By 2020, the US Government will be spending more annually on debt interest than the total combined military budgets of China, Britain, France, Russia, Japan, Germany, Saudi Arabia, India, Italy, South Korea, Brazil, Canada, Australia, Spain, Turkey, and Israel.
Through government spending the indulgence of one is the burden of another; through government borrowing, the excess of one generation becomes the yoke of the next; through international bailouts, one nation’s extravagance becomes another nation’s debt
Everyone takes, nobody makes, work doesn’t pay, indulgence doesn’t cost, money is free, and money is worthless
-Quoted on ZeroHedge.com
The above words were spoken by Canadian Member of Parliament, Pierre Poilievre. How true are these words? How simple, straight forward and easy enough for a 3rd grader to understand? Are you insulted? You shouldn’t be. In the news today all we hear is fiscal cliff this and debt ceiling that, yet these are small pimples on the elephant’s behind. Our lawmakers are at loggerheads trying to find $1.2 trillion over the NEXT 10 YEARS while we are piling up multiples of that year after year. We are adding a $1.5 trillion deficit each year along with countless aid, loans, guarantees and other liabilities which total another $5+ trillion per year.
Washington cannot agree on $1.2 trillion over the next ten years while truth be told another $60-70 trillion of liabilities will accumulate over these 10 years. 10 years may seem like a long time but in the scheme of things they are not, 10 years in other cultures like China merely represent tomorrow morning. The thing is, we don’t have 10 years left. There is no way that investors (trading partners) don’t wake up long before this. In my opinion, investors will wake up this coming year when they order metal and don’t receive it but that’s a story for another writing.
Please go back and reread the quote from Mssr. Poilievre if you will and forget about “2020”. We are now paying China interest on their Treasury holdings nearly enough to fund their entire defense budget. Yes, WE are paying to support the Chinese army. How could we have been so stupid? How could we have ever gotten to this position? I can see how foreigners with enough foresight would allow (even help) us get here but what were our leaders thinking? In a nutshell, our so called leaders were thinking of one thing and one thing only… getting re-elected. Getting re-elected so that they could bury their fat pig like faces in the largesse of feeding at the Treasury’s trough. While riding through the streets passing out the goodies, naturally some of the slop would end up in politicians pockets. Besides, while in office they have the power to make the rules no matter how ill advised and as you all know, “power is intoxicating.”
Folks, the above quote is not some whacko spinning out of control because he forgot to take his Prozac one morning. No, THIS is how foreigners see us because this is truth, this is reality… THIS is how it really is. We are broke, flat broke and only able to go forward because we have the ability to print Dollars to pay the interest. Were we not the issuer of the reserve currency, I assure you that we would not have even made it to 2008 much less through it by printing even more. Were is not for the status of reserve currency issuer, we would have already been thrown under the bus, shut off from credit and put on disadvantageous trade terms by the rest of the world. We would have been sat down in the corner with a dunce cap on and put in a serious timeout long ago until we came to our senses!
The above is not only what “would” have happened… it is exactly what WILL happen. The only thing is that now, we are further in debt and even more despised by the rest of the world so the comeuppance will be that much harsher. It is like we were traveling at 140 mph directly into a brick wall up until 2007-08 where a smart person would have applied the brakes but no, our leaders hit the turbo boost button with an added touch of NOS and now no amount of brake pressure can avoid the crash.
I am not even sure why they are playing out the “fiscal cliff” drama at this point other than to be able to say “we tried but failed” when mobs in the streets start calling for some heads. …Or, maybe the plan has been all along to turn this nation into 300 million (debt) slaves who will do anything for their next meal? Whatever the plan, many of the individual players were stupid or greedy, those “pulling the strings” knew what they were doing all along!
PS I wrote this piece from the standpoint of government finances… I could have just as easily (probably easier) written it from the standpoint of individual finances and been even more tragic/comical.