“It’s all about the economy, stupid!” is a familiar phrase.
With the news that the Trump administration intends to devolve infrastructure spending to the states, it’s really about who owns the debt.
When the Federal Government generates debt, everybody owns it. What can’t be paid, because you cut taxes for people most able to pay it, the treasury debt that is not bought by rich people (the people that say it is unnatural for “them” to pay taxes) is bought by the Federal Reserve Bank and is on the books as an asset in the form of “public debt.”
The public debt is just a big number that keeps getting bigger with the “full faith and credit of the Federal Government.”
When the debt devolves to the states it is owned by people who buy it in the marketplace; so it is private property with the obligation to actually pay it back, with more value added than the principle amount (ROI), in the form of a “bond.”
Since the people that buy bonds should not “naturally” pay the debt, because if they did they would not buy it, devolution of the cost intends to be a regressive tax burden, bonding the “little people” to the authority of that “natural identity,” legitimately existing on demand.
If the people bonded to pay the debt are not paid enough to actually pay it, like we have now, then there is a credit-default crisis. To manage this crisis proportion financiers use derivative financial products, like reverse-rate, credit-default swaps. Few people understand these products, which are sure to be sliced, diced, and bundled into securities with the full faith and credit of absolutely no one.
On demand, in a TBTF risk dimension, when the credit crisis emerges, it is then imperative that the debt be liquidated. The Fed buys the bad debt, paying the fiduciaries (the SIFI’s, who refer to themselves as “the makers” and not “the takers”) to do the dirty deed, by default, because “We” are all bonded to the authority of the natural identity, aren’t we?