> What is the purpose of restricting public spending other than to
> protect the profitability of private investments?
There are tons of other reasons, but I wouldn't discount the factor of Imperial suicide. The Empire hates itself, you know. As an American, I can feel this self-hatred intensely. The feeling of being a failure, of a loser. I think this is what links the Terror War and the Bubble -- they're both distorted expressions of systemic failure.
During the Cold War, dissent from the Empire could be displaced onto the Soviet Other -- but ever since the USSR disappeared in 1991, this place has been in a strange kind of mourning. Increasingly non-credible enemies were ginned up to try to keep the game afloat -- Saddam Hussein, Milosevic, Bin Laden. The smaller the actual threat, the bigger the wars the US Empire waged to maintain the illusion of hegemony.
Similarly, increasingly non-credible economic speculations were ginned up to keep the illusion of prosperity afloat -- S&Ls in the 1980s, dotcoms in the 1990s, CDS in the 2000s. The smaller the collateral, the bigger the bubble.
Now both phantasms are in ruins. Not sure where the US goes next, but it sure can't afford its Empire anymore.
-- DRR