Republicans build extra stories on straw house

In the story of the three little pigs, the laziest pig builds his house of straw so he can have more time to relax. When the wolf comes, the house is no match for his tremendous breath and it falls down. In the original story, he gets eaten. Nowadays, the story has probably been changed to he runs away. Even the house made of wood is not strong enough to protect the middle pig. Only the pig who sacrificed to build his house of brick managed to survive.

When there is no wolf around, it is very hard to justify spending money on bricks. They are expensive and above and beyond what is normally needed for a house. Only by factoring in the "known unknowns" can the smart pig figure out that bricks are essential to his survival and not an extravagance.

Congressional leaders have reached a bipartisan agreement to abandon the budget sequester, increase spending on the military and domestic programs, and increase the debt ceiling. Both parties are happy to spend our children's and grandchildren's future money and worry about the wolf...never. What wolf? Never heard of him.

The United States is operating in unchartered territory, but what else is new? We have computers trading stocks in microseconds, we have self-driving cars, and we drive around in glorified golf carts called electric vehicles. We all carry a combination phone-personal computer in our pockets and can ask Alexa any question we want (none of which she can yet answer.) And we have engaged in a series of financial moves that go against every rule of sanity, yet have so far not suffered any serious side effects.

When other countries do crazy things, there are usually repercussions. But because we are the largest, richest country, we can evidently set our own rules and break them at will. Sounds like a great plan.

First, we artificially lowered interest rates. If we set them at near-zero, banks can pay depositors next to nothing. No sense in putting your money in the bank, so you might as well invest it in the stock market. Coincidentally, the low interest rates reduce the cost of government debt, allowing the government to borrow even more money, only this time it borrows from itself. As the creator of the currency, it invents trillions of extra dollars which it then distributes, flooding the market with more money to invest in stocks. The stock market goes through the roof. Are our companies actually performing many times better than they were a few years ago?

Before this game is up, the government starts to slowly raise interest rates. But instead of a huge sell off of stocks, the stock market continues to rise. At the same time, Congress reneges on the sequester and allows spending to shoot through the roof, back to Obama-era levels approaching trillion-dollar annual deficits. Just keep the printing presses rolling, I guess. Fiscal conservatives can either go along to get along, or they can be the boy who cried wolf. Everyone else in Washington seems to be on board with more and more spending and no cuts elsewhere to fund it, and no tax increase either. Who is loaning the government all this extra money, or is it being created out of thin air...again?

How long can we sustain trillion-dollar deficits, $500 billion trade imbalances, $21 trillion in debt, $120 trillion in unfunded liabilities, tax cuts, 2% inflation, 3% interest rates, a 25,000 Dow, and soon a trillion dollar fund to fix our "aging infrastructure?" Is this the new normal and if the party ends, how will it finish? Or is the wolf nowhere in sight so we can just build our straw house, throwing a couple of extra stories on top, sip Margueritas, and be happy?

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