While this would, no doubt, be disastrous for the American economy, which is vastly based on the “full faith and credit of the United States government” of the United States dollar — could China’s own less-than-impartial statement that the future of the world should be “de-Americanized” have a point?

Partisan infighting in Congress, on top of massive trade deficits with China and Japan (among others) are threatening the faith the world has in the US government’s ability to pay the debts it has already racked up — even in simple interest payments on Treasury Bills and other things.

While there’s yet been a default on any obligation of the United States, if partisan gridlock doesn’t change in Washington, could it be an inevitable future?

Those on the right say our borrowing to fund the government and to pay our obligations say this is an unsustainable model do have a point.  Borrowing forever with no intention to fix it will only result in a catastrophic failure — sooner or later.

However, liberal economics specifically state that when the economy is in a recession, or otherwise growing at an anemic rate, that it is the government’s duty to pump money into the economy to ensure that consumer confidence remains high and that people spend — particularly during problems like high unemployment or lower consumer confidence, the two silver bullets to economic futures.  When people are scared (fiscally speaking) they withhold money; and not spending money grinds the economy to a halt.  Very effectively.

Are both goals mutually exclusive?  I don’t think so.

While a plan to begin to work down our debt obviously needs to be in place, because consumer confidence still hasn’t fully recovered from The Great Recession, this is where [neo?]liberal economics comes in.  Adaptive economics, in particular.  The economy “running itself,” particularly without any regulation, obviously doesn’t work as much as an authoritarian, centrally planned economy.  A government buffer helps “prop up” the economy, while the wheels of the private sector continue to spin.

It’s a mess, but it’s one we can fix — if we come together and work the problem… and not just point fingers — and America can still be a leader in the world.

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