More consequences of uncontrolled spending.
In addition to the consequences listed in the original post, there are other inevitable results.
Additional Consequences
As the country continue its inevitable dive into recession, the folly of added spending becomes clearer.
Municipal Bonds
States, counties and towns spread out spending on big ticket items such as new schools, sewer and water systems. roads, bridges and so forth by issuing bonds. Together these are called Municipal Bonds. The interest they pay to the bond owners is usually free of Federal Income Tax if the owner lives in the jurisdiction issuing the bond.
Municipal bonds compete with other investment opportunities such as stocks and corporate bonds, and have to pay interest rates that are attractive and appropriate to the risk of default. Issuers with great repayment histories and a lot of assets, and few liabilities, such as Virginia, can get away with paying low rates. Jurisdictions with poor repayment records, few resources or large obligations, such as Illinois, pay higher rates. The more the issuer has to pay, the more taxes are levied on the local taxpayer. The Biden Administration intends to allow local taxpayers to deduct local taxes from Federal tax returns. Thus, inflation both increases Federal outlays and cuts Federal income. Worse, as each state is a sovereign, meaning there is no authority to which to appeal, there is no constitutional right for a state to file for bankruptcy. Unfunded pension liabilities are almost always the problem.
In many states, unfunded liabilities are created when a public service union’s investment advisory committee allows its social justice goals to outweigh its fiduciary responsibility. Thus, investment in companies deemed to be on the “wrong side” of social justice issues are barred from receiving pension funds purchases, while companies or industries deemed on the “right side” of the same issue find their stock in the pension fund’s portfolio. Rather than enforce fiduciary responsibilities, the governing bodies of most public service employee unions applaud the unproductive use of members’ funds.
The classic case
The classic response to recession is expanded spending. This recession is unusual in that it is caused by expanded spending.
This spending is typically focused on creating jobs. There are already too many jobs chasing too few applicants.
Just as too much money pursuing too few goods, too few applicants pursuing too many opportunities is indication of a problem. During a deep recession we see the same phenomenon in reverse, and know something is wrong. Neither by itself is a problem, it’s a symptom of a problem: imbalance in supply and demand.
Little of that applies in the current situation in the traditional sense.
The current situation
Housing is irrationally-priced. An average home in San Francisco costs $1.5M.
The city publishes “poop maps” so visitors can navigate around areas completely covered in human feces. Crime rates are through the roof, and the outgoing District Attorney was just fired by the voters for defending instead of prosecuting criminals. And $1.5M doesn’t come with a view of the bay, unless it’s the emergency bay at a hospital where addicts are brought for life-saving treatment after shooting up at city-sponsored “safe injection sites.”
Nashville
Where I live, in Nashville, TN, there is a booming housing market because there is a booming job market. Music isn’t the leading industry, it’s number four or five. First is publishing, then banking, then healthcare. Higher education is somewhere in the mix. The city grows by about seven percent each year, driving up housing prices. Last year, the city council passed an across-the-board 30% increase in property taxes. Many of the elderly are being heavily squeezed. Increases in the price of tools and repair materials have caused a near-50% increase in the monthly maintenance fee charged per condo unit.
We’re going to Disney World!
Inflation does not exist in a vacuum. It affects everything around it. The Traveler family that has been planning a trip from Cleveland to Disney World since January 2021 finds that it has underbudgeted gas by a thousand dollars, the inside-the-park hotel by three hundred dollars, and park admission by two hundred dollars. They make bologna sandwiches at home to save on food, but the water pump goes out in West Virginia, and the part’s not in stock because of “supply chain problems.” That causes a two-hundred-dollar motel bill, obliterating the food budget, bologna sandwiches and all.
Nothing else goes wrong, they arrive at Disney World to find that their reservation has been canceled because they showed up a day late. No, there are no more rooms at El Cheapo Motel, but there’s a nice Motel No-Tell across the street for $20 an hour.
The family leaves the No-Tell and sleeps in the car at a near-by Wal Mart parking lot. The nice policewoman didn’t arrest them for vagrancy after they told her about the gunfire at the No-Tel.
At the park the next morning they take a snaking length of wooden carriages to the front gate, where they are greeted by a number of Disney employees on strike because Disney won’t demand that all guests wear name-tags telling the world what pronouns they use. Mr. Traveler picks up an androgynous-looking person by the belt and says “My pronouns are pissed-off, angry-as-hell, and dangerous to assholes.”
The family is allowed to pass, because the protesting group has found a family with a black father and a white mother, and demanded that the family beat up the mother for being an oppressor. After their visit to the closest first-aid station, where they admitted not noticing that the four teenage offspring all wore football letter jackets and averaged 225 pounds each, they decided to protest sexism at the first-aid station.
At the Jurrasic Park ride the Travelers were treated to an animal right group tilting all of the cars into the water to protest cruelty to dinosaurs. The oldest teenage Traveler got out of her boat and physically threw each of the protesters over the side of the tracks. She got back in to thunderous applause. She repeated her performance at the tea cups, causing a profuse scalp bleed on one of the protesters. She was voted Park Visitor of the Year.
When the family stopped for lunch, where they ordered $12.99 hot dogs and glasses of water, they were greeted by different protesters, snatching the invaluable hot dogs out of the hands of family members and telling them to feel shame for eating meat. Mrs. Traveler handled that one. “I am hungry, and you stole my meal. Either replace it immediately, or else.”
When asked what “or else,” she responded, “I just noticed you’re made of meat.” It was a ten-ounce hot dog, but she only bit off eight ounces of the protester’s left tit. Micky showed up and put a band-aid on the boo-boo.
And so it went for the rest of their stay. They slept in their car at Wal Mart, made friends with the manager, and ate all breakfasts and dinners at the food court. They also rounded up unreturned carts every evening, and handed out Wal Mart Gift Cards to homeless families. Back in Cleveland, Mr. Traveler’s brother-in-law asked how the trip went.
“It was nice. We learned to clean up after ourselves, help others, and had the most fun throwing darts at Pete Buttigieg’s picture.”
Well this was clever..from fiscal policy to a psychedelic trip through Disney. The hot dog bite was crazy to imagine.
What a lovely story about a family's adventure in Biden's Amerika.
That damned Putin!!!!!