing to the suppression of total fertility rates.
We need to cure the disease of market distortions before we reach the cliff. Restore property rights.
A society built on debt quietly depends on something fragile: trust that sacrifice today will still mean something tomorrow. I wrote an essay recently about deferred reward and the psychological consequences when that trust begins to break down.
so how do I advice my 20 year old? Im 55, my advice to her so far is to finish her nursing degree(paid for) and not continue on with education until there is certainty in her field..
so far her plan is to move back home in 4 months, work local and walking distance to her Job and save save save, carry no debt and put away in a retirement fund. Rent is higher than a mortgage payment currently so live with us (relatively) free.
I feel my advice is wrong and robbing her of her 20's, living some what care free as I did.
“The U.S. federal government collected $2.66 trillion in individual income taxes in Fiscal Year (FY) 2025. Combined with other revenue streams—such as corporate income taxes and social insurance—the Internal Revenue Service (IRS) brought in approximately $5.2 trillion in total tax revenue for the year.”
From safari search just now. So, confirming the failure. Who pays more and benefits less? And glass half full can be the frame too, if wished - same outcome.
The USA spends (if keeping up with commitments) @ 20% of the taxes paid by majority Americans to cover our deficit (national debt).
The Executive Branch and Congress will never deal with the National Debt. The only way, as a nation, that we will deal with it is: Inflation. Example; Say an insurance company (the Great Recession proved how stupid the industry is) in 1996 bought a 30 year Treasury Bond. The purchasing power that the money that the company just received has dropped by about 50%. That's how America will deal with the National Debt: Pay it off with less valuable dollars.
Now the Deficit appears to be something different, as you pointed out. The US takes in about $5 T in taxes and spends $7 T. Now it looks like, since the interest is $ 1 T, we have to make choices. No! Congress will simply issue more debt to cover an ever increasing amunt of debt service. And then inflation is inevitable. As Ben Bernanke pinted out, if you fly a helicopter over a (stable) economy, you will get inflation. And the Fed can only deal with relatively short term inflation/ recession economic conditions, not long term fiscal recklessness. The Taylor Rule is correct. So if you don't like a 10 year Treasury at 4.6%, get used to it. Deficits produce inlation without any doubt. Why would anybody buy a long term bond, and if not how will America sustain itself?
Credit availability has been used as a lever to mask market distortions for over a century. The unintended consequence of credit availability expansion has been the necessity of debt use to achieve “middle class” milestones for nearly 50 years.
The West has distorted housing construction markets with such onerous regulations and taxes that it is reaching the limit of what credit availability can be stretched to. It’s even contributing to the suppression of total fertility rates.
We need to cure the disease of market distortions before we reach the cliff. Restore property rights.
A society built on debt quietly depends on something fragile: trust that sacrifice today will still mean something tomorrow. I wrote an essay recently about deferred reward and the psychological consequences when that trust begins to break down.
https://megfloss.substack.com/p/the-second-marshmallow?r=3vtvi&utm_medium=ios
so how do I advice my 20 year old? Im 55, my advice to her so far is to finish her nursing degree(paid for) and not continue on with education until there is certainty in her field..
so far her plan is to move back home in 4 months, work local and walking distance to her Job and save save save, carry no debt and put away in a retirement fund. Rent is higher than a mortgage payment currently so live with us (relatively) free.
I feel my advice is wrong and robbing her of her 20's, living some what care free as I did.
“The U.S. federal government collected $2.66 trillion in individual income taxes in Fiscal Year (FY) 2025. Combined with other revenue streams—such as corporate income taxes and social insurance—the Internal Revenue Service (IRS) brought in approximately $5.2 trillion in total tax revenue for the year.”
From safari search just now. So, confirming the failure. Who pays more and benefits less? And glass half full can be the frame too, if wished - same outcome.
The USA spends (if keeping up with commitments) @ 20% of the taxes paid by majority Americans to cover our deficit (national debt).
Speaking of debt, is anyone outraged about this $1.7 billion fund settlement - Why are we all still asleep?
The Executive Branch and Congress will never deal with the National Debt. The only way, as a nation, that we will deal with it is: Inflation. Example; Say an insurance company (the Great Recession proved how stupid the industry is) in 1996 bought a 30 year Treasury Bond. The purchasing power that the money that the company just received has dropped by about 50%. That's how America will deal with the National Debt: Pay it off with less valuable dollars.
Now the Deficit appears to be something different, as you pointed out. The US takes in about $5 T in taxes and spends $7 T. Now it looks like, since the interest is $ 1 T, we have to make choices. No! Congress will simply issue more debt to cover an ever increasing amunt of debt service. And then inflation is inevitable. As Ben Bernanke pinted out, if you fly a helicopter over a (stable) economy, you will get inflation. And the Fed can only deal with relatively short term inflation/ recession economic conditions, not long term fiscal recklessness. The Taylor Rule is correct. So if you don't like a 10 year Treasury at 4.6%, get used to it. Deficits produce inlation without any doubt. Why would anybody buy a long term bond, and if not how will America sustain itself?
Always learning something from you, Scott. thank you
Love your stuff scott. Thanks for all the effort.