Op-Ed: America the sort-of solvent – 1929 may do a fatal encore

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Let’s admit it. Massive debt is such fun. Interest rates, private debt, public debt, and business debt are sometimes headlines, generally with no comprehension, and usually for political reasons.

…Or far more likely to keep useless media placeholders in jobs. Nothing at all is actually being done about any of it.  They’re background noise.

Meanwhile, it’s nearly 100 years since 1929. There hasn’t been a major financial crash for nearly 20 years. The same geniuses that caused the last crash are still smugly alive. Never mind the doomsaying, we have the means and the people to screw up on a bigger scale than ever before.

You’d think it’d be an interesting tale of heroic warnings and savvy risk evasion. Ah…Maybe not. The cliff is still patiently waiting for everyone to go over it. To do that, you need leadership and guidance. You know, someone smart and clever and corrupt and remarkably schmuck-like.

Wonder where you’d find one of those? No, you don’t wonder. You know.

You may glimpse from your jewel-soaked palace a few interesting things about this situation. All you need is a level of incomprehension that makes a house brick look like Einstein.

Like, for instance:   

America’s credit rating was downgraded last year, no sign of any interest from anyone, pun intended. That makes money more expensive on top of interest rates. Add to this the cost of “living”. Now see if you can figure out how to have a life so you can pay for it.

There’s an interesting issue here – The further up the financial beanstalk you are, the less you are prepared to admit you know about fundamental economics, or anything else.

Maybe I should explain with more relatable analogies – There’s no Off switch. You’re not looking at a cartoon. You and this idiocy are on the same planet. Dumb things happen.

Analogies can only do so much before they give up in disgust. I do get that.

Here’s the basic equation: Higher debts = higher demand for money = higher interest rates = higher prices.

A lot of this is done to consolidate old debts and pretend you’ve done something right.

The secondary equation is even more glamorous: Unaffordability of everything due to higher prices = massive inflation = crashing real asset values.

Every time this happens, your money is worthless. Eventually, you go “Squish!” and admirers dispose of you thoughtfully.

If a million bucks won’t buy you the time of day, what use is a million bucks?

The big secret here, and don’t tell anyone, particularly yourself, is that most people aren’t millionaires. How thoughtless of you. Now add the secret ingredient, which is the theory that lots and lots more people out of work are good for the economy.

They’re good for the economy because more people out of work might reduce rates and save some billionaires a few bucks on loans. The national increase in chronic poverty is just a bonus. Get it right, and nobody will ever be able to afford the time of day.

Fortunately, these aren’t topics for serious discussion. They’re grudgingly allowed to be mentioned in occasional articles to make it look like someone in media is economically literate. Nobody is expected to read them, let alone understand them.

Private American credit is a constant rustle. This is the debt that keeps brutalizing “the public”, that well-known theoretical human demographic which couldn’t possibly really exist. If you can afford to be even a theoretical human, you may be doing much better than you think. Otherwise, stick to being a raccoon. It’s safer.  

Business debt is a sleek, self-satisfied open wound. Silicon Valley Bank proved how easy it is to keep a few billion dollars happy. On the financial markets, you can buy other people’s triple ZZZ-rated debts. The debt market is a picture of rustic contentment for no apparent reason. This is value? Says who, and why?

The markets don’t seem to know where the cliff is. At what point does the Great X Box of the US economy blow a severely overloaded fuse? You might see something about wars and routine disasters. You might see something about abortion and the human rights issues related to reproduction. (Well, so what? Nobody can afford to have kids anyway. You need gold sneakers, not children.)

On a completely unrelated matter, the US economy makes the US nuclear arsenal look positively irrelevant. America’s greatest power is its economy. You know, the one you’re running into the ground? Yeah, that one, with the waggly tail and management mange.

If America falls over, nobody can afford to pick it up. The risks are much higher than 1929.

If you wanted to destroy America, destroying the economy with so many bad calls would be the easy way. What you really need are more idiots to make sure that happens. Can’t afford an idiot? Take out a loan.