The government’s “debts, liabilities, and unfunded promises for Medicare and Social Security” amount to a stupefying $56.4 trillion. The household net worth of Americans is around $56.5 trillion.
The first frightening figure doesn’t take into account the bailout bonanza. The last omits more recent market losses. Nevertheless, warns David M. Walker, former Comptroller General of the United States, now of the Peter G. Peterson Foundation, as of September 30, 2008, “the sum of the US government’s liabilities and other financial commitments now exceeds the collective net worth of its citizens.”
This is huge. This—and not the non-stop “breaking” bulletins about a pilot who faked his own death—is news.
And it’s bigger than Bernie Madoff. Compared to the United States government, Madoff is a mere babe in grand larceny boot camp. Madoff’s $50 billion scam pales in comparison to the multi-trillion dollar Ponzi pyramid run by the United States government, a scheme that is carried out in broad daylight, and with legal impunity. Notes economist Peter Schiff:
The Social Security Administration runs its ‘trust funds’ with precisely the same methods used by Madoff and Ponzi. As money is collected from current workers, the funds are then dispersed to those already receiving benefits. None of the funds collected are actually invested, so no investment returns are ever generated. Those currently paying into the system are expected to receive their returns based on the ‘contribution’ made by future workers. This is the classic definition of a Ponzi scheme. The only difference is that Ponzi didn’t own a printing press.
To fund its Ponzi plan, the bankrupt government borrows and prints fiat money out of thin air. It then auctions off treasury securities—big batches of IOUs—to the highest bidder. This Ponzi scheme is not new. “W,” now being canonized by Republicans, did not create the mess—but he worsened it by way of a massive drug prescription plan.
Contra ditto heads, blame for the depression, however, belongs not with Obama the newcomer, but with Bush. With his foreign, fiscal and monetary policy, Bush broke the budget, balanced by Bill Clinton, and doubled the federal debt—it was $5.6 trillion when “W” took office; it is now $10.7 trillion. Although the trillions in bailouts were Bush’s, Republicans want only to prate about Obama’s planned “stimulus” spending.
The best that government gurus—outgoing and incoming—and the pundits in the peanut gallery have mustered in response to America’s meltdown is to concede that digging America out of the financial grave is a long-term goal. For the short term, it’s stimulus time, baby. Show me the fake money, shower me with cheap credit; and send me sailing on a ship of fools.
The debt the American government has incurred—which American serfs will service—approximates 75 percent of the GDP. As the federal debt stands, the US would not be admitted into the company of socialists. The statist European Union expects member nations to hold their debt below 60 percent of the national income.
Nothing much distinguishes Republican from Democratic vulgar Keynesianism. Republicans have offered no change in paradigm. Guru Gingrich, a “hard core” fiscal conservative, advised fellow Republikeynsians to offer Americans a more efficient, targeted stimulus, when no stimulus is the conservative way; when allowing markets to contract is the conservative way.
A natural shift must take place from a credit-fueled, consumption-based economy, to one founded on savings, investment and production.
Fresh off the printing press, the trillions in new spending Obama is planning will only make matters worse. Understand, government can’t create wealth; it only consumes it, or moves it about. Not even Magic Man Obama can make sustainable jobs materialize by borrowing and counterfeiting. Only the private sector can create sustainable jobs—sustainable because driven by consumer preferences, as opposed to bureaucratic whim. The more taxing, printing, and borrowing the government does, in the vain name of job creation, the less capital will the private sector have with which to create long-lasting employment.
MSNBC’s Rachel Maddow thinks make-work schemes are “sexy.” She, and other priapic sorts like CNN’s Anderson Cooper, will beam into American living rooms images of earnest men and women put to work by Obama’s spending. The multitudes thrown out of work because private economic activity has been crowded out by the Miracle Maker’s magic will remain unseen behind the scenes.
Barack will continue the bacchanalia Bush began.
When the market attempts to purge bad businesses, as it should, Obama will prop them up. When lenders raise the bar, Obama, like Bush before him, will bully banks into extending the ownership society to unworthy men and women. Bailouts will balloon. Socialization of the economy will deepen—if not directly via state control, then by regulation. Vast amounts of paper will be pumped non-stop into this phony economy.
With every infusion of fake money, as Peter Schiff and other Austrian economists have warned, the dollar will drop like a stone. Assets will continue to devalue. Saving will be difficult; retirement near impossible. Prices will soar, and the currency will eventually collapse (hyperinflation).
Fox Business Network bimbettes disagree. Some will find comfort in this fact; others will see the writing on the wall—and the American ship of state for the ship of pirates it is; pirates whose reach extends into every American home, and beyond.
* Recommended: “I.O.U.S.A,” the movie.
©By ILANA MERCER
January 16, 2009
CATEGORIES: Barack Obama, Bush, Economy, EU, Federal Reserve Bank, Inflation, Political Economy, Regulation, Republicans, Socialism