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Is Trickle-Up Poverty the New Prosperity?

           While being assaulted on all sides with Barack Obama’s “trickle-up poverty” and other progressive government boondoggles like Obamacare on top of trillion-dollar national deficits as far as the eye can see and well beyond . . . a strange new phenomenon has emerged to further muddy the waters already obscuring our future hopes. China is now selling off American debt and ridding itself of dollars so that now the largest holder of American debt is . . . drum roll, please, Maestro! . . . the United States Federal Reserve Banking System. Yes, you read that correctly. Federal Reserve Chairman Ben Bernanke is now in the voodoo economics business all the way up to his fuzzy skull.  

           Over the last three months, China has sold roughly $19 billion in treasury bonds and other U.S. debt instruments. China, in other words, has become concerned about the sheer size of the U.S. overall debt and the high probability that the Federal Reserve’s unceasing money printing for the last twenty-nine months has debased and devalued the world’s reserve currency for ‘lo these last 60+ years: the American Dollar. Looking back in history that’s exactly what happened to the British Pound Sterling which had been the World’s Reserve Currency for over two hundred years until the Brits ousted Winston Churchill with World War II still not entirely won and brought in their Labour (progressive-liberal) Party to run the show. Labour inflated their once proud currency so much that the citizens and nations of the world began dumping the Pound and fleeing for gold, silver, the gold-backed Swiss Franc and most commonly for the American Dollar.

            The American Federal Reserve now standing as the largest holder of U.S. Treasury debt means that financing Obama’s third trillion-dollar federal budget deficit in succession has become something the rest of the world has begun to shy away from. China is still the largest foreign-holder of American debt, but the Chinese seem determined to remove their names from the top of that dubious list (other top foreign holders of U.S. debt instruments include: Japan, Russia, Brazil, India, Korea, England, France, Germany and Saudi Arabia). It also suggests that faith and trust in the “Almighty Buck” may be reaching a low-ebb.

            Unlike hard money (gold and silver) and all hard-money backed currencies such as the Swiss Franc and the Kruggerand-backed South African money . . . paper money has zero intrinsic value . . . it only exists and continues to serve so long as people trust the government issuing the paper bills (and that goes double for a nation’s paper debt instruments).    Bernanke has run the printing pressings so long that on a sheer mathematical basis the dollar of today is technically worth only as much as 3.4 pennies compared to the dollar of late 2008 when the financial crisis reached its low spot and the U.S. government started stepping in. What’s going on here? Why is Bernanke printing so much money?

            Bernanke is a well-known student of the Great Depression and has written numerous articles suggesting that the reason the Great Depression turned from a “little-d depression” into a “capital-G/capital-D Great Depression” is because there was never sufficient money in circulation to head off relentless deflation. That is, he believes a vicious-circle of deflation was created and that the continuous dropping of prices fed off itself and destroyed jobs which destroyed buying power which destroyed businesses which destroyed more jobs, etc., etc. 

            There is some truth to what Mr. Bernanke suggests . . . but it’s a lot like yanking your starting pitcher off the mound with the score going from 2-1 in the 6^th to 8-1 against you in the 8^th . . . once so much damage has been done . . . almost nothing will work. Perhaps the twirler should have been sent to the showers when he looked tired after 120 pitches before the start of the 7^th?  Or after he’d allowed a home run and walked the next two batters with no outs in the 7^th? Poor decisions early in a process can make finding good decisions later . . . very, very difficult.

            Rajjpuut suggests a different reading of history is more accurate.    Almost precisely a full decade before the infamous 1929 stock market crash we had a depression start-up that 98% of Americans never heard about. Progressive Woodrow Wilson’s so-called “Invisible Depression” started in late 1919 and was full-blown by the time Warren G. Harding was elected in November, 1920; and much worse when Harding took office in March of 1921 (they had a four-month Lame-Duck session in those days). Production had already dropped nation-wide by 26%. Ignoring the suggestions of his Commerce Secretary Herbert Hoover for immediate implementation of numerous government aid programs and other subsidies . . . Harding did only four things:

1.       Cut government spending by 48%

2.      Cut taxes by 49%

3.      Paid down the nation’s debt by 30%

4.       Slashed government regulatory interference across the board

            In fifteen months the economy had rebounded mightily (just a couple months later,  Harding died in office so he barely got to enjoy his success). The United States was now well into the “Roaring Twenties” the most single prosperous rebound of any economy in the recorded history of the planet. Calvin Coolidge, Harding’s vice-president continued the Harding policies faithfully, but chose “not to run” in 1928.   One of the most popular men in America and a famous philanthropist and author, Herbert Hoover ran for the presidency for the Republicans and won in a landslide over Democrat Al Smith.  Only three men in history have become president of the U.S. without extensive military or business executive or elected experience: Taft, Obama and Hoover.

            Hoover was a famous geologist and mining engineer who married the daughter of a rich banker.  He believed mightily in the “Efficiency Movement” (if you’ve read Cheaper by the Dozen, the father, Frank Gilbreth, was founder of the Efficiency Movement) and believed that the economy was riddled with waste and inefficiency which could be dramatically improved by “experts” like him once they identified the problems and solved them. Hoover became, according to the New York Times “one of the Ten Most Important Living Americans” for his charitable and humanitarian work during World War I.  

            Hoover administered distribution of over two and one-half million tons of food to nine million war victims and was later named head of the brand new U.S. Food administration by Woodrow Wilson when the country entered the War. A member of the Supreme Economic Council after the war, as well as head of the American Relief Administration he continued organizing shipments to millions of starving people in Central Europe.  A well-known philanthropist, Hoover like Teddy Roosevelt and Woodrow Wilson was like them a self-described “Progressive and Reformer.”

             He came to be known as “Wonder-Boy” during the Harding-Coolidge administrations for his notorious and comical lust for expanding portions of everybody else’s bailiwicks into new roles for the Commerce Department. The reporters of his day called Hoover, "the Secretary of Commerce... and Under-Secretary of Everything Else!" Long before he had entered politics he had abandoned laissez-faire economic thinking. Outside of engineering and charitable work he was a terrible micro-manager always on the look out to fix what wasn’t broken.  History shows that Hoover did one very important thing as Commerce Secretary:  he codified and standardized traffic lights across the nation. 

              As soon as he was elected president Hoover set about planning the undoing of much of the good work created by Coolidge and Harding.   He raised government spending and taxes and debt.  He initiated numerous “eleemosynary” style federal activities (reminiscent of his charitable work in World War I) to protect workers and farmers and businesses from the natural vicissitudes of the free market economy. His biggest mistake was instituting a huge tariff designed to protect American farm workers from foreign competition but remove such protections from business; the Smoot-Hawley Tariff Act was to cause great consternation in the business world. The agricultural tariff increase was the second highest in U.S. history and put a lot of people out of work. Overall, once the stock market crashed in 1929, Hoover instituted the biggest big-government policies the nation had ever seen.

             Franklin Delano Roosevelt (who had once praised Hoover in 1919 and tried to get him to run as the Democratic presidential candidate) and his v-p running mate Garner accused Hoover of being a socialist and promised that when elected they would:

1.      Cut government spending severely

2.      Cut taxes dramatically

3.      Pay down the nation’s debt

4.       Slashed government regulatory interference across the board and eliminate many of the socialistic programs of Hoover

          Since these amounted to little more than promises to do what Harding had succeeded with in 1921, people embraced FDR and he won in a landslide taking office in March 1933. History shows that the bottom of the Great Depression was reached in July, 1933, and the bottom of our own “Great Recession” was reached in March, 2009, in each case shortly after the new president took office. Ordinarily the expectation is that after the bottom is reached, prosperity begins to return within six months. In both FDR’s and Barack Obama’s cases, however, government interference made things much, much worse.

          FDR, of course, did exactly the opposite of what he promised. He dramatically raised taxes and government spending and debt and deficits. He expanded all of Hoover’s social and economic programs and added 40 of his own (just one law in 2010, Obamacare, created 384 new government agencies, so FDR was a piker compared to Barack) and made big government a way of life. He also confiscated gold coinage and then instituted an overnight inflation of 69% by pegging the dollar to gold at $35 per ounce (he’d given the citizens just $20.76) impoverishing the taxpayers while enriching the government. Of course doing what Harding did and avoiding what Hoover and FDR did is just common sense . . . something seemingly beyond Obama and Bernanke . . . .

          In June, 2009, when the full-folly of the Obama policies began to outline themselves in sharp contrast to common sense . . . the Chinese held $896 billion in American debt; today they hold $764 billion a 15% reduction in greenback holdings. Since an outright flooding of the market with U.S. debt notes would destroy China as well as the U.S., it seems the Chinese are now buying up gold and silver in large quantities and making an orderly retreat from the dollar – leaving our suspect currency in the hands of less astute nations and of Ben Bernanke. Since the American trade deficit with China alone reached a record $273.1 Billion in 2010, the Chinese are going to have to work awfully hard to keep lowering their dollar holdings . . . so one suspects that gold and silver will continue to rise quickly.

          Bernanke’s monetary policy, known as “Quantitative Easing” a.k.a. “irresponsibly printing money,” has seen the Federal Reserve recently buy up $600 billion worth of Treasury debt. Big Ben’s plan is to hold down interest rates and thus help lower the cost of federal government borrowing (to cover the Obama deficits) and incidentally increase inflation which he believes will stimulate economic growth and create jobs. This is a very Keynesian economic philosophy. In the months prior to his death in 1946, John Maynard Keynes (as the ending of the British Pound Sterling’s  200- year reign as the world’s reserve currency approached) who had long preached against the classical economic wisdom of Adam Smith and Smith’s “invisible hand of the marketplace,” like an atheist seeking God at the last hour repented . . . .

          As Britain’s economic hole under the progressive Labor Party deepened, and his own death drew near, Keynes told Henry Clay of the Bank of England of his hopes that Adam Smith’s “invisible hand” would somehow save the English economy and yank Britain out of the economic swamp it found itself in: "I find myself more and more relying for a solution of our problems on the ‘invisible hand’ which I tried to eject from economic thinking twenty years ago." The inflation destroyed the Pound Sterling as the Labor Party continued with government largesse and Keynes’ deathbed conversion went to naught.

          Here in America recent spikes in food prices and energy costs are a direct consequence of Bernanke’s unofficial devaluation of the dollar. The government continues under-reporting of inflation assisted by the Labor Statistics Bureau’s refusal to include fluctuations in prices of food and energy. Bernanke, however, believes that deflation is still the rule and continues to inflate the currency to avoid a second Great Depression. Since job creation by the private sector is the key, perhaps the government ought to try: cutting spending; cutting taxes; eliminating debt; and getting the government out of the way of the free market . . . oops, that’s been mentioned before . . . .

Ya’all live long, strong and ornery,

Rajjpuut

Obama, Lame Duck Semi-Conservatives

Sabotaged Nation

            America is now standing at the critical crossroads of fiscal- and Constitutional-destruction brought about by over a century of progressive (we must “progress” beyond the outdated and ill-conceived Constitution if we are to make “progress” toward our Socialist-Marxist utopia on earth) politics. This foolish progressivism has created a severe insolvency fiasco both in the states and the federal government created by 109 years of overstepping the Constitution. Right now the problem seems to be assaulting our states more severely because the federal government has shown itself willing to impoverish the people and the states by destroying the American Dollar, a resource thankfully not available to the individual states.  How did we get to this sad situation? It all began with the compromises of the 2010 Lame Duck Congressional Session.

           The most sensational sites for this national progressive shipwreck, besides Washington, D.C. itself, are found in a dozen moderate to high profile states. The strikes and nonsense now playing out in Wisconsin are likely to soon see ugly sequels in California, Illinois, Arizona, Nevada and even perhaps in Florida, Rhode Island, Oregon, Washington, and Michigan. Meanwhile two other states in very bad fiscal condition (New York and New Jersey) appear to have a great chance of avoiding Wisconsin’s fate because their two governors (Andrew Cuomo and Chris Christie, respectively) have shown immense backbone and common sense in attacking their state’s debt crisis head on and their state legislative bodies have largely kept out of their chief executives’ way; not so in Wisconsin where the entire Democratic senate had refused to come to work and is now hiding out in Illinois.   How did we get to this sad situation? It all began with the compromises of the 2010 Lame Duck Congressional Session.

           The situation in the nation stood dramatically better on election eve, 2010 than it stood on New Year’s Eve 2010-2011. The deterioration of the prognosis owes itself to the idiocy of the semi-conservative Republicans holding forth in the 2010 Lame Duck session who caved into President Obama’s demands on virtually all fronts instead of standing strong and letting the newly-elected representatives and senators deal with Mr. Obama’s foolishness in 2011. At that time Mr. Obama’s “strong”-approval rating showed a minus -18 percentage points, while today in many polls the overall (mild + strong approval and disapproval ratings) ratings show President Obama has climbed from 41% overall approval and 56% overall disapproval (a -15% overall rating) to showing him at +2% (51% to 49%) a dramatic increase in the president’s perceived competence after Republicans compromised with the President’s agenda.

           It’s to be hoped that House Speaker John Boehner and his chief lieutenants Ryan, Simpson and Cantor and their House Republican colleagues . . . learned volumes from the failures of Newt Gingrich dealing with the clever Bill Clinton and of the recent 2010 Lame Duckers in facing Obama. But just in case they haven’t, here are the lessons they should learn:

1.       DO NOT compromise on principles. Make a stand for statesmanship.

2.     Do NOT compromise on the Constitution: follow your promises from the 2010 Republican “Pledge to America” 100% to the letter.

3.     Do NOT compromise on taxes, spending, deficits, borrowing, the national debt or the entitlement mess. Save our country.

4.     Do NOT compromise with our Marxist president on any single thing. He wished to gain re-election. He can only do that IF he appears to American voters as a reasonable and center-dwelling politician. Make the Marxist skunk show his stripes.

5.     HOW does the G.O.P. save this country?

           By never giving in and fighting the president tooth-and-nail at every step of the way, that’s how. Specifically: don’t swing for the fences, make solid contact on every ball and be content with walks and singles.   If baseball is NOT your cup of tea, look at things this way, the battle before them is a marathon not a sprint . . . because every easily-gained compromise makes Barack Obama look reasonable and statesmanlike. Every grudging compromise by Obama shows his true ultra-socialist colors plainly for the entire country to see.

            The G.O.P. was elected by landslide numbers across the country to stand up to the president and his apocalyptic philosophy of spending, taxes government interference and unfettered government growth. They must do what they were elected to do . . . bring sanity back to Washington. Sanity without the presidency or the senate means only one thing: deadlock. If the issues that doomed Democrats to wide scale defeat in 2010 are still foremost in the voters’ minds, the Senate and the Oval Office can be won and sanity can prevail. If Obama through slight of forked-tongue can make himself appear “reasonable” to the electorate and re-elected in 2012, there is no limit to the harm that our nation will face (bankruptcy will be the smallest part of it). It’s a strategic battle . . . a chess game.

            Rajjpuut has coached children as young as two years old to become strong chess players and helped some of them earn five Colorado Chess Team Championships in the elementary, middle school and high school divisions in Colorado. No matter what the game involved (or the personal, military or commercial requisite) is, strategy always comes down to this:

1)      Play so that the opponent’s weaknesses become the key factor in the game. If he’s got an exposed King, a bad Bishop or tripled Pawns . . . make them stink up the board.

2)    Play so that your own weaknesses are irrelevant.

3)    Play so that your opponent’s strengths are irrelevant or unusable.

4)    Play so that your own strengths are the dominant factor across the whole board.

5)    Play aggressively if possible; or play defense so tenaciously that the opponent will face a lot of tough situations and in frustration will eventually slip however slightly.

            What are the G.O.P.’s strengths? The TEA Party “Contract from America” and the G.O.P. “Pledge to America say 90% of it all. If 60% of voters became familiar with these documents, Obama would have trouble getting 30% of the vote. The Republicans have also appeared more statesmanlike over the past two years and reasonable; and conservative-fiscal and Constitutional-conservativism is the approach that won the day on Election Day, 2010.

            What are Obama’s strengths? People don’t look at the truth of what he’s saying because they want to like him so much . . . thus, he can get away with almost anything and Republicans have not held his feet to the fire.   For example, the President has never told Americans that he worked as an ACORN attorney shaking down mortgage lenders to force them into compliance with CRA ’77 and he even went so far as to tell his “car in the ditch story” in at least 150 speeches while the Republicans were so foolish as never to expose Obama’s ACORN activities; CRA and Cloward Piven’s role in the meltdown; or Bush’s efforts to undo CRA ’77 and prevent the sub-prime lending crisis which led to our financial meltdown. This truth has never been revealed or understood by the voters as a whole, and until it has been, Obama will personally seem almost unassailable . . . .

            The TRUE CAR IN THE DITCH Story

                      In January, 2005, President George W. Bush saw that progressive Democrats, ACORN, Clinton and Obama were deliberately pushing the car (our American economy) toward a 500-foot ditch. He jumped in the driver’s seat and grabbed the steering wheel and slammed on the brakes. Despite Democratic opposition for 30 months, he was able to guide it into the nearest friendly-looking ditch by July, 2007.

             Since that is the 100% truth which 96% of Americans don’t know and since that underlined word “deliberately” ties the whole thing to the progressive movement and the aims of Cloward, Piven, George Wiley and Wade Rathke and to the ACORN presidencies of Obama and Clinton . . . no matter what obstacles the lamestream-mainstream media throw in their path, that history of treachery must be revealed.

             Here are five “fact paintings” to push the point into America’s permanent memory:

#1: In 1975 before CRA ’77 only 1 in 404 home loans was “suspect,” that is issued at 3% down-payment or less. America in 1975 with 62-65% private home ownership is the envy of the world. That solid beneficial status rests upon the accepted standards of long years: a 20% down payment requirement for home buyers and great credit ratings. CRA ’77 FORCED home lenders to knowingly make stupid loans to unqualified recipients at ultra-low down payments.

#2: In 1985 after eight years of CRA ’77 and ACORN operating in Clinton’s Arkansas alone and in no other states:  1 in 196 home mortgages was suspect. That is the rate of bad loans has doubled just from ACORN browbeating lenders in one state, Arkansas.

#3: In 1995 after three CRA ’77 expansions by Clinton (two of them legislatively) and the expansion of ACORN nationwide: now 1 in every 7 home loans was suspect. By the way, Barack Obama worked as an ACORN attorney during this era, browbeating mortgage lenders into making knowingly horrific loans to bad risks.

#4:  In 2005 following seven years of Clinton’s 1998 “steroid-version” expansion of CRA ’77: 34%, roughly 1 in every 3 home loans was suspect with many issued with 0% down-payment. Thanks to Clinton’s ’98 steroid expansion of CRA ’77 it’s now easier for ACORN to force home lenders to put an unqualified would-be home buyer into a $440,000 home than it was a decade earlier for Barack Obama and other ACORN attorneys to put the same person into a $110,000 home . . . and it’s now far more likely that the loan recipient a) won’t have a job or b) won’t even have a rental history or c) won’t even have I.D. or d) will list his only “income” as food stamps; or be on welfare or e) will have a terrible credit rating or f) will be an illegal alien.

#5 Luckily Al Gore didn’t win the presidency in 2000. Gore was a big believer in CRA legislation. Instead George W. Bush is elected between the two ACORN presidents, Clinton and Obama, and rather than driving the “car” into the ditch by incompetence as Obama loves to imply, Bush keeps the economy from utter ruin created by the deliberate actions of ACORN in abusing CRA ’77  (a deliberate Cloward-Piven effort to overload the system and create chaos using Saul Alinsky tactics) and prevents it going over the cliff, but rather he steers it into a friendly ditch and away from the abyss the progressives were pushing us toward. It happens like this . . . .

In January, 2005, George Bush makes the first speech (of 19 speeches he’ll make in the next 30 months) on the dangers of the CRA ’77 law and its expansions seeking repeal of the worst aspects of the laws. However, the bill he supports is defeated by the progressive Democrats and various compromise bills will continue to be defeated by them until a very weak version of his bill is  finally passed in July, 2007. It is, of course, too little and too late and the sub-prime lending crisis is soon underway. Nevertheless, the new law Bush passed is hailed in August 2010 by Obama’s Treasury Secretary Tim Geithner as saving the country’s economy from a truly hideous recession and an absolute meltdown in housing prices.

            These truths, of course, are as unpopular with the mainstream, lamestream media as Bush himself was . . . yet, these are the truths that will set the country free . . . These truths; the “chess-like” strategy mentioned above and simple patriotic stubbornness*** are the secrets to dealing with Mr. Obama and his progressive ilk.

Ya’all live long, strong and ornery,

Rajjpuut

*** D. Morris at his website dickmorris.com put it like this:

                    “If the Republicans hold firm in demanding huge spending cuts and Obama does not give in, the question of whether or not to cut spending will dominate the nation's political discourse for months on end and will spill over into the 2012 election.

                    “To assure that it will, the Republicans should hold firm to their budget spending cuts without surrender or compromise. If necessary, it is OK to vote a few very short-term continuing resolutions to keep the government open for a few weeks at a time, always keeping on the pressure.

                    “When the debt limit vote comes up, they should refuse to allow an increase without huge cuts in spending. If the debt-limit deadline passes, they should force the administration to scramble to cobble together enough money to operate for weeks at a time.

                    “If Obama offers a half a loaf, the GOP should spurn it for weeks and months. Then, rather than actually shut down the government, let them accept some variant of their proposed cuts but only give in return a few more weeks' time, at which point the issue will be re-litigated. Don't go for Armageddon -- just keep fighting the battle.

                    “Same with the debt limit. Extend it for a few hundred billion dollars and then go back for more cuts in return for a further extension. Make Obama pay for each continuing resolution and each debt-limit hike with more cuts to spending.

                    “Always avoid cuts in Medicare and Social Security. Save those for after 2012. For now, focus on Medicaid block granting and discretionary spending (including some modest cuts in defense).

                    “Like a guerrilla army, never go to a shutdown (a general engagement) but keep coming up with cuts, compromising, letting the government stay open for a few more weeks, and letting the debt limit rise a few hundred billion, and then come back for more cuts and repeat the cycle.

                    “And don't just demand spending cuts. Go for defunding of Obamacare, blocking the EPA from carbon taxation and regulation, a ban on card-check unionization and constraints on the FCC's regulation of the Internet and talk radio. Put those items on the table each time, each session.

                    “Every time the issues come up, every time the cuts are litigated, Obama's efforts to appear to be a centrist will be frustrated. Time and again, he will have to oppose spending cuts. Over and over, he will come across as the liberal he is, battling for each dime and opposing any defunding.

                    “Obama's campaign strategy has two elements: Change the subject from the 09-10 agenda and move to the center. A tough, determined Republican budget offensive, embracing all these elements and fought in this guerrilla style, will frustrate both and lead to his defeat.”

State of Union Speech Shows Obama

Seeking Utter Dominance of AWI

            In the good old days, the so-called “Misery Index” (MI) was achieved by adding the unemployment rate to the inflation rate. Notable, for example, was President Jimmy Carter inheriting Gerald Ford’s 13.45  misery index and then handing off a staggering 20.76 misery index to Reagan.   The term “stagflation” was invented to describe the particular type of mess that Carter had generated with his big government policies. Reagan in turn handed off a relatively low 9.57 misery index to his former Vice President G.H.W. Bush.  By the way, the only reason Carter got off so well is that the Democrats were keeping the stats and didn’t admit that inflation was 19% when he left office.

            Rajjpuut would like to submit for contemplation, however, the far more sensitive and indicative AWI or “Absolute Wretchedness Index” created by adding the weekly interest on the REAL NATIONAL DEBT (RND) to the Misery Index. Currently the nation’s REAL NATIONAL DEBT based upon a National Debt of $14.1 TRillion and UNfunded liabilities (just in Social Security, Medicare and the federal side of Medicaid) amounting to $114.6 TRillion equals a grand total of . . . (Drum-roll, Maestro please . . . ) $128.7 TRillion. Welfare costs are another huge UNfunded outlay which the nation is obligated to cover, but the math gets too complicated so let’s stick with a current RND of $128.7 TRillion. That means the weekly interest on a Real National Debt would amount to $ 73 Billion or about $250 per week per American man, woman or child . . . not the debt itself, just the interest we pay on it . . . so with 9.5% unemployment and .4% inflation and $73 Billion weekly RND interest rates Mr. Obama’s current Absolute Wretchedness Index stands at 82.9 easily the worst in history. His predecessor George W. Bush’s highest AWI reading was 72.6. The closest thing we see to Obama’s 82.9 AWI is Carter’s at roughly 76.6.

            For those who decry any measurement system which disparages the noble contributions of that stalwart statesman Barack Hussein Obama, perhaps a little deeper study is required. While we appreciate that it’s just not cool to talk about esoteric subjects like having revenues meet obligations, according to information found in a book recently written by a former Comptroller General of the United States (Comeback America: Turning the Country Around and Restoring Fiscal Responsibility by David M. Walker) at the time he wrote his book the National Debt was about 5.5 times our income (the revenues of the nation). So considering our UNfunded liabilities as well as the debt, our obligations are now more than fifty times our revenues. We have thus severely mortgaged the country’s future and our children’s, grandchildren’s and great grandchildren’s future all the while facing a markedly different world in which America no longer has a virtual monopoly on desired goods and services and technologies but every year faces more and more serious competition in the global marketplace. Current taxes are one thing, but if we don’t start reducing our debt and the interest on the debt, then deferred taxes will destroy the nation. Let’s be clear on this: future taxes could triple and we’d still have trouble paying off both the interest on the National Debt and our future now UNfunded liabilities. That is, unless we do something NOW, everyone in the future would be taxed 100% of earnings and we still could not pay off either debt interest or obligations . . . and, of course we would have zero dollars for Defense or any other budget item . . . and still would not be dealing with the debt itself (again, just the interest).

            How far in the future are we talking about? Within 12 or 13 years the interest on the National Debt will be the single largest item in the nation’s budget unless current trends change dramatically. And you get absolutely nothing in return for it, all this interest we pay . . . hence we’ve named this measure of problematical agony: the Absolute Wretchedness Index or AWI.   50% of this money is owed to foreign governments with China being #1 and Japan #2 in holding our debt; a bloc of oil producing nations combined hold’s the #3 amount.  This is a crucial factor. Why did we back Freddie Mac and Fannie Mae with $5 TRillion? Because foreign debtors demanded it, since they held so much of these U.S. debt instruments.

            The problem has two components, but despite all our current “pain,” only one of them matters. In the short term due to the economy, our two wars, and unemployment things are going to be painful . . . but this is a small drop in a huge ocean. The main component is the long-term structural imbalance. The budget and the deficits and the debt and the interest payments on the debt which are NOT sustainable.  Once the economy recovers we get out of the wars and finally see 5% unemployment again . . . things will be even worse because we’ll have continued on several more years increasing the debt; the interest on that new higher debt; and all our UNfunded liabilities as well. Huge unending deficits, year after year, as far as the eye can see will still loom ahead of us. It is this structural imbalance that threatens to destroy the country . . . hence our headline “State of Union Speech Shows Obama Seeking Utter Dominance of AWI.”

            Mr. Obama has, in real terms not in CBO configurations, increased the federal budget 41% if Obamacare and his other initivatives are considered. Now he talks about freezing discretionary federal spending at this super-elevated level for three years. What utter nonsense that pretense of his amounts to. We must begin to slash spending immediately towards 2006 or even 2004 levels. If we don’t we will lose the confidence of foreign lenders and find ourselves floating down the proverbial open sewer lacking a paddle or other means of locomotion other than our own hands as the dollar drops precipitously, interest rates and inflation soar, and our mild recession becomes a real depression and we see truly scary unemployment. Walker in his book called Washington “a lagging indicator” meaning that the politicians in their ivory towers and the political class who adore them aren’t getting the picture nearly as rapidly or as clearly as the people now do.

            It is the people, the voters, who are demanding something be done about these problems even if the solution is arduous and unpopular among politicians and their allies with a vested interest in the current unstainable structure. The current Obama administration and the Democratic majorities they had in Congress have called the TEA Party movement “astroturf” rather than a true grassroots movement; accused them of being merely a more rightwing version of the Republican Party; and shown them no respect at all.   Many of the current Republicans, such as John McCain’s daughter, lightweight pundit and columnist for The Daily Beast Meghan McCain, are proving just as blind about the TEA (Taxed Enough Already or Taken Enough Abuse?) Party as the Democrats. Ms. McCain objected to the TEA Party’s Michelle Bachmann commenting on Obama’s State of the Union address in addition to the Republican response so ably handled by Rep. Paul Ryan, saying, Bachmann was “at best a poor man’s Sarah Palin.”

            Ms. McCain, whose only accomplishment in life is being the daughter of a famous man, ought to show a little respect when she’s talking about her elders and about a woman of true accomplishment. As Walker’s book points out, the people are aroused now and Ms. Bachmann, Sen. Paul and Sen. DeMint recognize it even if she can’t.

            Let’s give you a real blast from the past when Time Magazine which loved Jimmy Carter finally had to admit things were none too rosy in their March 24, 1980 edition . . . .

                  "As Jimmy Carter stepped before the television cameras in the East Room        of the White House last Friday, his task was not just to proclaim another new anti-inflation program but to calm a national alarm that had begun to border on panic. Inflation and interest rates, both topping 18%, are so far beyond anything that Americans have experienced in peacetime—and so far beyond anything that U.S. financial markets are set up to handle—as to inspire a contagion of fear. Usually confident businessmen and bankers have begun talking of Latin American-style hyperinflation, financial collapse, major bankruptcies, a drastic drop in the American standard of living."

            We’ve heard plenty of talk about Obama’s and Bernanke sooner or later handing us a hyper-inflation and moving America toward Banana Republic Status so it appears history if it’s not repeating itself is at least humming the same rhyming song. Knowing that lesson in absolutely wretched history, let us pray not repeat it. Instead let us be pro-active in the Reagan sense and severely constraining the parasitic government, let us unleash the free market by cutting debt**; cutting spending; cutting taxes; cutting regulation; and ultimately under-cutting unemployment.

Ya’all live long, strong and ornery,

Rajjpuut

** actually Reagan’s negative legacy is the mountain of debt he handed us because dominated by Democratic congresses the welfare state continued to expand even during his eight years.