The people running this government are delusional. They believe their own “smoke.” We are in deep trouble, folks because non of this spending is directed at stimulating the private sector. Without small business and consumers, tax revenues will continue to deteriorate. That 40% borrowing level will quickly prove a pipe dream...
I would rather have them print money.
At least inflation is not unfair, as it affects everyone by the same percentage.
Here’s a story for you:
A cowboy named Bud was overseeing his herd in a remote mountainous pasture in California
when suddenly a brand-new BMW advanced toward him out of a cloud of dust.
The driver, a young man in a Brioni suit, Gucci shoes, RayBan sunglasses and YSL tie, leaned out the window and asked the cowboy, “If I tell you exactly how many cows and calves you have in your herd, Will you
give me a calf?”
Bud looks at the man, obviously a yuppie, then looks at his peacefully grazing herd and calmly answers, “Sure, Why not?”
The yuppie parks his car, whips out his Dell notebook computer, connects it to his Cingular RAZR V3 cell phone, and surfs to a NASA page on the Internet, where he calls up a GPS satellite to get an exact fix on his location which he then feeds to another NASA satellite that scans the area in an ultra-high-resolution photo..
The young man then opens the digital photo in Adobe Photoshop and exports it to an image processing facility in Hamburg , Germany .
Within seconds, he receives an email on his Palm Pilot that the image has been processed and the data stored. He then accesses an MS-SQL database through an ODBC connected Excel spreadsheet with email on his Blackberry and, after a few minutes, receives a response.
Finally, he prints out a full-color, 150-page report on his hi-tech, miniaturized HP LaserJet printer, turns to the cowboy and says, “You have exactly 1,586 cows and calves.”
“That’s right. Well, I guess you can take one of my calves,” says Bud.
He watches the young man select one of the animals and looks on with amusement as the young man stuffs it into the trunk of his car.
Then Bud says to the young man, “Hey, if I can tell you exactly what your business is, will you give me back my calf?”
The young man thinks about it for a second and then says, “Okay, why not?”
“You’re a Congressman for the U.S. Government”, says Bud.
“Wow! That’s correct,” says the yuppie, “but how did you guess that?”
“No guessing required.” answered the cowboy. “You showed up here even though nobody called you; you want to get paid for an answer I already knew, to a question I never asked. You used millions of dollars worth of equipment trying to show me how much smarter than me you are; and
you don’t know a thing about how working people make a living - or about cows, for that matter. This is a herd of sheep. ....
Now give me back my dog.
As I watch the political system operate, if the Democrats still control congress and the White House after 2012 (God forbid), the most likely path they will take is to coerce the Fed into an easy monetary policy to keep the economy going as fast as possible and inflate away some of the federal debt and interest expense on the debt. If they’re still in power, they’ll probably choose the path of least resistance for them, which is excessively low interest rates, printing lots of money, and higher inflation to create an incentive for consumers to buy now and to effectively increase taxes on everyone without having to vote for an explicit tax increase. Their strategy, if they still control Washington after 2012, will probably be 1) inflate away debt, 2) cover up actual inflation with phony “official government” inflation statistics that understate real inflation, and 3) deflect blame for the inflation they cause by blaming business, oil companies, and “financial speculators” for higher inflation, especially much higher energy and food prices.
That’s the path of least resistance for the Rats, because democrat voters are addicted to federal entitlement programs and falsely believe these entitlements are “free” and “the government pays for it”, or at least they believe they’re getting more benefits from the federal colossus than they’re paying in federal taxes. So I think it’s a slam dunk certainty that oil prices will move back above $100 in a few years, and it the Rats still run Washington in 2013 it’s likely that crude oil prices will rise above $140 in 2013. If they react to prices above $100 with a “windfall profits tax”, then we’re looking at oil over 150, real physical shortages of gasoline, and gas lines around the block (or rationing) like we had back in 1979. So I’m buying oil production companies and MLPs that have a lot of crude oil reserves. Farm suppliers look like a good investment, and metals and mining companies look like something to buy on a correction here in September/October.