If you were wondering why the economy and our political institutions are so badly broken, remember this brand of insanity is the fiscal wisdom among many elites.
“We are spending money we don’t have,” Mr. Bloomberg explained. “It’s not like your household. In your household, people are saying, ‘Oh, you can’t spend money you don’t have.’ That is true for your household because nobody is going to lend you an infinite amount of money. When it comes to the United States federal government, people do seem willing to lend us an infinite amount of money. … Our debt is so big and so many people own it that it’s preposterous to think that they would stop selling us more. It’s the old story: If you owe the bank $50,000, you got a problem. If you owe the bank $50 million, they got a problem. And that’s a problem for the lenders. They can’t stop lending us more money.”
Well you see they can. Because money isn’t actually infinite. They only keep lending it to you as an investment. If you can’t repay the money or they run out of people willing to gamble on Too Big To Fail Socialism, then infinite becomes a very finite amount.
There are real problems with this brand of Wall Street cynicism that seems to have infested the liberal camp. Credit isn’t some magic perpetual motion machine. Wiping out the credit of the United States does not result in infinite money, but in a lack of money and a huge pile of debt.
Credit is finite. If Bloomberg genuinely doesn’t understand this, then that level of ignorance is downright scary.