It's Your Debt - They Created It For You

60% see wars as large part of deficit problem 

It's the wars, stupid.

Too bad nobody in Washington has the courage to end the war machine. End the damned wars and build a new stimulus to get the country working again for everyone and not just the defense contractors.

Far more Americans say that the cost of the wars in Iraq and Afghanistan has contributed a great deal to the nation's debt than say that about increased domestic spending or the tax cuts enacted over the past decade.

Six-in-ten (60%) say the cost of the wars in Iraq and Afghanistan has contributed a great deal to the size of the debt. About four-in-ten (42%) say the same about the condition of the national economy.

By comparison, just 24% say increased spending on domestic problems has contributed greatly to the nation's debt and even fewer (19%) cite the tax cuts enacted over the past decade. While half or more say spending and the tax cuts contributed at least a fair amount to the debt, 31% say increased domestic spending did little or nothing to increase the debt and 38% say the same about the tax cuts.

In 2007, the top 1% owned 50% of all investment assets; the bottom 90% owned 73% of all debt

In a follow-up about the creditor class and the debtor class, we find this interesting data (h/t Paul Krugman). It's part of a Table 9 from Edward Wolff's Levy Institute paper, Recent Trends in Household Wealth (pdf); to see the whole table with notes, click the link and go to page 52). The highlights below are mine.


This shows clearly the divide between the creditors (who own the assets) and debtors (who owe the debts) in the U.S. As of 2007, the upper 1% (net worth of $8.2 million or more) owned 49.7% of all investment assets. The rest of us owned the debt. Those numbers can't have gotten better.

(If you click through to the rest of the table, you'll see that the top 10%, as a group, owned 87% of all investment assets.)

Remember: If you owe debt, deflation is a demon, since you pay back cheaper borrowed dollars with dollars that are now worth more. To make that simple, imagine borrowing a dollar that buys two Waldo-burgers and paying it back later with one that buys four. You're down two Waldo-burgers (plus the interest).

But if you are a creditor, deflation is an angel with honey-sweet breath and a gift in each hand. You really want to be a lender in times of deflation. In our example above, the lender just doubled his money by waiting, and charged interest for the privilege.

In Krugman's phrasing, "Deflation is hell for workers and business owners, but it’s heaven for creditors." (For more on deflation, what it is and what it does, see here.)

Bottom line — who's behind that push to keep interest rates low low low (as in Europe) and for debtors to pay back every dime? The same people who are trying to bring back debtor's prisons.

You got it. Our friends, the very very rich. No cramdown for you, sir; time to be extra responsible.

I guess giving them all that  money didn't buy their love after all.