by Sennholz
[Book Introduction and Author Biography]: An introductory overview of Hans F. Sennholz's 'Debts and Deficits', framing it as a critical analysis of the American political and economic scene. It highlights the author's background as a monetary theorist and head of the Economics department at Grove City College. [Title Page and Publication Information]: Title page and copyright information for the 1987 publication of 'Debts and Deficits' by Libertarian Press, Inc. [Table of Contents]: A comprehensive table of contents outlining the book's structure, divided into two parts: 'Social Goals And Federal Outlays' and 'In Search of a Solution'. It lists chapters covering deficit spending, the ethics of entitlement, underground government, and various proposed fiscal reforms. [Table of Contents and Acknowledgments]: The concluding portion of the table of contents followed by the author's acknowledgments, noting contributions from colleagues at the Foundation for Economic Education and Grove City College. [Introduction: The Dangers of Deficit Spending]: Sennholz introduces the core thesis that deficit spending and redistribution policies consume productive capital, leading to economic stagnation and social conflict. He argues that the U.S. has shifted from capital accumulation to net capital consumption, threatening the material well-being of future generations. [Chapter 1: The Politics of Deficit Spending]: This chapter analyzes the political mechanisms driving the federal deficit. It critiques the shift from balanced budgets to Keynesian 'contracyclical' spending, explores the 'parochial imperative' of Congressmen seeking local favors (pork-barreling), and describes how the executive branch and bureaucracy expand their power through entitlements and micromanagement. [Chapter 2: Income by Majority Vote]: Sennholz critiques the intellectual foundations of the welfare state, tracing them back to Mill and Marx's exploitation theories. He examines the specific failures of Social Security, student aid, and the 'war on poverty,' arguing that these programs create dependency and consume capital. He also critiques foreign aid as a tool that promotes global socialism. [Chapter 3: The Ethics of Entitlement]: An exploration of the moral and philosophical arguments for income redistribution. The author argues that egalitarianism is based on economic error rather than true justice, as it ignores the role of productive capital and the subjective nature of utility. He contends that redistribution empowers the state while destroying the cultural and economic diversity of a free society. [Chapter 4: Underground Government]: This chapter exposes 'off-budget' government activities used by politicians to bypass fiscal constraints. It details the rise of independent authorities (OBEs) at local, state, and federal levels, the use of industrial revenue bonds (IRBs) to favor specific businesses, and the massive growth of federal loan guarantees that distort capital markets. [Chapter 5: Deficits Do Matter]: Sennholz argues against the notion that 'we owe the debt to ourselves,' demonstrating that government debt is a consumptive tax lien on the future. He explains how deficits lead to inflation through debt monetization and how they cause trade deficits by consuming domestic savings and driving up interest rates, ultimately lowering real wages for American workers. [Chapter 6: Worse Than 1929]: The author draws parallels between the credit expansion of the 1920s and the monetary policies of the 1980s. He warns that the current stock market boom is an unsustainable bubble fueled by 'super ease' from the Federal Reserve and high-leverage debt like junk bonds. He argues the underlying economy is weak, with low savings and a vulnerable banking system, portending a crash worse than 1929. [Part Two: In Search of a Solution - Palliatives and Panaceas]: The opening of Part Two, framing the current economic crisis as a gathering storm. Sennholz critiques those who offer superficial solutions or palliatives, such as empty talk of privatization, without addressing the fundamental issues of debt and government overreach. [Privatizing Federal Functions: Seven Different Meanings]: Sennholz analyzes the political incentives behind federal spending, noting that concentrated benefits and dispersed costs make budget cutting difficult. He introduces 'privatization' as a popular but often misunderstood tactic for spending control, identifying seven distinct meanings ranging from genuine asset sales to the use of private contractors for government services. He argues that most versions of privatization fail to reduce expenditures and may actually expand the scope of government by creating new classes of beneficiaries. [Versions of Privatization and Genuine Privatization]: The author distinguishes between 'counterfeit' privatization and 'genuine' privatization, which he defines strictly as the sale of government assets at market prices to unhampered private owners. He highlights the massive federal land holdings in Western states and suggests that liquidating these assets, along with the Strategic Petroleum Reserve and the Synthetic Fuels Corporation, could significantly reduce the federal debt and expand the private economic base. [Political Privatization: Favored Individuals and Counterfeit Sales]: Sennholz critiques privatization strategies that sell assets at bargain prices to favored groups, such as employees or tenants, as seen in the Thatcher administration. He argues these are merely new forms of entitlement that do not restore true market order. Furthermore, he dismisses 'counterfeit sales' where assets like AMTRAK or airports are sold but remain under heavy government regulation, as the economic control remains with the state. [Contracting Out and the Voucher System]: This section examines the limitations of using private contractors and voucher systems to reduce government size. Sennholz argues that contracting out services (like the Postal Service) often fails to save money because civil service protections prevent the dismissal of redundant government workers. He further contends that voucher systems for education and health care actually expand government influence by imposing state conditions on private providers, leading to further socialization rather than privatization. [The Sale of Loan Portfolios and the New Collectivization]: The author criticizes the sale of federal loan portfolios, such as student loans, as a 'counterproductive' form of privatization. He argues these sales are used to meet deficit targets while allowing the government to tap into more private capital and extend its credit influence. He warns that these activities crowd out private borrowers and, through off-budget accounting, mask the true extent of government spending and debt. [The Line-Item Veto and Budgetary Conflict]: Sennholz discusses the breakdown of the federal budget process, characterized by the use of 'continuing resolutions' and the proposed 'line-item veto.' He traces the history of budget-making from the Founding Fathers to the 1921 Budget and Accounting Act. He argues that the line-item veto is a 'palliative' that would not significantly reduce spending—since most spending is in non-vetoable entitlements—but would dangerously increase presidential power to reward or punish members of Congress. [A Balanced Budget Amendment]: Sennholz examines the movement for a Balanced Budget Amendment, tracing its history from the 1970s and Congressional votes in the 1980s. He argues that while proponents like Thomas Jefferson sought to limit federal borrowing, the true cause of deficits is the popularity of political spending among the electorate. He contends that an amendment would likely be circumvented or lead to higher taxes rather than reduced spending, comparing it to the failure of Prohibition. [Raising Revenue and Economic Stagnation]: This section analyzes the likely outcome of a balanced budget mandate: higher taxes. Sennholz argues that politicians prefer raising revenue over cutting entitlements. He critiques Keynesian 'contracyclical' spending and supply-side indifference to deficits, warning that taxing business capital leads to reduced investment, fewer jobs, and economic depression, citing the 1932 tax hikes as a historical warning. [Raucous Opposition and Backdoor Spending]: Sennholz discusses the political opposition to fiscal reform, rooted in the ideology of the welfare state. He explains how 'backdoor spending' through entitlements, off-budget agencies (like the Federal Financing Bank), and government-sponsored enterprises allows Congress to bypass fiscal restraints. He concludes that without a change in public morality, legal amendments will be defeated by subterfuge and concealment. [Taxes and Tributes: Functional Finance vs. Sound Money]: The author contrasts historical fiscal policy, where taxes were for common benefit and budgets were balanced, with modern 'functional finance' influenced by Keynes. He argues that using taxation for social engineering or economic control grants excessive power to politicians. Citing Adam Smith, he rejects the idea that ministers should manage private economy, asserting that progressive taxation often protects the established rich while preventing newcomers from accumulating capital. [The Gramm-Rudman Act and Tax Reform of 1986]: Sennholz critiques the Gramm-Rudman Deficit Control Act as a political 'art' that postpones real action while potentially crippling national defense through sequestration. He also analyzes the 1986 Tax Reform Act, arguing that its 'revenue-neutral' shifts and repeal of investment incentives (like the investment tax credit and capital gains deductions) actually discourage production and will lead to higher unemployment in capital-intensive industries. [A Letter to the President: Leadership by Example]: Sennholz recounts a letter he sent to President Reagan in 1981 advising a 50% presidential salary cut to lead by example. He criticizes Reagan for failing to implement the frugality he preached, noting that presidential perks and congressional salaries reached record highs during his tenure. He contrasts the $6 per diem of the Founding Fathers with the modern $89,500 salary and massive staff costs of the 'entitlement society' legislators. [The Coming Storm: Triggers of Financial Crisis]: Sennholz predicts an end to the debt era triggered by one of six potential crises: withdrawal of foreign capital, a third-world debt default (impacting major U.S. banks), the collapse of Savings and Loan associations, a deep recession, the rising interest burden, or a return to protectionism. He warns that the U.S. banking system is overexposed to unpayable international loans and that the Federal Reserve's monetization of debt will eventually lead to soaring prices. [Inflation, Deflation, and the Great Depression Lessons]: This section evaluates the likelihood of rampant inflation versus acute deflation. Sennholz argues that while the Fed has the power to prevent deflationary bank runs through its money monopoly, it may be tempted by inflation to depreciate the debt. He provides a revisionist history of the Great Depression, blaming it on the Hawley-Smoot Tariff, the Revenue Act of 1932, and New Deal interventions rather than simple credit contraction. [Strict Regulation and the Payment Era]: Sennholz envisions a future of strict government regimentation as a response to financial crisis. This includes the potential nationalization of the credit industry, mandated debt conversions to lower interest rates, and the implementation of multiple exchange rates for a managed U.S. dollar. He warns that the 'payment era' is inevitable, where society must live below its means to compensate for current excesses. [Eternal Hope: Moral Reform and the Transfer System]: In the final section, Sennholz argues that true reform must be moral rather than purely legal. He proposes dismantling the 'strongholds' of the transfer system—Social Security and Medicare—through transparency (informing recipients of their actual contributions), means testing, and allowing young workers to opt out. He discusses the AIDS epidemic as a potential catalyst for the collapse of the government healthcare system and calls for a 'Freedom Party' to advocate for production over political bounty. [Notes and References for Chapters 1-11]: A comprehensive list of citations and bibliographic references for the eleven chapters of the book. It includes works by foundational economic thinkers like Adam Smith, Karl Marx, and Ludwig von Mises, as well as contemporary reports from the U.S. Budget, the Tax Foundation, and the Cato Institute. The references cover topics such as bureaucracy, welfare economics, underground government, and the ethics of entitlement. [Chapter 11 Notes and Subject Index]: Final citations for Chapter 11 regarding Social Security and medical care reform, followed by a detailed alphabetical index of the entire book. The index provides a roadmap to key terms, historical events like the Great Depression, government departments, and specific economic concepts discussed throughout the text. [Other Works by Hans F. Sennholz and Author's Predictions]: Promotional summaries of other books by Hans F. Sennholz, including 'The Politics of Unemployment' and 'Age of Inflation'. It highlights Sennholz's perspective from the Austrian School of economics and notes his historical accuracy in predicting federal debt levels and the stock market crash of 1987.
An introductory overview of Hans F. Sennholz's 'Debts and Deficits', framing it as a critical analysis of the American political and economic scene. It highlights the author's background as a monetary theorist and head of the Economics department at Grove City College.
Read full textTitle page and copyright information for the 1987 publication of 'Debts and Deficits' by Libertarian Press, Inc.
Read full textA comprehensive table of contents outlining the book's structure, divided into two parts: 'Social Goals And Federal Outlays' and 'In Search of a Solution'. It lists chapters covering deficit spending, the ethics of entitlement, underground government, and various proposed fiscal reforms.
Read full textThe concluding portion of the table of contents followed by the author's acknowledgments, noting contributions from colleagues at the Foundation for Economic Education and Grove City College.
Read full textSennholz introduces the core thesis that deficit spending and redistribution policies consume productive capital, leading to economic stagnation and social conflict. He argues that the U.S. has shifted from capital accumulation to net capital consumption, threatening the material well-being of future generations.
Read full textThis chapter analyzes the political mechanisms driving the federal deficit. It critiques the shift from balanced budgets to Keynesian 'contracyclical' spending, explores the 'parochial imperative' of Congressmen seeking local favors (pork-barreling), and describes how the executive branch and bureaucracy expand their power through entitlements and micromanagement.
Read full textSennholz critiques the intellectual foundations of the welfare state, tracing them back to Mill and Marx's exploitation theories. He examines the specific failures of Social Security, student aid, and the 'war on poverty,' arguing that these programs create dependency and consume capital. He also critiques foreign aid as a tool that promotes global socialism.
Read full textAn exploration of the moral and philosophical arguments for income redistribution. The author argues that egalitarianism is based on economic error rather than true justice, as it ignores the role of productive capital and the subjective nature of utility. He contends that redistribution empowers the state while destroying the cultural and economic diversity of a free society.
Read full textThis chapter exposes 'off-budget' government activities used by politicians to bypass fiscal constraints. It details the rise of independent authorities (OBEs) at local, state, and federal levels, the use of industrial revenue bonds (IRBs) to favor specific businesses, and the massive growth of federal loan guarantees that distort capital markets.
Read full textSennholz argues against the notion that 'we owe the debt to ourselves,' demonstrating that government debt is a consumptive tax lien on the future. He explains how deficits lead to inflation through debt monetization and how they cause trade deficits by consuming domestic savings and driving up interest rates, ultimately lowering real wages for American workers.
Read full textThe author draws parallels between the credit expansion of the 1920s and the monetary policies of the 1980s. He warns that the current stock market boom is an unsustainable bubble fueled by 'super ease' from the Federal Reserve and high-leverage debt like junk bonds. He argues the underlying economy is weak, with low savings and a vulnerable banking system, portending a crash worse than 1929.
Read full textThe opening of Part Two, framing the current economic crisis as a gathering storm. Sennholz critiques those who offer superficial solutions or palliatives, such as empty talk of privatization, without addressing the fundamental issues of debt and government overreach.
Read full textSennholz analyzes the political incentives behind federal spending, noting that concentrated benefits and dispersed costs make budget cutting difficult. He introduces 'privatization' as a popular but often misunderstood tactic for spending control, identifying seven distinct meanings ranging from genuine asset sales to the use of private contractors for government services. He argues that most versions of privatization fail to reduce expenditures and may actually expand the scope of government by creating new classes of beneficiaries.
Read full textThe author distinguishes between 'counterfeit' privatization and 'genuine' privatization, which he defines strictly as the sale of government assets at market prices to unhampered private owners. He highlights the massive federal land holdings in Western states and suggests that liquidating these assets, along with the Strategic Petroleum Reserve and the Synthetic Fuels Corporation, could significantly reduce the federal debt and expand the private economic base.
Read full textSennholz critiques privatization strategies that sell assets at bargain prices to favored groups, such as employees or tenants, as seen in the Thatcher administration. He argues these are merely new forms of entitlement that do not restore true market order. Furthermore, he dismisses 'counterfeit sales' where assets like AMTRAK or airports are sold but remain under heavy government regulation, as the economic control remains with the state.
Read full textThis section examines the limitations of using private contractors and voucher systems to reduce government size. Sennholz argues that contracting out services (like the Postal Service) often fails to save money because civil service protections prevent the dismissal of redundant government workers. He further contends that voucher systems for education and health care actually expand government influence by imposing state conditions on private providers, leading to further socialization rather than privatization.
Read full textThe author criticizes the sale of federal loan portfolios, such as student loans, as a 'counterproductive' form of privatization. He argues these sales are used to meet deficit targets while allowing the government to tap into more private capital and extend its credit influence. He warns that these activities crowd out private borrowers and, through off-budget accounting, mask the true extent of government spending and debt.
Read full textSennholz discusses the breakdown of the federal budget process, characterized by the use of 'continuing resolutions' and the proposed 'line-item veto.' He traces the history of budget-making from the Founding Fathers to the 1921 Budget and Accounting Act. He argues that the line-item veto is a 'palliative' that would not significantly reduce spending—since most spending is in non-vetoable entitlements—but would dangerously increase presidential power to reward or punish members of Congress.
Read full textSennholz examines the movement for a Balanced Budget Amendment, tracing its history from the 1970s and Congressional votes in the 1980s. He argues that while proponents like Thomas Jefferson sought to limit federal borrowing, the true cause of deficits is the popularity of political spending among the electorate. He contends that an amendment would likely be circumvented or lead to higher taxes rather than reduced spending, comparing it to the failure of Prohibition.
Read full textThis section analyzes the likely outcome of a balanced budget mandate: higher taxes. Sennholz argues that politicians prefer raising revenue over cutting entitlements. He critiques Keynesian 'contracyclical' spending and supply-side indifference to deficits, warning that taxing business capital leads to reduced investment, fewer jobs, and economic depression, citing the 1932 tax hikes as a historical warning.
Read full textSennholz discusses the political opposition to fiscal reform, rooted in the ideology of the welfare state. He explains how 'backdoor spending' through entitlements, off-budget agencies (like the Federal Financing Bank), and government-sponsored enterprises allows Congress to bypass fiscal restraints. He concludes that without a change in public morality, legal amendments will be defeated by subterfuge and concealment.
Read full textThe author contrasts historical fiscal policy, where taxes were for common benefit and budgets were balanced, with modern 'functional finance' influenced by Keynes. He argues that using taxation for social engineering or economic control grants excessive power to politicians. Citing Adam Smith, he rejects the idea that ministers should manage private economy, asserting that progressive taxation often protects the established rich while preventing newcomers from accumulating capital.
Read full textSennholz critiques the Gramm-Rudman Deficit Control Act as a political 'art' that postpones real action while potentially crippling national defense through sequestration. He also analyzes the 1986 Tax Reform Act, arguing that its 'revenue-neutral' shifts and repeal of investment incentives (like the investment tax credit and capital gains deductions) actually discourage production and will lead to higher unemployment in capital-intensive industries.
Read full textSennholz recounts a letter he sent to President Reagan in 1981 advising a 50% presidential salary cut to lead by example. He criticizes Reagan for failing to implement the frugality he preached, noting that presidential perks and congressional salaries reached record highs during his tenure. He contrasts the $6 per diem of the Founding Fathers with the modern $89,500 salary and massive staff costs of the 'entitlement society' legislators.
Read full textSennholz predicts an end to the debt era triggered by one of six potential crises: withdrawal of foreign capital, a third-world debt default (impacting major U.S. banks), the collapse of Savings and Loan associations, a deep recession, the rising interest burden, or a return to protectionism. He warns that the U.S. banking system is overexposed to unpayable international loans and that the Federal Reserve's monetization of debt will eventually lead to soaring prices.
Read full textThis section evaluates the likelihood of rampant inflation versus acute deflation. Sennholz argues that while the Fed has the power to prevent deflationary bank runs through its money monopoly, it may be tempted by inflation to depreciate the debt. He provides a revisionist history of the Great Depression, blaming it on the Hawley-Smoot Tariff, the Revenue Act of 1932, and New Deal interventions rather than simple credit contraction.
Read full textSennholz envisions a future of strict government regimentation as a response to financial crisis. This includes the potential nationalization of the credit industry, mandated debt conversions to lower interest rates, and the implementation of multiple exchange rates for a managed U.S. dollar. He warns that the 'payment era' is inevitable, where society must live below its means to compensate for current excesses.
Read full textIn the final section, Sennholz argues that true reform must be moral rather than purely legal. He proposes dismantling the 'strongholds' of the transfer system—Social Security and Medicare—through transparency (informing recipients of their actual contributions), means testing, and allowing young workers to opt out. He discusses the AIDS epidemic as a potential catalyst for the collapse of the government healthcare system and calls for a 'Freedom Party' to advocate for production over political bounty.
Read full textA comprehensive list of citations and bibliographic references for the eleven chapters of the book. It includes works by foundational economic thinkers like Adam Smith, Karl Marx, and Ludwig von Mises, as well as contemporary reports from the U.S. Budget, the Tax Foundation, and the Cato Institute. The references cover topics such as bureaucracy, welfare economics, underground government, and the ethics of entitlement.
Read full textFinal citations for Chapter 11 regarding Social Security and medical care reform, followed by a detailed alphabetical index of the entire book. The index provides a roadmap to key terms, historical events like the Great Depression, government departments, and specific economic concepts discussed throughout the text.
Read full textPromotional summaries of other books by Hans F. Sennholz, including 'The Politics of Unemployment' and 'Age of Inflation'. It highlights Sennholz's perspective from the Austrian School of economics and notes his historical accuracy in predicting federal debt levels and the stock market crash of 1987.
Read full text