When the fiscal cliff crisis came about, the bozos in Washington actually decided to try to find a way to cut $1 trillion in debt over the next 10 years. Of course, they have failed miserably in their attempt to do that. But, let’s say they were successful. All that means is $100 billion per year! Big deal. That’s a drop in the ocean and they can’t even come up with that. The U.S. is adding at least a trillion every single year to the debt!
The estimates are that our present $17T in debt will be $22T by the time Obama leaves office. I seriously doubt if it will only be $22T because I see no evidence the federal government will do anything to stem the tide of massively spending more than it takes in. But, it doesn’t matter if it is $22T or $25T or $30T, the notion of slowing annual deficits – thus slowing the rate the debt increases – is laughable. These bozos can’t even find a way to cut one cent off the debt when facing financial calamity.
And, that doesn’t even count the $124 Trillion “unfunded liability” – Social Security, Medicare, Prescription Drug program, Federal pensions.
COOL FACTOID: The $124 Trillion “unfunded” (meaning it doesn’t exist – that the promise has been made, but all monies paid into it has been stolen, or spent)... unfunded liability is equivalent to well over one million dollars per taxpayer. See the bottom line, right hand side of this link.
If you think the US debt has risen at a rapid rate (see graph below) you haven’t seen anything yet. As boomers retire (or attempt to retire), the drain on Social Security and Medicare will dwarf what it used to be, and annual deficits will escalate far beyond what they already are. You can't bank on very many boomers ending their life at 60!
COOL FACTOID: At least I can say I will have never received a cent from Social Security and Medicare! You can divvy up my portion between you as long as it exists.
There are only two possible eventual outcomes.
The first is default. If you don’t think a governmental entity can just default, you’re sadly uninformed. Cities are already defaulting on muni bonds because they can’t print money - see Stockton, Ca. or Detroit, Mi. The United States government would be forced to default on trillions and trillions of dollars it has borrowed. That means others won’t continue to loan money to the US unless they get astronomical rates of return. That would be impossible for the government to deal with over time. At some point, the interest alone would consume all revenues in such a scenario.
The second is more likely. The United States turns on the printing press like there is no tomorrow – because there won’t be. The day is coming when nobody is going to loan the US money unless the rate of return (assuming you ever get back any of the principal or the interest) is 20%, 30%, 50%. Thus, it’s only a matter of time until the government starts printing (creating) money so fast that the value of your income is worth less and less. As you should clearly be able to see, that means your standard of living will be lower and lower and you will have to work longer and longer.
I'm reminded of a Seinfeld story. He had an intro to one of his episodes about the guy who, as a teenager, was tearing tickets at the local movie theater. Then, 60 years go by while he gets married, has kids, has grandkids, has a career… and then finds himself at the same theater tearing tickets. “It took him 60 years to move three feet.”
In the case of inflation, those who loaned the US government trillions of dollars will be paid back in full, but the value of that money will be far less than it was when it was lent. It essentially means you will give the US government $100 by way of a bond, but when you get paid back, your $100 will only buy $70 worth of goods and services. And, that will continue to happen until the $100 you get back is almost worthless. This process has happened before in other countries that got too far into debt and no country in history has ever been a fraction as much in debt as the US is today - yet, no country in history has had the magician-like ability of the US to cover it up with smoke and mirrors.
When you buy far less with the $100 than you could have when you loaned it to the government, you have massive inflation. And, there is only one antidote to massive inflation – gold and silver.
Can you imagine that every year you made say $50K, that you 1) spent it all… AND… 2) added $20K to your already insurmountable uncollateralized $250K debt? If you were the federal government, that’s exactly what is happening. Who in their right mind would loan you money based upon your “good name”?
Obviously, this beyond astronomical debt can never even remotely be paid off. And, the astronomical rate at which it is climbing (see table below) can’t even be slowed down. All national politicians – Representatives, Senators and Presidents are equally responsible... or rather IRresponsible! The debt has gone ballistic for decades regardless of which group was in power, whether in Congress or the White House. Thus, they are all to blame for “leadership” so lacking, that if it were 200 years ago, they would probably be tried for treason!
If you think one person winning an election over the other will make any difference, you are uniformed and naive. Even if there was a measurable difference, it’s many years too late – long past the point of no return. The only issue today is when will there be a financial meltdown. And, it’s not just going to be the United States. Our infatuation with spending money we don’t have has infected many other countries. The collapse will be world-wide, but far worse in the US and Europe than anywhere else.
So, when will it happen? It could happen tomorrow if China decided to make it happen. China owns more of us every day. China obviously knows it will never be paid back in real dollars, but at this point it doesn’t want to lose its biggest borrower (customer). However, someday, it will decide it is sick of funding our gluttonous appetite for crap or it will want to annex Taiwan or it will want to spread its brand of communism or it will want a much larger percentage of available oil or it will just get tired of being preached to. And that’s when it will pull the plug. All it has to do is wink that it is going to pull the plug on our funding and this entire ponzi scheme will collapse.
Nothing these bozo politicians say matters. The last chance we realistically had was in the 1980’s when Reagan entered office on the back of the commitment that he would get our debt under control. In 1979, the year before Reagan was elected, he commented that the nation was “going deeper into debt at a faster rate than we ever have before.” Now, I dare you to find 1979 on this table!
Reagan capitulated to the “system” just as all other Presidents and Congresses have since the early-mid 1970′s. I bring him up only for perspective. It was a major issue in 1979, but 1979’s debt problem compared to 2013 is like an ingrown toe nail compared to an amputated leg.
The last time I voted for President was in 1996 (Ross Perot). That was a protest vote. The last time I voted seriously was in 1992 for Ross Perot. That was before I realized he was borderline insane, but at least he recognized the catastrophe of debt that was in our future. I haven’t wasted my time since 1996.
Why your vote doesn't matter - G-Rated Version. R-Rated Version.
The single worst problem, by a hundred miles in this country, is the fact that we are dying a slow, but inevitable financial death. Anyone who has any knowledge of economics is aware of this. Anyone who is in national public office is aware of this. They also know nothing can be done to stop it, but telling the truth will only hasten it. Thus, the only thing to do is to delay it as long as possible – until they are out of office, until they have made their millions, until they have secured their children’s future. As to your children and grandchildren and great grandchildren, they couldn’t care less and they haven’t for the last 30+ years.
And, that’s a fact jack! Ignore it at your own peril.
Copyright 2013 Martin Manley Life and Death. All rights reserved.