Joshua Sheats from the Radical Personal Finance podcast and I discuss our different views regarding the national debt and the severity of the U.S. government fiscal situation.
Over the past four years, David has created 200 episodes of Money For the Rest of Us. On this 200th episode, he talks with Joshua Sheats, creator of the Radical Personal Finance podcast. They discuss the national debt debate, why local communities are often the driving force behind the national economy and the biggest concerns when thinking about the future of the United States. Not only do they rationally discuss big economic questions, but they also share why America is still a phenomenal country full of freedom and optimism.
David and Joshua’s stances on the great national debt debate
Joshua has covered the national debt debate on his own podcast many times and explains to David that he believes the US government has made promises it can’t keep. He believes Medicare, Medicaid, and Social Security are all programs that are simply not sustainable long-term. David counters this viewpoint by explaining that a national financial collapse will not be because of accounting, but rather be caused by a “morally bankrupt government that doesn’t follow the rule of law.” He explains that countries such as Japan are successfully operating with a debt to GDP ratio that is double that of the US, and claims that America has, and could continue to, operate on a 3-5% deficit to GDP.
The fiscal situation of the federal government is determined by household and business operations
David explains on this episode of Money For the Rest of Us that even if a government starts with a balanced budget, the year-end result is determined by the actions of households and businesses. If households and businesses decide to spend less and save more (like in the event of a recession), households and businesses will earn less income because businesses will buy less from each other and workers will be laid off. Less income earned means less income taxes paid, which means tax revenue falls and results in a federal budget deficit, no matter how balanced and correct accounting-wise the budget was to begin with.
Cultural capital as it relates to the economy and the importance of not being an alarmist
The idea of cultural capital is discussed throughout this episode. Defined as the collection of experiences, knowledge, skills, and goods that one can use to demonstrate a place in society, cultural capital defines the way a modern society operates. Specifically, the level of education and productivity a community has will define how well it succeeds in a broader economic environment. David explains to listeners that money equals trust, and trust in political leaders and government institutions is what allows a country to flourish. Since money can be created by governments, if trust does not exist then the country is in peril. However, understanding these issues and being unnecessarily alarmed about potential threats are two very different ideas. For all of the details of cultural capital, as well as Joshua and David’s debate on financial collapse warning signs, be sure to listen to this podcast.
Still feeling concerned about the national debt? Here’s why David & Joshua are optimistic about the future of the United States
Even with the national debt predicament in mind, Joshua and David are still optimistic about the future of the country. They’re both adamant about the fundamental good qualities that exist in people and the wonderful flexibility Americans have for building businesses and creating new ideas. They’re encouraged by the decentralization of knowledge and the advances being made in artificial intelligence and robotics.
[0:30] David introduces his topic for the 200th episode, the great national debt debate
[2:22] David thanks his listeners for over 7 million downloads over 4 years of podcasting
[4:17] Joshua overviews his episode of Radical Personal Finance that discussed the national debt debate
[6:51] David counters Joshua’s stance on the national debt debate
[10:32] Moral collapse vs. financial collapse and the “inevitability” of financial ruin
[11:14] Is there a limit to deficit spending? What exactly is government debt?
[16:49] Taxation as it relates to currency and the national economy
[19:22] Analysis of federal programs such as social security must be viewed in the present, not in a future tense
[20:20] We can take take care of accounting issues, but people must be able to produce goods and services
[21:58] The idea of cultural capital as it relates to the economy
[27:48] Why David and Joshua are optimistic about the future economy of America
[31:50] Trends that concern David and Joshua regarding the future of the country
[42:17] Is it possible to have financial collapse and bankruptcy in the coming years? If so, what are the warning signs?
[44:05] The importance of not being an alarmist, but being aware of the actual concerns facing the United States
[53:13] Do Americans speak a common cultural language?
[54:42] David’s summary of his 200th episode of Money For the Rest of Us.
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