Fresh data suggest that the Democretin/Hussein Obama Depression is worsening - ("Here are some economic realities associated with our deepening fiscal hole. It's bad. As in, $11 trillion bad.")

On Wed, 24 Jun 2009 06:28:49 -0700 (PDT), "Harry Hope, Lazy Unemployed Democretin" <...@yahoo.com

On Jun 16, 3:32 pm, Harry Hope <...@ix.netcom.com"Here are some economic realities associated with our deepening fiscal
hole. It's bad. As in, $11 trillion bad."
http://finance.yahoo.com/expert/article/economist/172169
Ben Franklin supposedly said that it's better to skip supper and go to
bed hungry than it is to wake up in debt. Ben would be quite
disappointed in us. We Americans didn't skip dinner; instead, we opted
over the past decade to gorge at the buffet and then charge it.
We woke up as the world's largest debtor -- so deeply in debt that our
global creditors are getting nervous, and rightfully so.
Here are some economic realities associated with our deepening fiscal
hole.
It's bad. As in, $11 trillion bad. That number alone doesn't mean
much, at least without context. So here is some context. First, that's
roughly $40,000 for every man, woman, and child in the country.
Second, our debt is projected to grow to roughly 100 percent of GDP by
2010, meaning that, if we were to devote everything we produce as a
nation to paying down debt, it would take us an entire year to pay off
what we owe.
Eating Up the Global Capital Pool
Other countries have become more indebted as a percentage of GDP, but
they were small countries, so they sucked up less of the global
capital pool. There is only so much money in the world, and we have
borrowed a shocking proportion of it. The only other time the U.S. has
been so indebted was at the end of World War II.
Big debt means big interest payments. The Chinese haven't loaned us a
trillion dollars because we're good-looking; they've loaned us a
trillion dollars because we pay for the privilege of using that
capital. Interest payments now make up more than 8 percent of the
federal budget -- meaning that nearly one of every 10 of your tax
dollars gets you absolutely nothing in return. No schools, no bridges,
no domestic wiretaps. That's just the cost of servicing the debt we've
run up.
And we've done nothing terribly productive with all that borrowed
money. Debt, after all, is not inherently bad. If you borrow $100,000
to go to medical school, then you've probably done a very smart thing.
When you graduate, your earning potential will be higher, enabling you
to live better even after you pay off the loans (with interest). In
this case, you used borrowed money to invest in something that made
you more productive.
Now suppose that you borrowed $100,000 to sustain a lifestyle that you
could not otherwise afford: to pay the rent, to buy nice clothes, and
to make the payments on your luxury car. When that bill comes due
(with interest), you're no more productive than you were when you
started borrowing. You borrowed used money for consumption, not
investment.
Unfortunately, America's borrowing resembles the latter more than the
former. We haven't upgraded our transportation infrastructure or made
major investments in alternative energy or financed education for
those who could not otherwise afford it.
Stop the Bickering
We need to stop bickering about who got us here. Was it the Bush tax
cuts (yes) or the Obama stimulus (yes) or profligate Congressional
spending (yes) or voters who continually reward pork more than
parsimony (yes)? But analyzing just overcomplicates things. We are
deeply in debt because we have routinely spent more than we collect in
taxes. That's just a mathematical reality that has become needlessly
confounded with politics.
If you're a small government conservative, that's great. But let's say
enough of the tax cuts without corresponding spending cuts. Those
aren't tax cuts; they are tax postponements. You've just left the bill
for future taxpayers, with interest.
And if you believe that government can and should build a stronger
America, terrific. I'm sympathetic: I like early childhood education
and the high-speed rail and Army sharpshooters who kill pirates. If
you want those things, then pay for them.
Big government or small government, the revenues need to equal the
expenditures. It really is that simple.
When the Big Bills Come Due
The big bills haven't even come due yet. If the U.S. were a family,
we'd be crouched over the kitchen table trying to figure out how to
pay the Amex and Visa bills -- and the gigantic Mastercard bill would
still be in the mail.
The big bill still in the mail for the United States is for our
entitlement programs -- primarily Social Security and Medicare. We've
made huge commitments to these programs that are not adequately
funded. That Social Security check you're counting on when you turn 65
doesn't show up in the debt figures, but it's still money that we will
owe. Lots and lots of money.
And the Chinese are worried U.S. debt, as they should be. All debtors
have creditors; ours are all over the world. The biggest one is the
Chinese government, which has been buying up U.S. Treasury bonds with
all the vigor and foresight of a 1990s Las Vegas real estate
developer.
If we don't honor our bonds, China doesn't get to repossess the White
House or the national parks; they don't get to carve their own leaders
on Mt. Rushmore. Treasury debt is secured by the "full faith and
credit of the U.S. government" -- which won't command much at auction,
if it comes to a foreclosure type situation.
Chinese officials aren't worried about bankruptcy because the U.S. has
an easier and more insidious option -- we can print our way out of the
problem. Our debt is denominated in dollars, and the U.S. government
has the authority to print those dollars. We could take a page from
the Zimbabwe policy manual and just print money to pay our bills --
thereby debasing the currency, creating inflation, and devaluing the
real value of what we owe.
Is that a sensible solution? No, as it imposes the costs of inflation
on all of us. I don't know anyone eager to revisit the 1970s (in terms
of economic performance or fashion).
Is it a possibility? You bet. In fact, I'm surprised that long-term
interest rates haven't climbed more than they have. (When long-term
lenders fear inflation, they demand higher interest rates to protect
against that contingency.)
The solution to all this is straightforward: Spend less than we take
in, and use the surplus to pay down debt. At the risk of lapsing into
economics jargon, yes, this is going to suck. Think about it:
Americans don't like their current tax bills -- which aren't even high
enough to pay for our current spending, let alone the bills we've run
up from the past. In the future, we will have to pay more and get
less.
But we've done it before. We paid off the debt accumulated during
World War II. In fact, the ensuing decades saw some of the most
impressive gains in wealth and productivity in American history. But
it will require a radical change from what we're doing now.
An economic recovery will help. But we can't pretend that will be
enough. We need to raise taxes, cut spending, and/or reform our
entitlement programs. Probably all three, and in a serious way.
Will that dampen economic growth in the short run? Yes. Will it
jeopardize important social programs? Yes. Will it compromise our
ability to make important public investments? Yes. Does it limit what
we can spend on healthcare reform? Yes.
But as Ben Franklin would have pointed out, we should have thought
about that before ordering room service and then charging it to a
credit card.

THANK YOU PRESITARD HUSSEIN OBAMA!

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Headed in the wrong direction.

Harry