Posted on 11/24/2012 5:33:22 PM PST by upchuck
[Note: This editorial published on Nov 10, 2012]
We are now rushing down a course that is going to create incredible economic hardships for millions of Americans. The increase in the amount of debt that has been added to our economy is astronomical. And there is no end in sight. We now have over $16 trillion of debt, and with Obama’s policies it will be almost impossible to reverse that course.
Debt is the problem. Big debt is a big problem. There are only four ways to tackle it: increase taxes to bring in more dollars, reduce spending to save dollars, reduce entitlements to save dollars, and/or increase job growth which will result in more overall tax dollars coming in to the government.
Increasing taxes in the immediate future is going to be highly counterproductive in that it is going to put a damper on job creation by removing money from the private sector, which in the long run is the only sure way out of this mess.
Reducing entitlements will most certainly have to take place, but is going to be very difficult due to all the lobbying pressures and the fact that Obama has no intention of doing so. Obamacare will make the situation much worse.
Reducing other spending offers some avenues to help fix the problem, but the impact of such reductions will be smaller and will, again, take time to become effective.
Increasing jobs so as to increase revenues is really the only way out. But this would take quite a number of years to accomplish even with someone who knew what he was doing at the helm. Obama is not that person. He doesn’t know how.
At the very least, after another four years the debt load this country will be carrying will be well over $20 trillion dollars. This is close to an impossible load to bear. Our tax base right now, in a good year, is only $2.5 trillion, and in a bad year is around $2 trillion. That means we have a debt to income ration of 8 to 1 or 10 to 1.
In addition, we are spending about $3.5 trillion per year, which means we are borrowing about 40% of everything we are spending. It’s pretty hard to pay off any debt when you are doing that. And how long can that be sustained?
The crux of this problem is that we are unable to deal with the huge debt without facing massive inflation. The big debt has led us right into the ugly face of inflation, the major problem we face.
Generally speaking the amount of money in an economy should be enough so that products and goods and services can be paid for with the existing supply. If the amount of product goes up, it stands to logic that there should be more dollars printed and put in circulation to go with the demand for those products. However, if a great deal more money is printed than would fill that demand, then inflation will follow. For example, if we say that $100 is equal to 1/10th of an ounce of gold, and you print more dollars and don’t add any more gold to the pile, then each dollar will buy less and less gold as the dollar becomes inflated.
In the past four years, we have done just that. Since 2008, our monetary supply has increased over 300%. This is a great more money than was needed to keep up with any increase in the supply of goods, which certainly did not increase by anywhere near 300%. Unfortunately, a great deal of this money was just wasted. What we got instead was just a lot of debt.
In addition, it needs to be noted that 36% of the debt owed by the U.S. has a maturity of less than one year. That makes it subject to frequent refinancing, which will have a severe impact as interest rates go up. The higher rates will make it necessary to print more money to pay just the interest, which in turn will add to the inflationary pressures.
We are all living just now in a ‘dollar bubble’ which is equal in specter to the ‘housing bubble’ and ‘stock market bubble’ we have recently experienced. We are living in a ‘bubble economy,’ no matter how it feels. It is always hard to see the ‘bubble’ when you are inside it. But it would be prudent to plan for it even if it is hard to see and difficult to believe.
It’s going to happen. Massive, high inflation is coming. There is no stopping it now. The “dollar bubble” is going to pop.
It does depend on where you live.
Climate, soil and water become driving forces.
Your experience may be different, one size does not fit all.
Go to the link. After paying for Entitlements, Social Security, interest on the debt, and defense, there isn’t much (comparatively speaking)left for discretionary spending.
Many people think that just cutting discretionary spending is the way to cut the debt. This chart makes it pretty clear where the biggest chunks of money goes.
Past history of USA was that we paid our foreign debts, became an economic superpower, and people came to have faith in our ability, but also our determination to pay our debt.
The last debt ceiling debacle may have many countries wondering whether we would choose to stiff them rather than our own citizens.
FDR required gold to be turned in, and paid a specified price for it. Once the Government had the gold, they devalued the dollar, the citizens took a 40% haircut IIRC.
So, my money is kinda on the citizens will get the shaft. (But not the welfare types-Obama’s voting coalition).On the other hand, maybe they really do want to take down the entire global system.
Ok, that made me laugh. I’m definitely using that in the future.
No.
The problem with this backyard, besides its small... is that it has really really good drainage, so I might need to water the corn well.
I also know you shouldn’t plant corn and tomatoes near each other but that squash and beans work well with corn.
1.Declare a National Emergency...
2. Take over all banks and credit unions, confiscate all money in personal bank accounts over $500 replace it with low yield/long term government paper...
3. Nationalize all private or company retirement accounts and replace them with government guaranteed pensions backed by low yield/long term government paper...
4. Forbid all private ownership of gold and silver and require it turned at a low price, say, $1000/$12 oz., payable in low yield/long term government paper...
5. Forbid taking more than $500 in currency out of the country...
6. Forbid US citizens from having foreign bank accounts...
7. Tack a 2.5% federal surcharge on all banking and credit card transactions...
8. Lower threshold of inheritance tax to $250,000 (soak those millionaires and billionaires!)...
9. Nationalize all petroleum/gas resources and production chains all the way to the pump...
... I'm sure you can think of hundreds more "plans". No doubt the 0bama Regime can and will.
That’s my plan. I’ve started investing in multifamily properties. My main requirements is that it must have a positive cash flow - I look to pay the mortgage, taxes and insurance with 50-60% of the rent.
My thought is that if there is inflation rents go up and I earn more. The value may drop slightly in the near term, but long term it should go up. All the while earning me 15-20% return on investment.
I figure this will be my retirement, I don’t have much faith that I’ll get much through SS.
In my area, it's grown on BIG lots!
And then the next year, soybeans are.
That’s a good plan, and if you’re young and can handle the maintenance yourself, should work: as long as you don’t have complete animals that thrash your stuff!
Put down a lot, and get a fixed rate. Then pay it off with inflated dollars.
But get rid of variable rate debt ASAP.
Possibly. But, real estate requires a stable social order. Once the money is worthless, I suspect social chaos might set in and real estate might become kindling for ticked off Obama voters.
Then go to location without a lot of them!
Also, if the chaos kills off a LOT of people, there won't be much DEMAND for what you've got!
MAD MAX: Fury Road
I agree.....Real Estate should be an escape not an investment in these troubled times.
One of my main requirements when buying a property is that it’s a place I would want to live in.
Because of that requirement I’m able to get good tenants. I’ve dealt with inner city rentals before - it’s too much work.
So in an area of about 4ft by 12ft you could have 36 corn plants,and some good corn plants like "incredible" will produce two ears per plant in a good growing season with proper fertilizer.That's up to 72 ears of corn.
Corn loves nitrogen so when it start growing about 5-6 inches tall throw some around the plants then when it starts "tassel ling" do it again.
Well drained soil works fine My garden is well "drained". Actually a well drained garden does the best.
Rather surprised no one wanted to dispute that post about the design of the system and the requirement for exponentially more debt.
bump
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