USA or Zimbabwe?

From Dr. Martin A. Weiss at Uncommon Wisdom:

FACT #1: The official national debt now stands at $12.68 trillion — an amount equal to about 88.5% of all the goods and services our economy produces in an entire year.

FACT #2: Contingent obligations for Social Security, Medicare, Medicaid, veterans, and pensions now stand at an additional $108 trillion over and above the "official" national debt.

FACT #3: State, county and local governments are nearly $3 trillion in debt. Many can't pay and will ultimately demand that Washington assume responsibility for that debt as well.

FACT #4: Total federal, state and local government indebtedness now stands at a mind-blowing $123.6 trillion.

FACT #5: Last year, Washington added $1.4 trillion to the debt. In this fiscal year, the Obama administration will add another $1.6 trillion!

FACT #6: In addition to funding the current trillion-dollar-plus deficits, the U.S. Treasury must borrow MORE each year to replace bills, notes and bonds that are maturing.

FACT #7: This record-shattering borrowing by the Treasury has resulted in a Mt. Everest of Treasury obligations being dumped onto the market, which naturally depresses bond prices and drives interest rates higher.

FACT #8: In a desperate attempt to keep interest rates low, the Bernanke Federal Reserve has created $1.25 trillion out of thin air to buy mortgage-backed securities ... another $300 billion to buy U.S. Treasuries ... and yet another $170.6 billion to buy other government bonds — a total of nearly $1.7 trillion in all.

FACT #9: From September 10, 2008 to March 10 of this year, Bernanke increased the nation's monetary base from $850 billion to $2.1 trillion — a 250% increase in just 18 months.

FACT #10: Despite this massive money-printing, the yield on the benchmark 10-year Treasury note has STILL risen by more than one-fifth — from 3.2% to 3.86% — since December.

FACT #11: Because of this massive money-printing, the U.S. dollar has lost nearly 10% of its value in the past 12 months alone.

The Clowns in Washington have to STOP THE SPENDING!

Stop Spending!!!!

We're drowning in red ink with no end in sight, yet the Congressional Clowns continue to pass stimulus bills and other entitlements as if we all had high paying jobs and loved sending money to the IRS.

The chart above shows the growth OF US debt in TRILLIONS OF DOLLARS since 2001.

Beware!

Every day for the last two years, I have received emails and newsletters from numerous sources regarding the precarious financial position we citizens of the United States are in. The mildest warnings made my hair stand on end while the more trenchant made me wonder if there is any hope at all. Even John McCain, RINO, now says, "President Obama is leading an extreme left-wing crusade to bankrupt America." "Coruptocrats" have made selfish, stupid, and even criminal decisions that robbed all of us.

The mass media continues to babble about recovery, but serious sources keep saying "unsustainable." This chart from the Committee for Economic Development predicts that our debt will reach 60% of GDP by the end of this year.

Now is the time to get your own financial house in order, remembering that cash is king during recessions and depressions. Now is the time to demand that your Congressional Clowns STOP SPENDING immediately. Now is the time to pray for your country.

Defeat the Debt

Defeat the Debt is a website all Americans should bookmark. Among other things, there one learns:
* one million seconds will pass in 12 days
* one billion seconds will pass in 32 years
* one trillion seconds will pass in 31,688 years

No wonder Obama quietly, almost secretively, signed the bill that raised the US debt limit to $14,300,000,000. He did it late on a Friday afternoon before a holiday weekend. At one dollar per second, it will take us 453,138.4 years to pay off just the principal. Then there's the interest to factor in.

Our New Pledge*

"I pledge allegiance to Americaʼs debt, and to the Chinese government that lends us money. And to the interest, for which we pay, compoundable, with higher taxes and lower pay until the day we die." *from The Daily Bail.

American tax payers daily need to pay more than $500 million just to cover the interest on our debt, most of which is owed to foreign governments. Obamas first budget deficit is greater than ALL of the Bush deficits combined.

Just in Case You Missed It Last Time

I posted this great explanation of the debt and deficit earlier, but it's so good, it's worth repeating. Also it amplifies this morning's post. Embed and send to your friends and neighbors who need the fiscal education.

The Dollar Is Falling!

And our leaders are encouraging it because it preserves their power momentarily. Just look at the chart above left. We've already heard about this year's new trillion dollar plus deficit; it's 3.5 times the unconscionable debt we had under Bush in 2008. And which debt Obama strongly attacked when he was just a candidate; however, when he gained power, he suddenly forgot the danger. When added to recent deficits, the sum totals $11.8 trillion.

Because nothing drastic has happened yet, and because the Obama administration has been so terribly busy trying to change our country, most Americans have become numb to the implication of the facts before them.

However, other countries have not been so complacent. They are shifting out of dollar denominated investments and debts because they clearly see the (almost) inevitable decline in the dollar's value.

Perhaps they are paying attention to our unfunded debt such as Social Security, Medicare, Medicaid, Veteran's Benefits, and government pensions. These are not even listed on the balance sheet, but they amount to almost $104,000,000,000,000 in the foreseeable future.

If Obama passes a Health Care Reform bill, inevitably more will be added to the deficit.

And yet our leaders loudly whistle past the graveyard while they busily print more money to pay back our debts with less valuable dollars. No wonder there is a growing demand for a new international currency.

Ancient Rome, the Byzantine Empire, and Post WWI Germany all tried to use the same method when national obligations became too great to ever pay back.* After all inflation is a silent tax and many hardly even notice when politicians do it. But inevitably, it leads to the ruin of the country. In the fourth century AD, the Roman denarius fell to 1/50 of its value in a mere 13 years. The Bezant took longer, but by the 14th century it had virtually ceased to exist despite the fact it had once been the international currency. The Reich mark plunged from 4.2 to the dollar before WWI to 1,000,000 to the dollar by August 1923.

The chart below illustrates the dollar's loss of value in recent years -- 36% when compared to other currencies and a whopping 75% compared to gold. Without a drastic change in Washington, the dollar will decline even more precipitously.

*One economic writer, Larry Edelson, believes that if the US government started paying off its debts at the rate of $100,000,000 every single day, it would take 3,446 years before the debt is paid off. The statistics above came from the Uncommon Wisdom website.

Everybody Is Cheering

After all the Dow topped $10,000 yesterday. But what does it mean? With Treasury printing presses running at top speed, it doesn’t carry the same financial euphoria it used to.

For example, ten years ago the Dow was $11,497 and it would have taken 40.6 ounces of gold to equal that value. But yesterday’s Dow would only require 9.44 ounces of gold to “buy” that amount.

Inflation has plagued the US all through the 20th Century and threatens to become worse in the 21st because our Federal government insists on spending more money than we can reasonably pay back. Like the Banana Republics we recently disdained, we keep printing more fiat money to avoid raising taxes and to hide the growing reluctance of other countries to buy our treasuries.

"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose."
- John Maynard Keynes, 1920

Deficit Estimate and Rule One

Friday evening, the Obama administration released the news bomb that its deficit estimate had increased from $7,000,000,000,000 to $9,000,000,000,000. Of course, they hoped that no one would notice since it was done just before the weekend and hoped that the mass media would consider it old news by Monday and generally ignore it. Since it is an estimate by the administration for ten years, one almost knows that it's a lowball; the reality will probably be much worse.

Those of you who've been long time readers know Rule One refers to various ways that politicians manipulate news.

Fabulous New Visual on Deficit

Watch this short video to REALLY see how fast our debt is adding up, then share it with your friends. According to it, Obama is driving 174 miles per hour compared to Truman's negative 20 miles per hour.

$734,152,000,000

That’s the total amount spent if 1 million dollars were spent every single day from the time Christ was born until the end of 2010. It still adds up to less than $1 trillion.

According to the inspector general of TARP, the potential financial commitment of US taxpayers to fix the financial system could be $23.7 trillion. Now, you figure out how many thousands of years it would take to pay back $23,700,000,000 at a million dollars a day.

Then consider the current deficit (as of 7:22 am EST today) is already $11,614,505,913,666.00 or $37, 883.13 for each man, woman, and child in the country. Both the totals and amount each person owes grows by the minute. Just wait until the bills for health care “reform” come in.

Texas VS California

Way back in September, Nelson Guirado of Assymetric provided an excellent analysis of the current status of California and Texas. This is important now because California has been following the liberal program on taxes, the environment, and social services for years, while Texas has implemented more conservative laws and programs.

Here are Guirado’s highlights (remember these are figures from the middle of September):
1. Education results (with similar ethnic groups): Texas ranks 25th while California lags behind at 47th.
2. Unemployment in Texas is 4.3%, but in California, it’s 7.3%.
3. Taxes: Texas has the third lowest rate among the states while California is ranked eighth highest.
4. Deficits: California has a deficit of $15, 000,000,000 while Texas has a surplus.

From what I’ve observed since January 20, Obama and the Democrat Congress are rushing headlong to emulate or overtake California’s programs. Why? We have a proven life lesson right before our eyes.

The Real Recession (As Opposed to The One The Media Tried to Whip Up for Six Years)

It may take awhile to get back to normal economically. Even the Washington Post has admitted this week that the “Stimulus” is not working. Unfortunately, the knee jerk reaction by some politicians is to start demanding a second “Stimulus” bill.

I think the better reaction would be to pass a bill making it a felony for any Congressional Clown to vote on a bill he has not read. If anyone had bothered to read it before passing the blasted thing, they would have understood that is was nothing more than a conglomeration of Democrat pet projects cobbled together with no real regard for stimulating the economy.

Unemployment continues to rise everywhere except Washington, DC. The official figure, based on people filing for unemployment checks, is 9.5%. According to a Wall Street Journal article last week, the real unemployment figure may be closer to 16.9%. That percentage also includes those who no longer receive unemployment checks, either because they accepted part time jobs in lieu of full time work or gotten out of the job market all together.

Then there is an insightful article in yesterday’s American Thinker about the states with big deficits. When the talk centers on mere numbers, the figures vaguely seem bad, but when taken as a percentage of state budgets, one gets a much better understanding of the crisis. For example, California’s deficit of $53,700,000,000 represents 58% of its budget. According to AT, the reason for the deficits is that tax revenues are down. In fact, tax revenues have dropped more than they did during the Great Depression.

And They Complained about Bush Spending

According to the Wall Street Journal, federal spending in 2009 will account for 28% of the economy while deficits mount. (No one dares to predict how high the percentage will be after more Obama changes take effect.) WSJ claims that fact is behind the highly unpopular edict that employees pay taxes on 25% of their business phones because of personal use. What’s next? Taxes on personal time in the wash room?

The bright spot, according to the editorial, is the possibility that this will incite rebellion against all the hope and change they’re giving Americans.

8 Months = $1,00,000,000,000 Debt

We have faced $1,000,000,000,000 in debt before, since 1981 in fact. At that time the trillion referred to total or cumulative debt acquired over years of deficits. At the end of May the US ran up a trillion dollars in debt in less than a year. Investor's Business Daily has an excellent editorial today about some of the implications. Read it and weep.

The Definition of Insanity

Someone needs to remind President Obama that “The definition of insanity is doing the same thing over and over again and expecting different results.” On *Saturday he admitted in a C Span interview, “We are out of money now.”

That’s precisely what the Tea Party People have been grousing about for months.

Unfortunately, Obama went on to explain that the $1,700,000,000,000 in debt and the deficit of $11,000,000,000,000 was NOT due to his actions – the fault lies with previous administration(s), particularly in the area of health care. (Thus reminding some viewers of a three-year-old with icing on his cheeks earnestly telling his mother that he was NOT the one who ate the icing off the cake before it was served.)

He further enlightened the interviewer by stating that the short term problem of spending money on the financial and automobile industries coupled with a recession would soon be dwarfed by the long term problem of increased health care costs if we do nothing about health care now in spite of the mounting deficit.

In essence, he said we should continue spending even if we are out of money. It sounds exactly like the theory of someone who regularly maxed out his credit cards and borrowed on his home equity to pay them.

Frankly, the theory seldom, if ever, works well in the real world. Eventually one runs out of the possibility of credit on all levels. And it has never worked on a national level, as numerous failed regimes attest.

Footnote: Over the weekend I heard a radio commentator say that our deficit now exceeds the value of all the gold that has ever been mined in the history of the world. I have no way of checking the truth of his statement, so I offer it with that caveat.

*Always, always, always pay attention to the news on Friday evening and Saturday morning. That’s when politicians dump whatever bad news they can no longer conceal. Their modus operandi is to slip the information out when people are least likely to pay attention to the news and by Monday, they hope that new “news” will overshadow the bad “news” they just released. This “Friday Night (or Saturday) Dump” is especially effective on holiday weekends. Consider this Rule Three for the Mass Media.

Spend And The Lord Shall Send?

Now we find out that the man who runs our country, our banks, and two of our automobile companies, the very man who plans to take over our health care industry ASAP, didn’t even run his own household very well. Apparently Obama and Michele were up to their eyeballs in debt before the book deal came through and Michele got a sweetheart salary increase of 260% the year he became US senator.

In April, The American Thinker had an analysis of their personal finances during the 2000-2005 period from public records. With around $240,000 in annual income, Obama had little or no savings and regularly used lines of credit on his home to make ends meet. Now we understand why he had trouble using his credit card during the Democratic convention 2004. They reported annual child care expenses of $23,000 to $24,000 and Michele recently mentioned that they spent about $10,000 for extra curricular activities for during those difficult years.

Book royalties and an astronomical raise rescued the family finances in 2005. Do you think Obama secretly believes that something like that will rescue the US from his spending spree that quadruples the national debt during his first year in office?

Obama Finally Gets It! . . . Or Does He?

At a town hall meeting yesterday, Obama “courageously” spoke out against excessive spending. "The long-term deficit and debt that we have accumulated is unsustainable. We can't keep on just borrowing from China or borrowing from other countries. We have to pay interest on that debt and that means that we're mortgaging our children's future with more and more debt.”

Even the most rabid conservative could say “amen” to that; it was part of the Tea Party message. However, Obama was using that spiel as a major selling point for his health care proposals. Somehow in his magical economic utopia, if the government spends more money on health care for everyone, then we will save money, get the economy going, and get out of debt.

This is from the guy who within 107 days in office has increased the deficit to 11.9% of the Gross Domestic Product, or $1,800,000,000,000. Since 1946, that percentage has varied, but the average for all of those years was 2.3%. In 1934, the year the Depression deficit peaked, the percentage was 5.9% of the GDP. (Read Investor’s Business Daily for more.)


And the people responsible for this are the same ones who excoriated Bush’s $400,000,000,000 deficit. Go to Heritage Foundation to see an excellent visual comparison. Since everyone tends to nod off when mentally comparing billions and trillions, it is necessary to have a visual to understand the impact. In fact, the Obamatrons are depending on our misunderstanding to continue their plans to change the country without opposition.

A Billion Here,

A billion there, and pretty soon you're talking about real money. Sen. Dirkson was so right, but after a while everyone just gets numb to the figures. Check out this counter provided by the 9.12 Project:

WWJD?

What would Jefferson do about trillions of dollars of debt that Obama thinks is expedient?

"We must not let our rulers load us with perpetual debt. We must make our election between economy and liberty or profusion and servitude. If we run into such debt, as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our calling and our creeds . . . [we will] have no time to think, no means of calling our mis-managers to account to rivet their chains on the necks of our fellow-sufferers . . . . And this is the tendency of all human governments. A departure from principle in one instance becomes a precedent for [another] till the bulk of society is reduced to be mere automotons of misery . . . . And the fore-horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression."

--July 12, 1816 letter from Jefferson to Samuel Kercheval (with a tip of the hat to ND Sullivan)