In the analysis by MN Gordon on EconomicPrism.com, there’s a pervasive sentiment that the U.S. economy teeters on the edge, burdened by excessive government spending and an ever-growing national debt that has ballooned from $8 trillion in 2004 to an alarming $36 trillion in 2023. He argues that while the current economic indicators such as GDP and employment may seem favorable, they are fundamentally distorted by policies that prioritize deficit spending over sustainable financial practices. Government employment has dramatically increased, with a sizable portion of job additions in recent years attributed to public sector roles. Gordon emphasizes that if key figures like Elon Musk and Vivek Ramaswamy were successful in slashing federal budgets and dismantling certain agencies, the immediate consequences would be a plummet in GDP and a significant rise in unemployment, potentially causing short-term chaos but paving the way for long-term economic rejuvenation.
Gordon draws a strong parallel between inflated economic statistics and what he describes as a “daycare for adults.” He contends that the metrics used to gauge economic health have been corrupted, driven less by genuine economic activity and more by the artifice of government spending. He attributes this malaise to historical decisions surrounding the federal income tax and the establishment of the Federal Reserve, which set the stage for deficit spending practices notably espoused by economist John Maynard Keynes. Gordon criticizes Keynes’ theories as a misguided justification for expansive government intervention, citing outlandish suggestions like burying bottles of money to stimulate job creation. Such fundamentally flawed economic reasoning has deeply influenced policymakers, leading to wasteful spending with little to no return on investment for the average taxpayer.
Major legislation such as the American Recovery and Reinvestment Act of 2009 and the American Rescue Plan of 2021 exemplify the outcomes of Keynesian economics, producing colossal spending bills that failed to deliver the promised economic vitality. Gordon highlights a troubling paradox: while federal spending has escalated drastically, real GDP growth has trailed behind, with federal debt outpacing GDP growth at a staggering rate. The figures paint a bleak picture; from 1980 to 2023, while GDP has seen a tenfold increase, federal debt skyrocketed thirty-six times, underscoring the inadequacy of deficit spending as a vehicle for sustainable economic improvement.
Further driving the point home, the author points out that the unwavering commitment to Keynesian economics by Nobel laureates like Paul Krugman has led to increasingly absurd proposals, such as borrowing funds to prepare for hypothetical alien invasions. This absurdity illustrates the extent to which economic theory has strayed from practical reality and sound fiscal management. Gordon’s observations suggest that decades of misguided fiscal policy have created an American economy overly reliant on government spending, a predicament set to challenge any incoming administration. This reliance, he asserts, creates a daunting task for leaders like President-elect Trump, who must now contend with an economic landscape that is not only fragile but dangerously encumbered by debt.
Ultimately, Gordon asserts that the only way to rectify the United States’ dire financial situation may involve a painful, reset-like culling of government expenditures. He refers to the insights of economist Ludwig von Mises, who warned against the inevitable collapse that follows unchecked credit expansion. The alternative to facing the crisis sooner, as proposed by Musk and Ramaswamy, depicts the potential for a crisis resolved through deliberate policy reform and cuts rather than a catastrophic collapse that would obliterate the currency system. This difficult choice suggests a necessary acknowledgment that the path to meaningful recovery may first require intentional hardship and economic contraction.
In Gordon’s estimation, while the proactive approach may lead to short-term turmoil—including mass layoffs, reduced GDP, and skyrocketing unemployment—it is essential for the long-term health of the nation. He implies that to restore America’s economic integrity and sustainability, a drastic re-evaluation of federal spending and priorities is not simply advisable; it is imperative. Nonetheless, this journey toward recovery will inevitably involve considerable distress, often leading to “weeping and gnashing of teeth.” The interim period, as Gordon argues, may last generations, emphasizing the profound understanding that enduring financial mismanagement will not yield easy solutions, but rather demand resilience and radical change. Ultimately, the piece embodies a somber warning of the consequences of ignoring foundational economic principles in favor of short-term political gains.