Of the $38 and a half billion dollars in cuts, $12 billion in cuts from three previous stopgap continuing resolutions. In other words, old money. Twelve billion dollars of the 38 and a half came from old CRs, three stopgaps. Ten billion came from the previous continuing resolution. Now, we talked about this yesterday. It had been said that $10 billion of it was from a previous CR. We couldn't find any documentation. We did overnight. And the number of real cuts in this continuing resolution that was agreed to on Friday night was $2 billion.Mark Levin's take: "It is an historic scam".
Inflation is actually around 10%, "Inflation, using the reporting methodologies in place before 1980, hit an annual rate of 9.6 percent in February, according to the Shadow Government Statistics newsletter." It came from CNBC.
In light of the inability to cut government spending and to get its debt under control, here is an article to give you a heads up to what is coming.
Some more news in Egypt and the rise of Islam as the dominate political force there.
This stuff is on a level of macro economics that I don't understand nor do I have the time right now in my life to research it very much.
ReplyDeleteWhat I do know, is that the EPA, within the last year, has made painting on lead based homes a lot harder and costly. I just went through an eight hour course (which is required if you are going to paint on homes built before 1978) and became EPA certified to paint on lead based homes. I bitched and griped to the governments mouthpiece who was giving the class and he just smiled and acted like he empathized. I'm so glad that the government is worrying about making it harder for blue collar guys to do an honest day of work at a time like this.
I heard from one guy that OSHA is going to really crackdown with fines this year because they need revenue. It makes me wonder if they are functioning for our safety when they worry about things like revenue.
If you can run you household budget then you should be able to understand this. This will directly impact your life in the not too far distant future--5 to 20 years. You will experience a reset of the global economy preceded by a near collapse of the global monetary structure--not the end of the world and not necessarily the great depression and not Kurt Russel in "Escape From LA". This will be a transformative event as it will transform the way we relate to our government and the various governments of the world relate to each other. This will be one of the greatest events that will occur in your life in terms of how it will impact your life. Becoming educated on this is important. People that have savings or real wealth need to know what is coming and to know how to protect their wealth by allocating their money into certain investments.
ReplyDeletePaul Ryan said that this crisis is the most predictable economic crisis in history. http://www.youtube.com/watch?v=rjI2C3vNqnU
This is not talk radio or crazy people saying this. Our President and other elected officials acknowledge this fact, but they fail to do anything about it. All of the major economies of the world are facing a similar situation. This will be a global event.
The point is that the US federal government is spending massive amounts of money that it does not have, about 46 cents for every dollar it spends and is 14 trillion in debt, and is borrowing an equally massive amount of money to pay for this spending. The government borrows money by issuing treasury notes. To do this they need to pay interest to get people or nations to let the government borrow their money. When it comes time for the government to pay the people or nations back, or the debt matures, the U.S. government pays the people back by issuing new debt. This is like a person who gets a loan and pays for the loan with another loan and so on. The recent budget battle shows that the government is unwillingly and or unable to make the necessary cuts in spending to get the debt under control. This means that this will lead to a default or bankruptcy for our government. A default by the government will mean a lost of confidence on the part of the people or nations letting the government borrow their money in the U.S. government. This means that to continue to finance its operations with deficit spending will become cost prohibitive because people will be demanding higher interest rates in return for letting the government borrow their money. (The interest on the debt will already be around 800 billion dollars by 2020 this is larger than what we spend on defense. This is why it was called the biggest threat to our national security.) When the government defaults, government payments to social security, medicare, medicade, food stamps, G.I. bills, and all of the other programs that people are dependent on to meet their basic needs--remember that 1/3 of all income in the nation currently comes from the government-- will stop coming or they will be reduced and thus large number of people will not be able to meet their basic needs. This will undercut the very base of Maslow's hierarchy of human needs. This in turn leads to lost of social cohesion and unrest and usually to the collapse of the current government and the creation of a new one. And note that there are several influencial people that are in power or have influence in our government that have stated that they want this collapse to happen so that their new system can be created.
On the inflation point. To help pay for this debt the U.S. government is creating new money as they did in Quantitative easing 1 % 2. This has been done all through out history. When they print money it devalues the dollar and causes prices to increase, this was a contributing factor to the Middle East uprisings. Inflation is on the rise due to several factors and will get much worse. As John Maynard said about inflation, "By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." If the government continues its current policies, inflation will get much worse than it did during the 70's or 80's as it is already close to this.
ReplyDeleteThe EPA is becoming a tax collector as are police officers in places like California. And OSHA cost businesses a lot of money each year. The EPA has little to do with protecting the environment. It is an organization that gives cover for politicians trying to raise taxes or to transform America. You can expect much more of this type of inference from the government in the future.
No fair combining diverse subject matter in one post, Jeff! Makes it harder to respond to.
ReplyDeleteI still plan a detailed response in Post form to events in Egypt. Regarding the 2011 budget (which Democrats should have passed last Fall when they controlled everything but were too big of pussies to do), yes the result is disappointing, however, the conversation has changed and we are talking cuts in budget rather than increases for the first time in my lifetime. This is huge, even if the cuts are small. We'll see if Republicans can force more things with the Debt Limit, and the final big test: the 2012 budget. If they can't make big changes in the right direction on the 2012 budget, then 3rd Party here we come, and real Jeff-Like Disaster looms.
"The $38 billion in budget cuts touted by Republicans over the weekend might end up being less. A lot less. According to a Congressional Budget Office estimate, the hard-fought budget deal funding the government for the rest of the year saves only $352 million from non-war accounts this year." http://www.foxnews.com/politics/2011/04/14/congress-ready-close-budget-books-2011/#ixzz1JVsUJEgD
ReplyDeleteThe term "crisis" was coined by Paul Ryan. I think the fact that spending has increased as much it has in the past decade far out way any cuts that are being talked about or will be able to be made. The debt limit will be raised just like it has 64 times in the past. The repbulicans will whine and make it appear like they care but they will raise it. To not raise it will lead to lost of social cohesion.
And on of the the points of the post is to show that the Republicans are doing nothing to solve the looming debt crisis and they are actually lying about the actual cuts they have made. They have caved in and have made it know to the democrats that they are not willing to have a government shut down. The Republicans completely control the level of spending that occurs as nothing can be spent without their approval. The Republicans are unable and unwilling to make the necessary cuts and reforms because that would be politically unacceptable and unacceptable from the stand point of maintaining social cohesion. There is NO support for real budget cuts among the public. They only support the nebulous reduction in waste and anything that doesn't affect them. "Make cuts as long as it doesn't affect me". When I see senior citizens being willingly to take a pay cut along with all the other recepitents of government money, then these cuts will be made. Vets aren't going to get the 4 year welfare gi bill and all of the other perks. People like me are going to have to continue to pay 14% of our income in SS taxes and get nothing in return. The republicans aren't even talking about cutting social security in their 2012 budget.
The point of no return was supposed to have been reached when the Republicans won the election and this years budget. They had their chance to make the cuts and have failed to do so. They did not fulfill their promise to cut 100 billion dollars which is itself meaningless. The Rubicon has been crossed: the economy and financial system will have a reset or near-collapse. This fact is obvious to Congressmen, investors, economist, and anyone that is informed on economics and current events. Until I see some major- earth shattering- gigantic changes in the very character of Americans, I am preparing myself mentally and financially for the collapse. You can get educated on the subject yourself and decide what to do with that knowledge. Or you can keep a false sense of hope and keep your head in the sand. To accept what you can't change is not being a weakling or a cop-out or a pessimist person. It is a form of courage. People that accept the situation are the ones that survive and prosper. I am done trying to convince myself that this will not happen. I am moving on with the realization that it will happen and making plans to prosper in the new economy that is coming.
Lets assume that your scenario actually manifests. "the economy and financial system will have a reset or near-collapse". How does one make "plans to prosper in the new economy that is coming"? Saving money doesn't seem like it would help. I think the only thing that would be smart is to own physical assets like a house, a business, and have little debt. Other than that, is there other things that I should be planning?
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