I responded to a lengthy post on Facebook.com: http://j.mp/nnyCRC this evening which featured the typical "we're totally f'ing f'd!" back-and-forth and decided to chime in. Thought I'd "leverage" it into a blog post:
"Okay, now I know mine isn't popular prevailing opinion today, but after a lot of thought over the years about what the proper ratio of debt a nation desirous of high-growth and low inflation should carry, and I have to disagree: I don't think we're over-leveraged at all.
That isn't to say I think we're spending the right amounts of money in the right places, I don't. I'm a Libertarian-leaning Conservative (I know, how does this reconcile?) and I believe that the governments job ought to be limited to insuring adequate defense of its citizens health and property, and promotion of a fair and robust economy.
However, as a question of pure economics, I believe we should have taken-on more debt, ESPECIALLY if we believed hard times are ahead. At the core of the question is the term "leverage". In business you understand that leverage is essential as a term to any CEO in wont of building anything of greatness; it accelerates growth and often hastens arrival at the desired end-state. An inability to leverage a governments revenue and asset-base invariably lead to the same disastrous outcome for a nation as it would a business.
Economic leverage typically requires at least one but typically both revenue inflows and assets (a collateral base). It maddens me to no end that all the bird-brained media chicken-littles have America peeing in the corner in terror inre our being over-leveraged; they are never neglect in speaking about spending deficits and gross national debt, I also often hear about "$40 trillion in unfunded liabilities in the next thousand years...squawk squawk"...but let me ask you: when was the last time you heard ANYONE in the media mention our our stock of Broad or Narrow Money, of Foreign or Domestic Credit, or our National Balance Sheet? Never?
How many companies would you buy (or sell for that matter) if the assets of the business weren't taken into account? Obviously rhetorical, because only a maniac or invalid would do such a thing. So why I ask is the media screeching about important policy when such absolutely fundamental elements of it are completely ignored? My guess is because we, by and large, as a public aren't yet educated on such things.
What's the bottom line on America, Inc.'s Balance Sheet?
Rutledge Capital's analysis pegs it at roughly $188 Trillion.
Now that, THAT is a big number."