Elizabeth Warren’s Most Disturbing Quote Yet…

“There’s always money,” said Senator Elizabeth Warren (D-MA) in a recent interview.

Interesting comment, coming from a former – now emeritus – professor who taught bankruptcy law at the Harvard Law School. Indeed, “Professor” Warren is still listed as faculty on the HLS web site.

Of course, Warren is running for President. She’s long past her days of worrying about what legal arguments might impress a federal bankruptcy judge.

That is, bankruptcy law is about figuring out who doesn’t get paid when there’s not enough money; who gets stiffed, in other words.

Now, though, President-Wannabe Warren is trying to impress voters, not judges. Warren is deep into politics, and it’s all about making promises.

Of course, politics is about promising voting blocs that they, too, can have their place at the feeding trough of public money. “An advanced auction of stolen goods,” as Mark Twain once noted.

Because… “There’s always money,” as Elizabeth Warren pointed out.

Let’s ponder this for a few minutes…

“There’s always money”? Note my question mark here…

Unless there isn’t. Bankruptcy lawyers know this; or, they ought to know this.

In another life I used to practice bankruptcy law. I know about people not having money. I know it really well.  Deep down.  Seen it.  Been there.  Done that. Gone to court.

I could tell you stories about people who walked into my office – and from there into federal bankruptcy court – and explained how they just plain ran out of money. One reason or another. Bad decisions. Bad luck. Whatever…

Or on the other side, there were people who walked in and explained – to me, and eventually to a federal judge – how they advanced money, goods or services to somebody else, and were not getting paid back. Bad decisions. Bad luck. Whatever…

That’s what the money game is all about. You make it or you don’t make it. You have it or you don’t have it. You pay it, or… Well…

If you can’t pay? If you’re not getting paid?

See you in bankruptcy court.

Of course, there’s nothing new about money problems; about not having it when you need it.

People have been unable to pay debts since time immemorial. Per no less than Proverbs, 22:7, “The rich rule over the poor, and the borrower is slave to the lender.”

Even the word bankruptcy is ancient… From “Bancus Ruptus” in Latin. And the origins of the word tell a tale of immutable truth.

In Roman times, merchants transacted business on a trading table called a “bancus.” If a merchant ran up too much debt and could not repay, Roman authorities would come into the shop and smash the table to pieces. “Ruptus.”

Way back then, bankruptcy was ruinous. In Roman days, a bankrupt merchant might find himself and his entire family dragged through the streets, tossed into prison or sold into slavery. Proverbs, 22:7 to its literal end.

We live in a kinder world today. Bankruptcy holds less of a negative stigma.

Indeed, there’s a saying in places like Silicon Valley that you’re not really a success unless you’ve failed a few times already. A few business bankruptcies? No big deal…

Still… Put lipstick on the problem as much as you want… It’s no fun to spend yourself broke, or to put your business underwater.

Which brings us back to Senator Warren and her comment; “There’s always money.”

Well, unless there isn’t.

I’m wondering if Professor Warren is perhaps on to some sort of new monetary or economic theory.  The theory of “There’s always money.”

It’s a Nobel Prizewinning idea, if it works…

Warren taught at Harvard University for many years. And Harvard has long pioneered novel ideas.

For example, in the 1790s, Professor Benjamin Waterhouse founded the Harvard Medical School and introduced smallpox vaccination to the fledgling United Sates. Quite useful.

More recently, in 1942 – during World War II – Harvard chemistry professor Louis Fieser invented napalm. He tested it at a school soccer field on no less than Valentine’s Day. The rest is history…

Smallpox vaccine. Napalm.  Now, “There’s always money.”

Some ideas that come from Harvard are better than others, of course.

So where did this latest economic idea come from?

“There’s always money” goes back to a recent interview. Warren was being quizzed by the President of the National Education Association, Lily Eskelsen García.

The question arose whether or not Warren would commit to more federal funding for Title I of the Elementary and Secondary Education Act and the Individuals with Disabilities Education Act. “If the answer is yes, how do you pay for that?” García said.

And Senator/Candidate for President/former bankruptcy professor Warren replied, “The way I see it, there’s always, c’mon, there’s always money. It’s there. Are we going to spend the money on defense or are we going to spend the money on our children?”

As political tripe goes, this seems innocuous enough. Politicians gotta politick.

“Spend the money on defense,” as Warren so breezily characterizes it.

“Or are we going to spend the money on our children?”

It’s a total straw-man argument, of course. Shallow. Insipid. Words from a demagogue, actually…

Then again, over and above the cheap-shot nature of the comment, one might be forgiven for asking of the former bankruptcy professor… What money is “always” there?

With trillion-dollar federal deficits every year, and national debt over $23 trillion, it seems that the U.S. government is already spending a lot of money it doesn’t have.

“There’s always money”? Actually, no…

Absent the government’s control over issuing bottomless levels of unpayable debt, the U.S. federal entity is insolvent. It can’t meet its debts as they come due.

Right now, today, there’s not enough money for what’s already going out the door. Federal intake is far less than spending. The difference is made up in so-called “borrowing;” in issuing federal debt obligations.

Meanwhile, the federal deficit (about one trillion dollars) is quite a bit larger than the entire “defense” budget (about $800 billion).

So, since we’re doing glib, “either-or” arguments, try this line of thought… Just zero-out Defense. Close the Pentagon.

Close every base. Tie up every ship to the pier. Chain every airplane down to the tarmac. Send all the troops home. Shut the whole edifice down… And still, you have not made up for the annual federal deficit. And you now have a few million unemployed troops, bureaucrats and defense contractors running around.

Or, try a different approach… Interest on the federal debt is also quite large; just about equal to the defense budget. So, it’s arguable that nearly all of the federal deficit is interest on the debt… Payable for all the past deficit spending and federal borrowing.

What if the federal government just announced… We’re not paying any more interest. You’d have a small army of big bondholders running around the world, very perturbed.

Here’s the bottom line about Warren-the-politician; she’s a spender. She’s making promises with political power and future money that isn’t hers. Not yet.

Evidently, Warren’s approach to governance is to exert government control, and of course to raise taxes. But don’t worry; it’ll be a tax increase on so-called “millionaires and billionaires.” In other words, “most” Americans won’t pay it because the rhetorical trick here – demagoguery – is to create a sense of “otherness” about people who hold or control big whacks of money. Screw ‘em, right?

Not just higher tax rates, either. Warren promises a wealth tax of 2% on large accumulations. All that, and more.

Because “There’s always money.”

In Warren’s view, apparently, government can – and should – tax people. Do it with impunity, too, because they’ll pay it. And then government should spend without restraint because the treasury has an endless checkbook.

To be fair, most politicians – Warren and most of her colleagues in the Senate and House – appear to think that this fantasy fairy-land of monetary theory is how things work.

But these kinds of reckless spending habits can’t last.

Eventually, the money runs out. You’d think that a bankruptcy lawyer would be more careful with what she says, even when she’s running for President. Not in the current political culture, sad to say.

On that note, I rest my case.

That’s all for now…  Thank you for subscribing and reading.

Best wishes,

Byron King

Byron King
Managing Editor, Whiskey & Gunpowder
WhiskeyAndGunpowderFeedback@StPaulResearch.com

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Byron King

A Harvard-trained geologist and former aide to the United States Chief of Naval Operations, Byron King is our resident gold and mining expert, and we are proud to have him on board as the managing editor of Whiskey & Gunpowder.

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