Fiscal Madness and How to Counter It


by Robert Williams

The National debt may have started as a long term modest threat that might have been adequately handled when our nation was truly prospering.  Lately it has through neglect and unconscionable acceleration in borrowing,  become an immediate threat of deadly proportion.  Three things about it are appalling:  its enormity of scale,  the enormity of betrayal and  utter lack of conscience shown by those who perpetrated this monumental irresponsibility, and the general apathy of the population.  Part of the apathy is the result of a hoax that the economics involved are “too complicated” for mere citizens to understand so we must put our faith in the so-called “experts” our government has chosen to “manage the economy”.  It should be quite evident by now that these wonderful experts have only succeeded in making things worse.  As for the complexity hoax we can dispense with that in the few following paragraphs.

That the consequences are dire is indisputable if one observes a few simple facts:

1- Private individuals and corporations are protected from excessively adverse consequences of fiscal irresponsibility by the laws concerning the economic state of “bankruptcy”.  Those with no financial connection or work connection to bankrupt corporations or bankrupt individuals are either not affected at all or not seriously affected.  NOT SO FOR NATIONS.  For nations it is the entire population that is affected.  This is especially true for democratic republics such as America where the ultimate accountability for the nation’s actions and the nation’s debts constitutionally lie with the citizenry.  As Greece and other European countries are now finding out,  irresponsibility comes back to bite and bite hard.  For countries as large as the U.S. , there is no other country nor world financial institution huge enough nor willing enough to literally “bail out” America.

2- In our government there are two main categories of expenditures.  The first is Mandatory expenditures including interest on debt, entitlement programs, Medicare, Social Security, etc. Congress doesn’t even see the Mandatory spending — it just goes out automatically as an unavoidable obligation. The second category is Discretionary spending related to the thousands of agencies, the public infrastructure, the military, Homeland Security, foreign aid, etc.

3- The government is by definition not an industry.  It cannot “make money”.  It may print it — but the paper is worthless unless given intrinsic value by the millions of transactions that go on every day in manufacture and trade.  No elite few people in government circles are anywhere near smart enough to analyze these millions of transactions in any given instant and predict their effect in order to micro-manage the entire economy.  Yet they have the false arrogance to try.

4- It has been historically proven many times that when governments attempt to solve their economic foolishness by printing more money it does not work.  It merely de-valuates the money to the point it is no longer practical as a medium of exchange and everyone in the country suffers.

5- Right now in America,  the economic mess is so bad that it matters little what person is in the White House or which politician says what.  As long as the only proposed solutions are mere band aids the situation will only get worse very rapidly  IN THE COMING 5 YEARS !

HERE IS THE ARITHMETIC  (yes it is simple — only politicians insist it is complicated because they want the population to stay unaware of their betrayal).

The explosion of baby boomer entitlements, the added unexpected spending of stimulus packages and bailouts,  and the explosion of debt caused the 2010 Congressional Budget Office to predict that in 15 years the mandatory and interest expenses alone would exceed revenue.  They were wrong on only one point.  It happened only one fiscal year after their prediction,  not 15 years later.  How bad is the debt acceleration? In October 2012,  the first full month of fiscal 2013, we citizens accumulated nearly $200 BILLION IN NEW DEBT.  That is 20 percent of the way to a trillion IN JUST 31 DAYS!  It took 200 years for us to accumulate one trillion  in debt and just 286 days to go from 15 trillion to 16 trillion.  It becomes evident that we could cut all Discretionary expenses to zero including having no military at all — and our Mandatory expenses would still be greater than our revenue.  Also, we could raise taxes one hundred percent on the very rich and even that would be insufficient.  The problem is not taxes,  the problem is that our irresponsibility has blinded us to the simple fact that the country can no longer produce enough taxable income to service our enormous debt and eventually pay it down.  We are literally choking on debt and wasting enormous amounts of the people’s hard-earned money on ever-increasing interest!


All the proposals so far have been useless band-aids save one.  That one is the proposal to put an immediate limit on debt increase.  Politicians have so far resisted this because it would mean cutting some popular automatic increases in spending.  People used to luxury and “free stuff” (that is not really free)  don’t take kindly to belt tightening.  Some of that attitude is justified.  Take Social Security for example.  A huge portion of the population had SS premiums deducted all their working lives with faith they would get it all back after retirement.  Originally these accounts were supposed to be “kept separately safe” by the government.  Instead the government changed the goal posts by merging SS money with the “general budget” and spent the money unwisely on pet vote-getting projects.  And who is the government that screwed the working people?  The very representatives that the people voted for.  In short “we the people” did it to ourselves.  Now “we the people” have to face the consequences.  We have already lost jobs overseas and now we are losing economic respect.  Soon, like Greece, we will not be able to borrow at all.  Both of these factors will be hard to recover.

1- We must demand that a debt ceiling law be passed immediately to stop the burgeoning hemorrhage and allow time for the solutions proposed below to have an effect.

2- In spite of legitimate concern over climate change, we cannot change our oil dependence overnight —  so we must bring gas price increases to a halt by rapidly increasing domestic production and use of coal and oil and natural gas while at the same time improving our solar and wind and ocean-wave energy sources.  We can ease off on oil and coal when the green energy sources finally take hold.  This will curb destructive inflation and make debt ceilings more possible to meet.

3- We must demand that government get out of the way and stay out of the way by creating a stable business-friendly environment of sensible regulations and reliable tax structure so new businesses can trust that their government relations will be predictable enough to justify investment.

4- Last but not least,  we the people can devise plenty of ways to help each other out instead of expecting government to do it all.  We can take a lesson from WWII when Americans voluntarily tightened their belts, worked harder and longer for fixed pay,  created car pools to cut down gas usage, shared responsibilities, did their own home maintenance, formed community help-the-nation groups, and a host of other cooperative grass-roots life-style changes.  Whatever changes and sacrifices it took we were willing to do it.  Why?  because everyone realized the utter disaster that would follow laxity.  Now again our nation faces utter disaster and it is time again for a major volunteer public effort. At the very least we should grit our teeth and pay more to BUY AMERICAN.  That will inspire American business to create local jobs.

The government will most likely continue grid-lock, the politicians and pundits will blather blather blather, but we the people are still free to take positive ACTION,  AND WE MUST TAKE ACTION WHILE WE STILL CAN !

5- Individuals need to be aware of these facts, badger their representatives frequently, cut down on unnecessary personal expenses, stop buying houses they cant afford,  and put their money either in American businesses that do not manufacture off-shore, or in personal (not government) savings.  Folks paying mortgages should try to pay them off as rapidly as possible so if times get worse they will at least own their place to stay.

6- Ronald Reagan had it right when he claimed the scariest thing is to have a person at your door announcing he has come from the government to help you.  THE LESSON IN THAT IS HANDLE YOUR OWN AFFAIRS — DON’T TRUST ANY GOVERNMENT TO HANDLE THEM FOR YOU.


Posted November 13, 2012 by Candidus in Uncategorized

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