|
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.
Why am I in this hand basket? Where are we going?
That can be done with simple assignment of various federally owned properties with vast oil resources ~ or coal ~ maybe Grand Escalante! That's gotta' have some value.
If the mid-western “bread basket of America” is in a five-year drought cycle, as some meteorologists fear, food will be very expensive. Do plant a garden next spring, and if you can, raise some chickens and a goat or two. Your family will be thankful you were so prescient.
They left out the most important fact: Congress and the President are taking on debt at a level that is literally High Treason.
There are only four ways to tackle it:
1. increase taxes to bring in more dollars,
2. reduce spending to save dollars,
3. reduce entitlements to save dollars,
4. and/or increase job growth which will result in more overall tax dollars coming in to the government.
And this administration’s solution will be...
Clearly, number 1; they will also dabble in number 3, as long as it doesn’t discommode Obama’s voter base, i.e. Blacks and Hispanics (BOTH the legal and illegal varieties).
As of even date, Obama’s Marxist Revolution is right on track.
In four more years, America will be unrecognizable, even as compared with the America of today.
” There are only four ways to tackle it”
You left out the fifth way, the universal historical solution which has been used over and over across the centuries.
We ain’t payin’, and you can’t make us.
That WAS the plan!
Everybody says it is coming. Nobody will say when. All I know is that the Democrats will NEVER allow it to happen on their watch. They will put it off four more years until things are even more horrible. Then the republicans will happily allow themselves to be elected. Two months into the Repulican presidents term in 2017, the whole thing will collapse. The MSM will happily report the Republicans did it.
Just watch. You know I’m right.
Thanks upchuck.
What makes you think they will not merely say “too bad, so sad, your SS ‘deposits’ are gone?”
bump
They’ll crank SS out of a printing press before saying that.
or (5) get the printing presses going at warp speed (dilute the problem away)
Yup!
We listened all those years ago when Congress told us the money we were paying in to Social Security was being “kept” in a trust; then to Al Gore when he told us it was going in to a “lockbox”. We later learned that Congress had SPENT the money we’d paid in to Social Security and other taxes; spent it to . . buy votes . . I suppose. Of course, they’d spent it to pay other old folk’s Social Security; I guess in a sort of Ponzi scheme. Now, I’m supposed to “trust” their deals?
"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.", Romney was the President to meet this most compelling need; job creation. Unfortunately, since 0bama stole the election via voter fraud and Congress chose to look the other way just as they did with 0bama's identification papers, we're doomed for catasrophe so BLOAT, store food and gas if possible and live out in the boonies.
I’m *there*.
is it hard to grow corn in the backyard?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
