Michael B. Duff

"Set up for the Great I Told You So. It's not going to work this time. The profession is completely discredited. It's time to shift focus from the debt to the roll risk. This Is the difference this time around. Krugman and the We-are-so-full-of-shit-it's-difficult-for-us-to-even-be-considered-keynesians crowd wants to play the debt off as a problem 30 years from now. It's an almost weekly problem for the treasury at this point. No amount of growth can solve a near-term balance of payment problem except direct monetization of new issue of debt."

BN 11:59 *KRUGMAN SAYS HE WILL SHOW UP NAKED AT ALL MEETINGS UNTIL QE2.0 IS PASSED.

"You can bring your dog with you to the office every day (1 out of 4 employees always has their dog with them)"
"If I can't stand dog, I can't work at Google?"
"Just choose one of the other entrees."

"I'm ready to predict today that QE2 will be formally announced before the end of the month. Whether it takes the form of new direct intervention in the bond market, a new economic "stimulus" package or some combination of both, it is clear now that the announcement is imminent. Why? This Krugman interview is the final signal. Don't think for a moment that Krugman isn't wired in to Dem/Obama politics. These statements today are just trial balloons meant for clearing the road."

"Look, Tyler, don't worry about the ridiculous monthly roll. Take two Krugman columns (any two over the last year or so) and call me in the morning. It's brilliant, I think, that a virtual government should have a virtual budget, thus obviating the problem of "balancing" it or exceeding it. It's a kind of Budgetary Uncertainty Principle, where we exceed the budget only if someone observes us doing so. Otherwise, it doesn't exist."

In case one is wondering why the House Democrats attached a document to the emergency war supplemental bill that "deemed as passed" a non-existent $1.12 trillion budget, which basically allows the ruling party to start spending money for Fiscal Year 2011 without the constraint of an actual budget, here is the answer: on June 30, the US closed the books with just over $13.2 trillion in total debt, an increase of $210 billion in one month, or $2.5 trillion annualized. There is just $1.1 trillion left on the ceiling. As we have long been warning, at the current run rate, the ceiling will be breached in under six months, or just around November 2.

There’s more than this, even. As much as I love Socrates and all of the giants of the agora of the mind, still, from the Greeks to the Romans to the English to the Americans, we have enslaved the human mind under a vicious caste system. Throughout the entire history of the West, cultivation of the mind has almost always been a monopoly of what we might call the equestrian class, the quality folks who live up in the big houses on the hill. This is the source of the enmity evident in that SNL sketch, the petulant resentment of a putative aristocracy that feels its historical privileges are being eroded away.

I am not jaundiced — to the contrary. But I am an old libertarian, and I know from years of paying close attention to events that nothing changes as rapidly as we expect it to, nor as dramatically. Changing trajectories is easy if you are one person on foot, or a dozen folks all loaded into one airplane. But a nation of 300 million souls, each one of us with his own agenda — this is not any easy thing to move. Doesn’t mean it can’t happen, but experience argues that it doesn’t — not very much, not very quickly, not very often.

This is the power of (relatively) free markets. Not only can you buy more stuff, better stuff, stuff that was completely unobtainable in 1964, at the same time very smart people have figured out how to make you much more productive than you would have been in 1964.

If someone who claimed to be in contact with space aliens could give us just a few simple numbers they’d unequivocally prove their case to skeptics. Simply send me (1) the celestial coordinates of the home star, (2) the number of planets orbiting it, (3) their distances from the parent star, (4) and their relative masses. Then all we’d have to do is look at the star and see if the planets were there. Voila!

What the Greeks discovered you are fine until you are not fine with the bond market and if you have a non-credible fiscal strategy of borrowing a $1 tillion a year for the rest of time, never ever again running a balanced budget, at some point the markets are going to get spooked, and I think that point is nearer than Paul Krugman believes. Nothing would spook the markets more than for Paul Krugman's advice to be accepted by the Obama administration. That might well be the trigger."

To chart a course out of this situation, the Right will have to acknowledge that higher taxes are going to have to be part of the solution (a hard thing to write, given my visceral hatred of high taxation). There is no way that the search for “waste, fraud, and abuse” will bear the desired fruits; there is no way that we can grow our way out of this situation. The Left will have to disabuse itself of the illusion that once “Bush’s wars” are over, all will be right.

No wonder America is getting it all wrong when it comes to government, and taxes, and policy. We all act as if the "lemonade" or benefits we're "giving away" is free.

Most states have addressed or still face gaps in their budgets totaling $196 billion for fiscal year 2010, while tax revenue declined in the final quarter of 2009 in 39 of the states for which data is available.