Debt Ceiling 2013: Why Libertarians Should Stop Worrying and Love the Debt


In the next few weeks, we're going to again be treated to another pointless battle over the nation's finances as politicians from both sides of the aisle breathlessly claim they are the sole bearers of truth, fighting for the very future of our children against the forces of ignorance, and even worse, sinister special interests attempting to enslave us.

As before, all of this puffery will be entirely futile, largely because the problem has gotten so bad that the stakes are too high for it to be fixed easily with a few, painless tweaks to current budget projects as it might have been in the 1980s or 1990s. In just four years, our $16 trillion debt will explode to $22 trillion, and so on. Too many are invested in existing spending and theirs is no constituency for difficult cuts.

So what do we do? Instead of fretting over the national debt or government spending, libertarians should embrace the end of the dollar's supremacy because, realistically, it is our best hope to achieve our political aims. In the long run markets, not politics, will likely prove the most effective force in shrinking government as the decline of dollar-based economic imperialism forces the state back into the limited government box. To that end, we should learn to stop worrying and love the debt.

In the event of a U.S. debt default, fiat money, unsecured credit and excess leveraging cannot be sustained. Put simply: if the education and health care bubbles keep growing faster than inflation, the onus will be on the federal government to pay for them since no one else will be able to afford them; it will do so by borrowing larger amounts of money, putting pressure on the dollar that, if unchecked, will eventually lead to the end of its supremacy in global markets and a depressed treasuries market. If the federal government cannot borrow billions of dollars a day cheaply, it will force it into an austerity, that while painful, will make a large, intrusive government unsustainable.

The focus of our energies then, should be in the preservation of civil liberties for two reasons:

1. it is a fight we have already won, since constitutional liberties already exist and we have only to preserve them;

2. it is far more important to ensure the government does not chip away at those liberties if a serious debt default and subsequent turmoil does occur like we have seen across Europe. It may mean the difference between coming out on the other end of a dollar bubble under a banana republic dictatorship or the kind of lean, mean economic powerhouse that provides the kind of opportunities we have come to expect as Americans.

I'm not being defeatist here, just realistic: libertarians are asking for a total bottom-up overhaul of how the public views the role of government in our lives, including people who are increasingly dependent on government resources for survival: Social Security disability payments, for example, have skyrocketed 53% in the last ten years; Medicare spending has doubled as a percent of GDP in the last decade, and that increase is expected to continue. To ask a nation of millions of debt consumers to give up their benefits and embrace free markets and self-reliance is a tough road to hoe. Our time and resources are better spent educating the young and preserving the civil liberties we do have than phoning our congressmen about budget issues.

History has shown us that in most cases major government overhauls are only possible under extreme conditions — the Civil War, Great Depression and world wars of the 20th century all permitted the end of laissez faire economics and limited constitutional government in short bursts of furious political activity following mass destruction and severe hardship. It stands to reason a reversal of these trends would likely require similar conditions.

Senator Rand Paul (R-Ky.) has the right idea making internet freedom a core component of his legislative agenda. Fighting to maintain the freedom of the web will enable human communication — essential to the freedom of society — to remain easy and unrestrained. Since knowledge must remain free to support efficient market activity in order to rebuild our economy after a dollar bubble, the monopolistic concept of intellectual property must be fought against. Firearms must remain free to enable the population to protect itself from encroaching, and potentially malignant, government aggression.

Protect our freedoms and the state will fall of its own accord to whatever size the market will sustain. The promise of 20th century politics was a lie — the world was not made a better place by Marxism or its offshoots, not by ever-expanding government bureaus or convoluted tax codes, and certainly not by massively expanding central bank balance sheets. It was made better, and will continue to be improved, by the hard work and innovations of ordinary human beings. This is the truth that sustains the libertarian movement, and will be realized again by the rest of the country in the 21st century as markets ultimately prevail.

So forget the silliness and melodrama of the upcoming debt ceiling fiasco; when the ceiling inevitably gets raised, have a drink and toast to the end of the empire!