Posted on 04/12/2011 5:34:04 PM PDT by KoRn
“Only in Washington can a budget that spends more than it did the year before, with a larger deficit, be portrayed as ‘cutting.’” - Senator Rand Paul.
Yeah.
When I wrote the Ticker this morning Tossing the Tea Cart I didn't have the numbers yet. But I didn't really need to in order to know that there was going to be no actual budget cut.
It's not really very difficult to figure out, as I outlined. Either of the two choices produces this:
So you want to cut government spending ("G") eh?
Ok, every dollar you cut will reduce GDP by (at least) one dollar. See the above equation.
You prefer instead to tax the rich?
Ok, every dollar you tax (from "the rich" or otherwise) will reduce GDP by (at least) one dollar, as it must by definition reduce either "C" or "I". Once the government steals your money via taxation you cannot spend or invest (save) it.
That's a problem.
House Republicans seem to be in accord that the legislation represents the best deal that Boehner can get – another $28 billion in cuts beyond the $12 billion already obtained in earlier rounds of continuing resolutions. But for many of the fiscal hawks, the appeal of bucking the leadership on the spending plan will be irresistible.
That's nothing. In the same time period that these "cuts" were obtained Treasury blew more than twice as much in additional debt. Never mind that $40 billion is about 1% of the budget and just over 2% of the projected deficit for this calendar year.
In other words it's meaningless.
On purpose.
Why?
Because of what I wrote earlier: If the government pulls back it will hammer the living hell out of GDP.
We truly have a Hobson's Choice in front of us. Nobody has been held to account for their projections that "just some" help for the economy in the form of huge deficits would be sufficient, and could be pulled back relatively quickly. We're three years into it now - where's the pullback?
We have zero interest rates and The Fed monetizing. Where's the pullback?
In short, we have taken what was private debt leverage and transferred it to the Federal Government. Brilliant. Or was it really the dumbest, most sub-shoe-sized IQ, hare-brained scheme I've seen in the last 20 years?
The latter.
We are rapidly reaching the point where the political parties are going to be forced to deal with this problem and face the previous lies. Not because they want to, mind you - because they have to.
No banker is going to allow the currency to be detonated. Do you really believe that Jamie Dimon is going to allow you to borrow $500,000 to buy a house and then permit the destruction of the currency to the point that your $500,000 will buy two loaves of bread?
That's the bet you're making on the "hyperinflation" scenario. Oh sure, the politicians would love to kick and kick and kick the can some more but we're now to the point that the only support the economy has is their profligate spending. Do you really think the banksters will sit around and let them drive the bus off the edge, killing the bankers?
Remember, these guys have plenty of long-term debt exposure. That's how they make money. Borrow short and lend long. That's what a bank is and does!
I don't have a timeline on all this, but I'm certain of a few thing. One, the timeline is much shorter than you think. Two, we're not going to make it to 2012 without some sort of coherent, logical and believable plan.
I'm not saying Congress will execute on that plan (I don't believe they will; after all, their primary attribute is making promises they have no intention or ability to keep) but there is going to have to be something that, at least for the next year or two, that the market will believe.
QE's clock is running out and the evidence before us right now is that the market is heavy and fear is starting to rise in trader's minds: What if our bets on hyperinflation are dramatically and ruinously wrong?
The bottom line is, we thought we won in 2010 and we lost.
Hell, I'm wondering when was the last time we 'won'? When Reagan was president?
Would it be dreaming if Congress cut the money flow. Obama can't spend a dime unless they let him!!
And I’ll wager the debt limit gets raised, too. Why? Because nothing changed in D.C. from the last election. There are a few good guys but most are not. And there are those who vote against crap because they know it’s going to pass. Or they vote for crap knowing it’s not going to pass. They know the exact tally before a vote is cast. This country is screwed, glued and tattooed.
Boehner bald faced LIED to us!!
Who’s surprised?
The House can do it. But they won’t do it.
How right you are.
When liberals lie, it’s the truth, dontcha know?
Of course it will get raised. But a song and dance dog and pony show will be presented to get the masses all excited first.
Karl once said to stop government borrowing and take the consequences. Sooner rather than later as later will be harder to deal with. So now is the time to stop. No debt limit increase. As bad as it will be when we do, it will be far worse if we wait. And every minute we wait it gets worse. The clock is ticking. What say you?
You could br dead on.
I don't know what the split in the House is...how many RINOs compared to the new tea party elects.
Our only hope is to let the new freshman know that we are totally behind them if they do the right thing... Keep calling them.
Prepare for hyperinflation.
That is a hilarious picture. Thanks.
I am 52 y.o. and about 5 years ago I came to terms with the extreme likelihood I won’t collect any social security money due me from paying in for over 30 years. The next 10 years of Boomer retirees will bankrupt SS and payments will go to those destitute or nearly so, not to people like me, or you apparently. Many of those collecting SS will be illegals and other immigrants who are poor or at least poor on paper, like elderly who put all their money in their childrens’ name.
“Got preps?”
Scared not to!
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