Call on our rich uncle
My family is very fortunate to have a rich uncle who will loan us all the money we need to make investments for our future. We can borrow at very low interest rates now, and we never have to repay the loans; we just renew the notes. Some members wrongly believe that these notes will have to be paid.
My family is the United States of America. Like any family, we invest in our future with borrowed money for education, health care, infrastructure, scientific research, etc. We haven’t been doing much of that lately. Teavangelicals are afraid of the debt. It is not the size of the debt, but the debt-to-GDP ratio that matters. Investment spending will grow the economy (GDP) faster than the debt over time. If we invest now, that ratio will go down just like it did from 1945 to 1980 (120 percent to 30 percent). We still owe our war debt of $240 billion in 1945 and Ronald Reagan’s debt of $2.9 trillion in 1989. (Reagan tripled U.S. public debt from $998 billion to $2.9 trillion.)
When does investment spending become consumption spending? When we feed nutritious meals to poor children, that is investment spending. When the government feeds the well-off, that is consumption spending. When we give medical care to those who cannot afford it, that is investment spending. Giving free medical care to the rich is consumption spending. Now, apply this to all government spending, including tax cuts.
Our rich uncle will loan us the money for investments because it will grow the economy, reduce the debt-to-GDP ratio, and increase revenue, but not for consumption spending because that leads to inflation. If that happens, our rich uncle can take money out of the economy by selling our notes and increasing interest rates. The Federal Reserve is our rich uncle.
RUUD DUVALL Fayetteville