Saturday, July 18, 2009

The New Camelot? I Sure Hope Not!

I've seen a few references this year about the Obama Administration being the new "Camelot," referring of course to the JFK Administration which had that nickname. When I hear that, I wonder to myself if the person using the expression has actually read the King Arthur story. Those of you who have read the story will know where I'm going with this; for those who haven't, it's not pretty. The story ends with a dead King Arthur and a kingdom collapsed in ruins. The story is really about the end of the Golden Age.

At the time of this writing, unemployment is approaching double digits, and the deficit is above a trillion. The national debt is in the trillions. Sooner or later, if deficit spending at the current rate continues, and there's no indication that the budget can be balanced any time soon, the interest on the national debt will exceed the tax revenue that can be collected. At that point there will be two options: default on the debt or print money to pay the interest. Either option would be disastrous. So maybe there's something to this Camelot analogy after all.

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