Let me start with the obvious: Since when is it a debate that is for the purpose of informing the people when it is conducted by and on a subscription-only cable channel?
CNBC, of course, is entitled to try to make money. But why is it that the entirety of the Republican field allowed this to take place without insisting that the debate be able to be watched without a cable TV subscription? What of those people who dont have one or cant afford one? Is their participation not important?
It got better quickly. The so-called moderators were clearly trying to incite one candidate against another, and I give the candidates credit for largely refusing to take the bait, with a few of them even pushing back aggressively and justifiably so against such tactics.
But where the debate was billed as a hard-core economic discussion it utterly failed. As I have repeatedly pointed out there are two fundamental problems with our economic future that must be addressed and one was evaded by the moderators while the other the moderators conflated and then refused to separate and demand answers to from the candidates.
The first is that our so-called economic growth paradigm in the last 30 years has been driven by declining interest rates. This in turn has led to financial leverage being used as a substitute for actual growth borrowed money spends exactly as does earned surplus!
In 1982 there was $5.13 trillion in outstanding debt in the United States economy. Today there is $62.3 trillion, 12.1x more. GDP during the same period went from $3.3 trillion to $17.9 trillion, a 5.4x multiple.
Debt has grown at more than double GDP; or to put it another way more than half of so-called GDP advancement wasnt real.
This is where the problem with the argument for well do 4% GDP under my Presidency! claims run into reality. That advancement was all due to increasing financial leverage.
To put a historical background on this lets look at 1951 to 1982. GDP went from $360 billion to $3.3 trillion, or a 9.16x increase. But debt during the same period went from $470 billion to $5.5 trillion, an 11.7x increase. Put another way about 25% of the increase in GDP during that period was due to increasing leverage (not actual output improvement) rather than more than half, and while the economy increased in size by 9.16x in nominal terms the stock market only managed to increase in value by less than 3x.
First, at the beginning of the period debt was only 129% of GDP. Thus, even in a generally flat-to-rising rate environment there was more room to add debt. By 1982 this had increased to 168% of GDP.
Right now, with rates at record lows, that ratio stands at 348% of GDP. There is no more room to add debt even in a flatrate environment, and if rates rise then catastrophe lurks around the corner for so-called growth.
This means that even in the benign scenario there is no 4% GDP number in our future on any sort of realistic basis. 2%, which is just 1% on a population-adjusted basis (since our population grows by about 1% a year) is the best youre going to get.
This in turn implies that productivity + that expansion is all you can expect from markets at their best, and yet weve had six years, arguably, of gross outperformance most of which has to come back off either through time or price, and if its through time it will be decades of time.
Its more likely to happen through price.
Now given this reality, the second point comes into focus: Entitlements, because you cannot grow out of the mess since the secular environment that allowed that nominal increase (which was a chimera) has ended and cannot be continued.
The issue is not Social Security. If the politicians try to gut Social Security to save other handouts, after demanding that the people pay that tax (which I remind you is 13% of every dollar you earn up to the cap) for decades they deserve to be impeached, indicted and imprisoned, and if they defer the pain until after theyre out of office to evade that sanction we the people ought to work corruption of their blood on a private employment and social basis. Its unconstitutional to do so via the law but nobody can make you sit next to someone in church or choose to hire them or even walk on the same side of the street, and that includes their children, spouses and even grandchildren. Since these politicians think its perfectly appropriate to financially gang***** our kids its only reasonable for the same sanction to be applied to theirs, and we both can, should and indeed must make clear that we the people will do exactly that.
No, the issue in the budget is entirely in Medicare and Medicaid, and exists entirely due to monopoly protections. The only thing I heard on this point were candidates supporting reimportation. Do you understand, America, that there is nothing to support here? Reimportation is unlawful because it was made illegal by politicians denying your basic right to purchase, own and dispose of something you lawfully own as you wish.
In other words this issue only arises because the politicians put a boot on your neck and a gun up your ass in the first place.
Where did they get the right to do that? They never had it, yet they arrogated it to themselves.
There is no issue here to resolve other than prosecuting everyone involved in the violation of basic property rights the right to transact as you wish, the right to own that which you purchase and the right to dispose of that which you own at any agreed set of terms with anyone else who wishes to transact with you.
The very same premise applies to essentially every other area of the medical system. Consumer protection laws are supposed to prevent monopolist abuse, refusal to name prices until after a service is performed or a good tendered, naming a price then billing someone at a higher price, billing someone for services never performed and similar. All of these practices are illegal and that law is enforced in any line of work save one medicine.
Simply enforce the damned law. Lock up a bunch of doctors and hospital administrators and this crap will instantly stop and with it, the cost of medicine will collapse by 80%.
END OF PROBLEM both for the public and government budgets.
Its not hard folks, but neither the CNBS moderators nor the candidates brought this to the table.
These people are all in with each other in robbing you blind so this industry can get whatever they want, and literally hold your death over your head to obtain it.
The deserve no deference, no courtesy and no cooperation of any sort.
Guest post courtesy of Market Ticker.