This week’s fool

Over on, Zachary Karabell says the U.S. is not drowning in debt:

…what matters about the debt isn’t the dollar amount per se, but how much it costs us to service it. And by that measure, the debt isn’t nearly as big a problem as it’s being made out to be.

That’s like saying it’s not the credit-card balance that matters, it’s the size of the payments. People tell themselves that so as not to face the unpleasant truth that carrying a huge credit-card balance is stupid, and that paying interest on a debt is – with very few exceptions – just pissing away money.

Mr. Karabell admits that the federal government is paying a quarter-trillion dollars in interest – excuse me, in debt servicing – every year. What a waste.

2 thoughts on “This week’s fool

  1. Pat Post author

    On August 5th, Standard & Poor lowered the United States’ credit rating from AAA to AA+. The chattering classes have begun chattering as to What It Means For America.

    One possible consequence: interest rates might go up. So the federal government might end up wasting even more money ‘servicing the debt’.

  2. Pat Post author

    And that phrase, ‘servicing the debt’…it conjures the image of the U.S. as a gigolo, whose client is neither as young, nor as beautiful, as she believes herself to be.

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