Wednesday, January 30, 2008

Spending our way to bankruptcy

Americans do not need any more proof that the fiscal and monetary leadership of the United States is bankrupt. Both the Republican administration and the Democratic congress have joined hands in the total destruction of the American dollar.

The combination of the Federal Reserve (Fed) lowering interest rates and the Congress promising legislation allowing for dollars to fall from the sky to Americans (with the president's encouragement) is pretty much sealing the fate of the American currency.

The so-called $150 billion "stimulus" package insures that the value of the dollar drops even further, buying less and less. Foreign governments may not even accept the dollar except maybe under threat of attack.

No one, not even the government of the United States, can continue to spend more than it earns, and pay for that difference through the printing of money, without severe economic consequences.

Extremely little is even mentioned in the media as to where the $150 billion dollars is going to come from. The federal government is already in the hole to the tune of almost $250 billion for the year, not to mention that the total federal debt is close to $10 trillion, which does not even include unfunded liabilities of Social Security.

The current deficit and debt increases the amount of interest to be paid, which in turn increases the amount of government expenditures to pay. In order to pay for the increased expenditures the government must increase tax revenues, but the leaders of this once great nation are engineering tax decreases.

Tax decreases are a good thing because they allow for individuals to keep more of what they earn and decide for themselves how to use their income. However, when the expense side is increasing exponentially, there is not enough revenue to cover the bill.

Hence, the Fed comes to the rescue to lower interest rates to increase the supply of money to make up the difference - which only ratchets up the inflation rate even further.

The nation's leaders have put all Americans in a very precarious position, encouraging more individuals to go into further debt and leading citizens to bankruptcy.

Federal government officials have no money to give to American citizens except that which they first take from American citizens. In other words, federal government officials either directly take from some to give to others through taxation or, as is currently done, they rob everyone through inflation (the increase in the supply of money).

The economic "stimulus" package being offered reminds one of the airplane dropping fire retardant over a forest fire in order to put out the fire. However, in this case what American government officials are doing is dropping gasoline on an already raging fire.

The solution to this whole economic morass is very simple, but very painful. No American government official - except for GOP presidential candidate Ron Paul - proposes a gigantic cut in all government expenditures greater than the necessary cuts in taxes.

If the only solution to every economic downturn is the printing of more money, then hyperinflation is in the future of every American.

Dropping dollars into the laps of individuals so they can go out and spend more than they earn encourages bankruptcy, not economic well-being. With dollars dropping all over America and the world, $3 for a gallon of gasoline will seem extremely low. We are in a financial meltdown.

2 Comments:

At 7:34 AM, Blogger W. W Woodward said...

I hope then , you are actively campaigning for and will vote for Dr. Paul. He seems to have the ONLY plan to get this country headed in the correct fiscal direction.

 
At 12:57 PM, Blogger Thomas Bell said...

I was campaigning for Ron Paul since before he announces his running for the presidency (in March), and I will continue to campaign until he is President, or he resigns. BYW, I knew about Paul since around 2003, and I agree with what you said.

 

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