Hard Choices Ahead

Having put off reality for long enough, the Feds finally face the flames...

(Source: Getty Images)

Bill Bonner, reckoning today from Youghal, Ireland...

Did you ever have to make up your mind?
Pick up on one and leave the other one behind
It's not often easy, and not often kind
Did you ever have to make up your mind?

Did you ever have to finally decide?
Say yes to one and let the other one ride
There's so many changes, and tears you must hide
Did you ever have to finally decide?

~ The Lovin’ Spoonful

Uh oh. Hard choices ahead. Yahoo Finance:

Time is running low to strike a deal…

Treasury Secretary Janet Yellen maintains that a deal needs to be reached and "it's not an acceptable situation for us to be unable to pay our bills."

Her first priorities if there is no deal by June 1 would include paying for interest on existing debt as well as making sure Social Security recipients and military employees get their checks on time, she said Sunday on NBC’s “Meet the Press.

“There will be hard choices to make about what bills go unpaid” if the talks fail or are too slow.

Paying the army was always the top priority in ancient Rome. If the soldiers weren’t paid (especially late in the empire when they were mostly mercenary armies of Germans and Slavs) they might turn on Rome itself.  

The Fed’s Pickle

But that is the pickle that the feds have gotten themselves into. They are hostage to their own bamboozles. Like reckless, petty swindlers, they owe money all over town. If they don’t pay up, there are likely to be consequences.

What a horrible situation (from Joe Biden’s, Ms. Yellen’s and the feds’ point of view). They’ve devoted their whole careers to avoiding hard choices and unpleasant consequences. When Joe Biden came to Washington, the feds owed only $400 billion. Now it’s nearly $32 trillion; every penny of the difference represents another hard choice not made. And why make a hard choice when you don’t have to? Go with them both. Blonde and brunette. Guns and butter. Aces and eights. Russia and China.

But hard choices are what the feds should have been making all along. And if they had, our choices today wouldn’t be so hard. We wouldn’t have an estimated $20 trillion debt more coming over the next 10 years. Or a war in the Ukraine and 800 military bases all over the world. Or 5% inflation. We wouldn’t have a $2 trillion budget deficit this year…or interest rates that have to be held down in order to avoid going broke. And America’s hard-working families (AHWF) wouldn’t be getting poorer.

Hey, wait…here comes another Deus ex Machina…AI. Are we saved? Why not just let it make the hard choices for us? It’s not swayed by emotions or prejudices, right? AI has no knees to jerk or necks to stiffen. It could just examine the federal budget logically and point out those things that aren’t really necessary…no? No need to raise the debt ceiling?

Oh, dear reader, we need to put on our thinking caps, don’t we?  

Human, all too Human

The feds are humans, too. And like all of us, they want to feel good about themselves…that they are top guns…big spenders. Patrons of the arts. They want to give alms to the poor and payoffs to the rich…and win re-election. They want to make things better for everyone, especially large campaign donors. And as long as the price tags are removed…and there are no real debt ceilings…and they are spending other people’s money, no hard choices are necessary. In any case, when you’re over 80, whatever the price – war, inflation, bankruptcy – someone else is likely to pay it, not you.

We happened to watch a tech expert giving a TED talk. He was telling us about the “evolving relationship between humans and computers.” It was “deeply profound,” he said.  

Our message today: it is probably only superficially profound.  

Even using old-fashioned, natural intelligence, our species has been able to make extraordinary progress in the outside world. We add. We subtract. We find the hypotenuse. We use science and technology to level the forests and raise up huge concrete and glass towers. We use our brains to accelerate particles and slow down traffic. We can now push a few buttons and obliterate entire cities…and cause the heavens to fill with huge clouds of radioactive dust.

That’s progress!

Pure Fantasyland

But science and technology are always faced with hard choices – Boyle’s law, the boiling point of water, the conductivity of copper, gravity – we bend to the laws of the natural universe. They do not bend to us.

Our internal world, however, evolves more slowly. It is a trickster. And much more difficult to manipulate. We are, more or less, still the same knuckle-dragging, rough animal that first rose up onto two legs. We have feelings, emotions – far beyond anything our thinking minds can comprehend or control. We fall in love. We paw the ground. We howl at the moon.  

In our families and our businesses, there too, we are always constrained by tough choices. Take a vacation or fix the roof? Hire another employee or give existing employees a raise?  But in war, economics, and politics we let the beast off the leash. A Cultural Revolution… Free the Holy Lands…DEI…On to Moscow!

For many years, in the federal budgeting process, the feds ignored the right side of the menu. There was no need to look at prices when you could borrow all the money you wanted…at real rates below zero…and never have to pay it back. There are no hard choices in fantasyland.  

So, “Cry havoc! and let slip the dogs of war”…open the gates of Hell…hand out the stimmies…give free rein to jealousy, hate, envy, pride – all the seven deadly sins are still there…along with others we’ve picked up along the way. A large government, with the world’s reserve currency, a printing press and a military machine far larger than any rival can push off the hard choices for decades. 

But not forever.

Ms. Yellen knows perfectly well that the US government doesn’t really need to borrow more money.  

What then, is really going on?  And what can AI do about it?

Stay tuned...

Bill Bonner