Mark Levin’s Liberty Amendments Can Soften Impact of Wiedemer AfterShock Economy
Mark Levin’s Liberty Amendments, specially the one about controlling federal spending, if implemented, may result in a moderate, not major as expected, Aftershock economy. Why?
Foreign creditors confidence in probability of US repaying debt, now very low, will increase significantly. Consider that the budget related Liberty amendments mandate following:
Immediately, any budget not passed by Oct 1 will result in across the board 5% cuts. In tough times, private sector cuts back even more and comes back stronger. The Fed Gov must also.
Immediately, any debt ceiling increase must be approved by 3/5 of both houses. This increases probability of long needed structural budget changes limiting its growth thus debt expansion.
within 4 years, Outlays shall not exceed receipts and
fed Gov as % of GDP must not exceed 17.5%, unless for one year only 3/5 of both houses make an exception (addressing emergencies is reasonable).
In conclusion these measures will finally address unsustainable debt growth and the increasing Dependency on Government mindset. The former has already caused many creditors to balk at financing our debt; left unchecked it will cause a severe Wiedemer Aftershock economy via a $ collapse when creditors increasingly dump $ denominated securities. Why? Because the $ by then will have virtually no chance of returning a positive return on investment (ROI). The Dependency on Government mindset, where in many states one can earn more via Government transfer payments rather than work, retards personal responsibility for one to develop their God given skills. Many of these skills are related to a job where one contributes positively to the economy and makes the world a better place. The US needs to get back to where strong private entrepreneurs created many new products, industries, companies, and jobs for those interested in developing their skills. Get to this point and GDP can again grow over 3 %.
For details about what an Aftershock may be please read – https://economics501.wordpress.com/2011/11/25/aftershock-economy-book-review/