Thread: Increasing Debt Increases Economic Growth Say the Keynesians

Increasing Debt Increases Economic Growth Say the Keynesians

Economics / US Debt
Apr 02, 2010 - 07:45 AM

By: Gary_North


You may not have watched my video seminar, "Retirement Armageddon." It's here. http://www.garynorth.com/public/6059.cfm

Let me explain why you should.

In fiscal 2010, the Federal debt will increase by an estimated $1.5 trillion, give or take $100 billion.

Have you estimated your share yet? Probably not.

Divide $1.5 trillion by 300 million Americans. The figure is $5,000.

Every American resident, from oldsters to infants, just got hit with an extra $5,000 tab. This is on top of what he already owes. What does he already owe? Something in the range of $300,000: a $90 trillion total debt divided by 300 million.

It will happen again next year. And the next. We are told that the deficit over the next decade will be in the range of $900 billion a year. That is $3,000 per person. This is a low-ball estimate.

We are talking about the on-budget debt, which is in the range of $12.7 trillion this week. What about the off-budget debt of the two trust funds: Social Security and Medicare? The estimated unfunded liability is about $75 trillion this year. Some say it is more. I will be conservative.

This will not be funded. Congress will kick the can, as always.

In a mortgage in which the debtor pays nothing – interest or principal – each missed payment is added to the principal owed. This is sometimes called a backward-walking mortgage. Option ARM mortgages are backward-walking. The trust funds are comparable to mortgages. They are therefore backward walking.

If we assume that the interest rate on these obligations is in the range of 5% over 75 years, and principal repayment is 1.33% (100% divided by 75), then the amortization rate is about 6.3%. Let's be conservative. Call it 6%. If you multiply $75 trillion by .06, you get $4.5 trillion. This is the unfunded liability for fiscal 2010. It is tacked onto the existing $75 trillion.

So, the increased debt per person of the two forms of Federal debt totals $6 trillion ($4.5t + $1.5t). Divided by 300 million Americans, that is $20,000. In one year. This will continue until the debt is paid off.

It will happen again in fiscal 2011. But in fiscal 2011, the "mortgage" will be $79.5 trillion, not this year's $75 trillion.

How many Americans understand this? The infants do not understand. The oldsters don't care. Neither do the people in the middle.

As we all know, most Americans pay relatively few taxes. The tax burden is borne by others. So, your share is way above $20,000 this year. It will be way above $20,000 next year.

Will these debts ever be paid off? No. Will there be a default? Of course. Do the politicians factor this into their plans? Of course not. Do the economists sound a warning? Only Austrian School economists.

Do you believe this scenario? I mean, really, truly believe it? Sit down with a copy of Quicken or your financial software. How much money did you invest last year in assets that will not be wiped out in the inevitable default? That exercise will tell you how much you believe it.

THE GDP/DEBT RATIO

We are now facing a monumental debt crisis. We were warned. From the recession of 2001 until his death in August 2007, Dr. Kurt Richebächer warned in his monthly newsletter about an ominous development in the U.S. economy. The level of increased debt necessary to produce one additional dollar in GDP was rising. He said repeatedly that this would eventually produce a major financial crisis. The increased debt would require increased production to finance it, quarter by quarter, let alone repay it. If economic output per dollar of increased debt is declining, there will come a day when an increased dollar of debt will lead to negative returns.

We are there. We reached that point in 2008. It continued through 2009. GDP fell, yet total debt increased. Here is a chart that describes this falling ratio, GDP to debt, 1965–2000. http://www.garynorth.com/public/6284.cfm

The problem is debt financing. If creditors see that their loans will not be able to be funded by the borrowers, quarter by quarter, they will cease lending money at low interest rates. They will demand a higher return in order to compensate them for the increased risk of default. Borrowers will have to pay rising interest rates in order to persuade lenders to continue lending. The cost of capital will rise. The return on investment will fall.

At that point, rolling over the existing debt will become a matter of institutional survival for borrowers. Corporate borrowers use banks as a way to keep the doors open. Governments rely on non-bank lenders, such as insurance companies and retirement funds. But all of them are in the same ship of debt. They cannot afford to have the flow of funds cut off. If this were to happen, they would have to shut their doors and declare bankruptcy.

Small businesses are already facing a crisis. Commercial banks have ceased lending. Banks are actually contracting their loan portfolios. http://www.garynorth.com/public/6285.cfm

Borrowers are still able to get lenders to lend at low rates. This is because of the state of the economy. It is no longer suffering from the threat of immediate price inflation. Interest rates have fallen. Lenders have decided that T-bills are safe. They are letting the Treasury borrow at rates well under two-tenths of a percent. This has affected other rates. They are lower. Lenders are not yet ready to consider the long-run implications of the incredibly low return on investment in terms of economic output – negative in 2008 and 2009. The rate of return may have been slightly positive since mid-2009. We will find out next quarter, when the report is published.

THE KEYNESIAN BUCK

The phrase, "More bang for the buck," became popular in Washington during the Vietnam War. It referred to Defense Secretary McNamara's attempt to increase the efficiency of the military forces in Vietnam. He wanted larger kill/budget ratios. He demanded that all assessments be accompanied with objective data. He used this phrase to filter all assessments not based on objective data: "I'm not interested in your poetry." The commanders got the message. They supplied him with impressive information on kill ratios. The dead were always military forces, never civilians, by definition. Then the North Vietnamese won the war. The kill ratio kept rising, but the war was lost. The North Vietnamese turned out to be exceptionally good poets. They won the war in the American media and in undermining the will to resist in South Vietnam's troops.

Keynesians are equally committed to data. They believe that an economic downturn can be reversed by increased debt, especially government debt. They argue that the recession is the result of insufficient aggregate demand. The Federal government must step in and supply this demand. How? By borrowing money. But won't this borrowing reduce the supply of capital to the private sectors? No, say Keynesians. Then where does the money come from? From people who would have converted their money to currency and hidden it under the mattress.

Keynesian theory is based on 1936 models of how people behave. People withdrew currency from banks, 1931–34, before the FDIC. Therefore, they will do it again if the Federal government does not increase spending by increasing its debt. Forget about the FDIC. Forget about the fact that money saved is invested.

You may think I am exaggerating for effect. I wish I were. I have discussed this Keynesian outlook elsewhere. http://www.lewrockwell.com/north/north822.html

Keynesians view increased government spending/debt as a way to increase aggregate demand, despite the fact that the money lent to the government comes from private savers, with this exception: when it comes from central banks. These days, about half of the Treasury's debt is bought by foreign central banks, which create domestic fiat money, buy U.S. dollars, and purchase U.S. Treasury debt.

To the extent that foreign central banks do this, and would not otherwise buy the U.S. dollar, the Keynesians have a legitimate point. There is an increase in demand. But this increase keeps prices higher in the U.S. than they would have been. Without this increased demand for Treasury debt, the Federal government could not have spent the borrowed money. Then Americans would have purchased either consumer goods or production goods. When they put money in a bank, the bank lends it. Historically, this has meant lending the deposits to borrowers.

This time, however, there has been a change. Commercial banks have deposited over $1 trillion in their excess reserve accounts at the Federal Reserve. This sterilizes the money. It does not get spent. This is the fault of prior Federal Reserve policies. Commercial bankers are afraid to lend money in this economy.

This is why prices from January to February this year were flat. The CPI did not change. Neither did the Median CPI. In a free market with stable money, prices would generally decline as output increases. Central banks have not allowed this in the modern world. But now, because of excess reserves, it is happening.

INCREASED DEBT INCREASES THE GDP, SAY KEYNESIANS

The basis of Keynesian fiscal policies in an economic slump is a theory that increased government debt will increase aggregate demand, which will in turn lead producers to hire more people and buy more resources in order to meet future rising demand. The increased debt gives the economy a much-needed shot in the arm – or, these days, a shot in the ARMs. The government stabilizes demand, and this increases the confidence of producers.

The commercial bankers are not yet persuaded. They refuse to lend. They see big trouble ahead: commercial real estate loan losses. They want liquid reserves available to keep them from having to call in commercial loans to cover the expected losses in their portfolios.

We are told repeatedly that the recovery is weak. Bernanke keeps telling anyone who will listen that the FED will keep rates – meaning the federal funds rate – at or below 0.25%. The market is doing this, not the FED. The FED need only do nothing to achieve this result. Banks are not lending overnight to other banks, because they have such high excess reserves at the FED that they do not need overnight loans to keep from exceeding their legal reserve requirement.

As the increased output per dollar of increased debt has gone negative, the Keynesians have called for even more debt. They have said that the $787 billion stimulus passed in October 2008 was not enough. But the trend of the GDP to debt has been falling for decades. This was not some overnight problem in late 2008. The ratio went sharply negative. This was a surprise to everyone except Austrian School economists. But this was merely the result of the severity of the recession in relation to the massive Federal stimulus. The numbers got much worse very fast. But this was an extension of a long trend.

The Keynesians have taken credit for the recovery, such as it is. They have argued that things would have been much worse if Congress had not ignored the voters and passed the bailout. But the weakness of the recovery and the size of the Federal deficit indicate that the Keynesian prescription for prosperity is about to produce undeniably negative results.

The size of the predicted annual Federal deficits is so large that the economic recovery must be unprecedented in its rate of increase and sustained for a decade if the decline in the GDP to debt ratio is to return to pre-2008 levels. No one in authority in Washington is predicting either outcome. On the contrary, they are predicting a weak recovery.

Keynesians are facing a crisis in faith. If the GDP/debt ratio continues to hover around 0, the Keynesian prescription will not solve the problem: massive escalating debt without an even greater percentage increase in output. That will mean that the U.S. economy cannot grow its way out of the present crisis. Such a failure will call all school of economic thought into question. The exception is the Austrian School.

CONCLUSION

We are way beyond the point of return economically. There is no possibility that the economy will grow its way out of this level of debt. There is no way that there will not be a default. The experts keep telling us that the economy can grow its way out, but they do not say how. They talk as if growth were automatic, as if capital accumulation were automatic, as if the Treasury were not absorbing $1.5 trillion in additional capital this year, as if the numbers really did add up. The numbers do add up: to default.

What have you done so far to protect yourself?

What extra will you do to protect yourself?

http://www.marketoracle.co.uk/Article18363.html

"Should government refrain from regulation (taxation), the worthlessness of the money becomes apparent and the fraud can no longer be concealed." -- John Maynard Keynes

"Every Congressman, every Senator knows precisely what causes inflation...but can't, [won't] support the drastic reforms to stop it [repeal of the Federal Reserve Act] because it could cost him his job." -- Robert A. Heinlein, Expanded Universe

My answer to the Keynesians, is the Austrian Economics

What is Austrian Economics?
(essay in pdf)
The Austrian School
The story of the Austrian School begins in the fifteenth century, when the followers of St. Thomas Aquinas, writing and teaching at the University of Salamanca in Spain, sought to explain the full range of human action and social organization.

These Late Scholastics observed the existence of economic law, inexorable forces of cause and effect that operate very much as other natural laws. Over the course of several generations, they discovered and explained the laws of supply and demand, the cause of inflation, the operation of foreign exchange rates, and the subjective nature of economic value--all reasons Joseph Schumpeter celebrated them as the first real economists.

The Late Scholastics were advocates of property rights and the freedom to contract and trade. They celebrated the contribution of business to society, while doggedly opposing taxes, price controls, and regulations that inhibited enterprise. As moral theologians, they urged governments to obey ethical strictures against theft and murder. And they lived up to Ludwig von Mises's rule: the first job of an economist is to tell governments what they cannot do.

The first general treatise on economics, Essay on the Nature of Commerce, was written in 1730 by Richard Cantillon, a man schooled in the scholastic tradition. Born in Ireland, he emigrated to France. He saw economics as an independent area of investigation, and explained the formation of prices using the "thought experiment." He understood the market as an entrepreneurial process, and held to an Austrian theory of money creation: that it enters the economy in a step-by-step fashion, disrupting prices along the way.

Cantillon was followed by Anne Robert Jacques Turgot, the pro-market French aristocrat and finance minister under the ancien regime. His economic writings were few but profound. His paper "Value and Money" spelled out the origins of money, and the nature of economic choice: that it reflects the subjective rankings of an individual's preferences. Turgot solved the famous diamond-water paradox that baffled later classical economists, articulated the law of diminishing returns, and criticized usury laws (a sticking point with the Late Scholastics). He favored a classical liberal approach to economic policy, recommending a repeal of all special privileges granted to government-connected industries.

Turgot was the intellectual father of a long line of great French economists of the eighteenth and nineteenth century, most prominently Jean Baptiste Say and Claude-Frederic Bastiat. Say was the first economist to think deeply about economic method. He realized that economics is not about the amassing of data, but rather about the verbal elucidation of universal facts (for example, wants are unlimited, means are scarce) and their logical implications.

Say discovered the productivity theory of resource pricing, the role of capital in the division of labor, and "Say's Law": there can never be sustained "overproduction" or "underconsumption" on the free market if prices are allowed to adjust. He was a defender of laissez-faire and the industrial revolution, as was Bastiat. As a free-market journalist, Bastiat also argued that nonmaterial services are subject to the same economic laws as material goods. In one of his many economic allegories, Bastiat spelled out the "broken-window fallacy" later popularized by Henry Hazlitt.

Despite the theoretical sophistication of this developing pre-Austrian tradition, the British school of the late eighteenth and early nineteenth centuries won the day, mostly for political reasons. This British tradition (based on the objective-cost and labor-productivity theory of value) ultimately led to the rise of the Marxist doctrine of capitalist exploitation.

The dominant British tradition received its first serious challenge in many years when Carl Menger's Principles of Economics was published in 1871. Menger, the founder of the Austrian School proper, resurrected the Scholastic-French approach to economics, and put it on firmer ground.

Together with the contemporaneous writings of Leon Walras and Stanley Jevons, Menger spelled out the subjective basis of economic value, and fully explained, for the first time, the theory of marginal utility (the greater the number of units of a good that an individual possesses, the less he will value any given unit). In addition, Menger showed how money originates in a free market when the most marketable commodity is desired, not for consumption, but for use in trading for other goods.

Menger's book was a pillar of the "marginalist revolution" in the history of economic science. When Mises said it "made an economist" out of him, he was not only referring to Menger's theory of money and prices, but also his approach to the discipline itself. Like his predecessors in the tradition, Menger was a classical liberal and methodological individualist, viewing economics as the science of individual choice. His Investigations, which came out twelve years later, battled the German Historical School, which rejected theory and saw economics as the accumulation of data in service of the state.

As professor of economics at the University of Vienna, and then tutor to the young but ill-fated Crown Prince Rudolf of the House of Habsburg, Menger restored economics as the science of human action based on deductive logic, and prepared the way for later theorists to counter the influence of socialist thought. Indeed, his student Friederich von Wieser strongly influenced Friedrich von Hayek's later writings. Menger's work remains an excellent introduction to the economic way of thinking. At some level, every Austrian since has seen himself as a student of Menger.

Menger's admirer and follower at the University of Innsbruck, Eugen von Boehm-Bawerk, took Menger's exposition, reformulated it, and applied it to a host of new problems involving value, price, capital, and interest. His History and Critique of Interest Theories, appearing in 1884, is a sweeping account of fallacies in the history of thought and a firm defense of the idea that the interest rate is not an artificial construct but an inherent part of the market. It reflects the universal fact of "time preference," the tendency of people to prefer satisfaction of wants sooner rather than later (a theory later expanded and defended by Frank Fetter).

Boehm-Bawerk's Positive Theory of Capital demonstrated that the normal rate of business profit is the interest rate. Capitalists save money, pay laborers, and wait until the final product is sold to receive profit. In addition, he demonstrated that capital is not homogeneous but an intricate and diverse structure that has a time dimension. A growing economy is not just a consequence of increased capital investment, but also of longer and longer processes of production.

Boehm-Bawerk engaged in a prolonged battle with the Marxists over the exploitation theory of capital, and refuted the socialist doctrine of capital and wages long before the communists came to power in Russia. Boehm-Bawerk also conducted a seminar that would later become the model for Mises's own Vienna seminar.

Boehm-Bawerk favored policies that deferred to the ever-present reality of economic law. He regarded interventionism as an attack on market economic forces that cannot succeed in the long run. In the last years of the Habsburg monarchy, he three times served as finance minister, fighting for balanced budgets, sound money and the gold standard, free trade, and the repeal of export subsidies and other monopoly privileges.

It was his research and writing that solidified the status of the Austrian School as a unified way of looking at economic problems, and set the stage for the School to make huge inroads in the English-speaking world. But one area where Boehm-Bawerk had not elaborated on the analysis of Menger was money, the institutional intersection of the "micro" and "macro" approach. A young Mises, economic advisor to the Austrian Chamber of Commerce, took on the challenge.

The result of Mises's research was The Theory of Money and Credit, published in 1912. He spelled out how the theory of marginal utility applies to money, and laid out his "regression theorem," showing that money not only originates in the market, but must always do so. Drawing on the British Currency School, Knut Wicksell's theory of interest rates, and Boehm-Bawerk's theory of the structure of production, Mises presented the broad outline of the Austrian theory of the business cycle. A year later, Mises was appointed to the faculty of the University of Vienna, and Boehm-Bawerk's seminar spent a full two semesters debating Mises's book.

Mises's career was interrupted for four years by World War I. He spent three of those years as an artillery officer, and one as a staff officer in economic intelligence. At war's end, he published Nation, State, and Economy (1919), arguing on behalf of the economic and cultural freedoms of minorities in the now-shattered empire, and spelling out a theory of the economics of war. Meanwhile, Mises's monetary theory received attention in the U.S. through the work of Benjamin M. Anderson, Jr., an economist at Chase National Bank. (Mises's book was panned by John Maynard Keynes, who later admitted he could not read German.)

In the political chaos after the war, the main theoretician of the now-socialist Austrian government was Marxist Otto Bauer. Knowing Bauer from the Boehm-Bawerk seminar, Mises explained economics to him night after night, eventually convincing him to back away from Bolshevik-style policies. The Austrian socialists never forgave Mises for this, waging war against him in academic politics and successfully preventing him from getting a paid professorship at the university.

Undeterred, Mises turned to the problem of socialism itself, writing a blockbuster essay in 1921, which he turned into the book Socialism over the next two years. Socialism permits no private property or exchange in capital goods, and thus no way for resources to find their most highly valued use. Socialism, Mises predicted, would result in utter chaos and the end of civilization.

Mises challenged the socialists to explain, in economic terms, precisely how their system would work, a task which the socialists had heretofore avoided. The debate between the Austrians and the socialists continued for the next decade and beyond, and, until the collapse of world socialism in 1989, academics had long thought that the debate was resolved in favor of the socialists.

Meanwhile, Mises's arguments on behalf of the free market attracted a group of converts from the socialist cause, including Hayek, Wilhelm Roepke, and Lionel Robbins. Mises began holding a private seminar in his offices at the Chamber of Commerce that was attended by Fritz Machlup, Oskar Morgenstern, Gottfried von Haberler, Alfred Schutz, Richard von Strigl, Eric Voegelin, Paul Rosenstein-Rodan, and many other intellectuals from all over Europe.

Also during the 1920s and 30s, Mises was battling on two other academic fronts. He delivered the decisive blow to the German Historical School with a series of essays in defense of the deductive method in economics, which he would later call praxeology or the logic of action. He also founded the Austrian Institute for Business Cycle Research, and put his student Hayek in charge of it.

During these years, Hayek and Mises authored many studies on the business cycle, warned of the danger of credit expansion, and predicted the coming currency crisis. This work was cited by the Nobel Prize committee in 1974 when Hayek received the award for economics. Working in England and America, Hayek later became a prime opponent of Keynesian economics with books on exchange rates, capital theory, and monetary reform. His popular book Road to Serfdom helped revive the classical liberal movement in America after the New Deal and World War II. And his series Law, Legislation, and Liberty elaborated on the Late Scholastic approach to law, and applied it to criticize egalitarianism and nostrums like social justice.

In the late 1930s, after suffering from the worldwide depression, Austria was threatened by a Nazi takeover. Hayek had already left for London in 1931 at Mises's urging, and in 1934, Mises himself moved to Geneva to teach and write at the International Institute for Graduate Studies, later emigrating to the United States. Knowing Mises as the sworn enemy of national socialism, the Nazis confiscated Mises's papers from his apartment and hid them for the duration of the war. Ironically, it was Mises's ideas, filtered through the work of Roepke and the statesmanship of Ludwig Erhard, that led to Germany's postwar economic reforms and rebuilt the country. Then, in 1992, Austrian archivists discovered Mises's stolen Vienna papers in a reopened archive in Moscow.

While in Geneva, Mises's wrote his masterwork, Nationalokonomie, and, after coming to the United States, revised and expanded it into Human Action, which appeared in 1949. His student Murray N. Rothbard called it "Mises's greatest achievement and one of the finest products of the human mind in our century. It is economics made whole." The appearance of this work was the hinge of the whole history of the Austrian School, and it remains the economic treatise that defines the School. Even so, it was not well received in the economics profession, which had already made a decisive turn towards Keynesian.

Though Mises never held the paid academic post he deserved, he gathered students around him at New York University, just as he had in Vienna. Even before Mises emigrated, journalist Henry Hazlitt had become his most prominent champion, reviewing his books in the New York Times and Newsweek, and popularizing his ideas in such classics as Economics in One Lesson. Yet Hazlitt made his own contributions to the Austrian School. He wrote a line-by-line critique of Keynes's General Theory, defended the writings of Say, and restored him to a central place in Austrian macroeconomic theory. Hazlitt followed Mises's example of intransigent adherence to principle, and as a result was pushed out of four high-profile positions in the journalistic world.

Mises's New York seminar continued until two years before his death in 1973. During those years, Rothbard was his student. Indeed, Rothbard's Man, Economy, and State (1963) was patterned after Human Action, and in some areas--monopoly theory, utility and welfare, and the theory of the state--tightened and strengthened Mises's own views. Rothbard's approach to the Austrian School followed directly in the line of Late Scholastic thought by applying economic science within a framework of a natural-rights theory of property. What resulted was a full-fledged defense of a capitalistic and stateless social order, based on property and freedom of association and contract.

Rothbard followed his economic treatise with an investigation of the great depression, which applied Austrian business cycle theory to show that the stock market crash and economic downturn was attributable to a prior bank credit expansion. Then in a series of studies on government policy, he established the theoretical framework for examining the effects of all types of intervention in the market.

In his later years, Mises saw the beginnings of the revival of the Austrian School that dates from the appearance of Man, Economy, and State and continues to this day. It was Rothbard who firmly established the Austrian School and classical liberal doctrine in the U.S., especially with Conceived in Liberty, his four-volume history of colonial America and the secession from Britain. The reunion of natural-rights theory and the Austrian School came in his philosophical work, The Ethics of Liberty, all while he was writing a series of scholarly economic pieces gathered in the two-volume Logic of Action, published in Edward Elgar's "Economists of the Century" series.

These seminal works serve as the crucial link between the Mises-Hayek generation and the Austrians now working to expand the tradition. Indeed, without Rothbard's willingness to defy the intellectual trends of his time, progress in the Austrian School tradition might have come to a halt. As it was, his wide and deep scholarship, cheerful personality, encyclopedic knowledge, and optimistic outlook inspired countless students to turn their attention to the cause of liberty.

Though Austrians are now in a more prominent position than at any point since the 1930s, Rothbard, like Mises before him, was not well treated by academia. Although he held a chair in his later years at the University of Nevada, Las Vegas, he never taught in a capacity that permitted him to direct dissertations. Nonetheless, he managed to recruit a large, active, and interdisciplinary following for the Austrian School.

The founding of the Ludwig von Mises Institute in 1982, with the aid of Margit von Mises as well as Hayek and Hazlitt, provided a range of new opportunities for both Rothbard and the Austrian School. Through a steady stream of academic conferences, instructional seminars, books, monographs, newsletters, studies, and even films, Rothbard and the Mises Institute carried the Austrian School forward into the post-socialist age.

The first issue of the Rothbard-edited Review of Austrian Economics appeared in 1987, became a semiannual in 1991, and becomes a quarterly in 1998, The Quarterly Journal of Austrian Economics. The Mises Institute's instructional summer school has been held every year since 1984. For many of these years, Rothbard presented his research into the history of economic thought. This culminated in his two-volume An Austrian Perspective on the History of Economic Thought, which broadens the history of the discipline to encompass centuries of writing.

Through the Mises Institute's student fellowships, study guides, bibliographies, and conferences, the Austrian School has permeated, at some level, virtually every department of economics and the social sciences in America, and in many foreign countries as well. The annual Austrian Scholars Conference at Auburn University attracts scholars from around the world to discuss, debate, and apply the entire Austrian tradition.

The fascinating history of this great body of thought, through all its ebbs and flows, is the story of how great minds can advance science and oppose evil with creativity and courage. Now the Austrian School enters a new millennium as the intellectual standard bearer for the free society. That it does so is thanks to the heroic and brilliant minds that make up the family history of the School, and to those who are carrying that legacy forward with the Ludwig von Mises Institute.

It matters not what economic theorists say from their ivory towers, as it seems one thing that gets left out is the effect on the peons (us.)
Years ago I had a debate with a guy from across the pond. He said if a home cost $100,000, he would pay cash and buy one home. I argued that with only $10,000 down, I could get ten homes, living in one and renting out the others which would cover my mortgage as well as mortgages on the others. This was the beginning of the FL real estate inflation bubble that has since seriously burst.
For every dollar one borrows, depending on the interest rate, the average is repaying $3. Yep! If I can't pay cash, I cannot afford it. The old guy was right. And if the government would just have the same outlook, we would be better off, even though our super-power reputation would be a bit tarnished.