Yep... another stand-alone newsbite.
Yep... via today's WSJ:
Did you know that annual spending by the federal
government now exceeds the 2007 level by about $1 trillion?
The result is an unprecedented string of federal budget
deficits, $1.4 trillion in 2009, $1.3 trillion in 2010, $1.3 trillion in 2011,
and another $1.2 trillion on the way this year.
AND, NO... IT'S NOT JUST THAT TAX REVENUES HAVE DECLINED...
(READ ON!)
With a slow economy, revenues are little changed.
(*SHRUG*)
The amount of debt is one thing. The burden of interest
payments is another.
The Treasury now has a preponderance of its debt issued
in very short-term durations, to take advantage of low short-term interest
rates. It must frequently refinance this debt which, when added to the current
deficit, means Treasury must raise $4 trillion this year alone. So the debt
burden will explode when interest rates go up.
WE KNOW THIS... AND YET...
(*SHRUG*)
ONE MORE TIME... EXPLAIN TO ME HOW VIOLENCE ISN'T THE
ONLY ANSWER?
Did you know that during the last fiscal year around
three-quarters of the deficit was financed by the Federal Reserve?
Foreign governments accounted for most of the rest, as
American citizens' and institutions' purchases and sales netted to about zero.
The Fed now owns one in six dollars of the national debt,
the largest percentage of GDP in history, larger than even at the end of World
War II.
DOES... THIS... MAKE... SENSE... TO... YOU...?!?!
Did you know that the Federal Reserve is now giving money
to banks, effectively circumventing the appropriations process?
AS YOURS TRULY HAS BEEN NOTING ALL ALONG... (*SIGH*)
To pay for "quantitative easing"...the Fed "credits"
banks with electronic deposits that are reserve balances at the Federal
Reserve. These reserve balances have exploded to $1.5 trillion from $8 billion
in September 2008.
AGAIN.... (*PAUSE*)... DOES... THIS... SOUND...
REASONABLE... TO... YOU...?!?!
The Fed now pays 0.25% interest on reserves it holds. So
the Fed is paying the banks almost $4 billion a year.
(*SMIRK*)
If interest rates rise to 2%, and the Federal Reserve
raises the rate it pays on reserves correspondingly, the payment rises to $30
billion a year.
(*BLOOD PRESSURE SHOOTING THROUGH THE ROOF*)
Would Congress appropriate that kind of money to give - not
lend - to banks?
AS NOTED THE OTHER DAY, A SMALL GROUP OF REPUBLICAN
HOUSE MEMBERS ARE TRYING TO STOP THIS... BUT SO FAR THEY'RE NOT GETTING MUCH
TRACTION.
The Fed has effectively replaced the entire interbank
money market and large segments of other markets with itself. It determines the
interest rate by declaring what it will pay on reserve balances at the Fed
without regard for the supply and demand of money. By replacing large
decentralized markets with centralized control by a few government officials,
the Fed is distorting incentives and interfering with price discovery with unintended
economic consequences.
IN ENGLISH: THE GOVERNMENT - VIA THE FED - IS REPLACING
THE PRIVATE ECONOMY; WE'RE MOVING STEADILY CLOSER TO A TRUE COMMAND AND CONTROL
ECONOMY ALONG THE LINES OF THE OLD SOVIET MODEL OR PERHAPS THE FASCIST CHINESE
MODEL OR AT BEST THE ARGENTINE MODEL.
The Consumer Financial Protection Bureau is also being
financed by the Federal Reserve rather than by appropriations, severing the
checks and balances needed for good government. And the Fed's Operation Twist,
buying long-term and selling short-term debt, is substituting for the
Treasury's traditional debt management.
(*PURSED LIPS*)
FOLKS... NOTE... THE AUTHORS OF THIS PIECE...
(*DRUM ROLL*)
GEORGE P. SHULTZ, MICHAEL J. BOSKIN, JOHN F. COGAN,
ALLAN H. MELTZER AND JOHN B. TAYLOR - SENIOR FELLOWS AT STANFORD UNIVERSITY'S
HOOVER INSTITUTION WHO HAVE SERVED IN VARIOUS FEDERAL GOVERNMENT POSITIONS
INCLUDING THE TREASURY DEPARTMENT, OMB, AND ON THE COUNCIL OF ECONOMIC
ADVISORS.
FOLKS... ALL OF THIS THAT IS HAPPENING... ALL THAT I'VE
BEEN RANTING AND RAVING ABOUT FOR YEARS NOW... IT'S REAL... IT'S ALL REAL...
THESE AREN'T "RIGHT WING TALKING POINTS" FOR PARTISAN CONSUMPTION
DURING A PRESIDENTIAL ELECTION YEAR. THIS IS THE REALITY WE'RE FACING!
The government has to get the money to finance its
spending by taxing or borrowing.
CLEARLY IT'S BORROWING. WHAT ABOUT THE TAXING END?
While it might be tempting to conclude that we can just
tax upper-income people, did you know that the U.S. income tax system is
already very progressive? The top 1% pay 37% of all income taxes and 50% pay
none.
WELL, YES... I KNEW THIS... I'M GUESSING ALL MY
REGULARS HERE KNOW THIS.
HEY... FOLKS... MY VIEWS ON HOW WE SHOULD REFORM THE
TAX CODE ARE WELL KNOWN. HERE'S THE THING, THOUGH... WHILE NEITHER PARTY
ESTABLISHMENT HAS MUCH INTEREST IN REFORMING THE TAX CODE, AT LEAST CERTAIN
REPUBLICANS SHARE MY VIEWS. (THINK FORBES... THINK DUPONT... THINK TEA PARTY
REPUBLICANS AS SEPARATE FROM CORPORATE REPUBLICANS...)
HERE'S THE DIRTY LITTLE NON-SECRET: OBAMA, PELOSI, AND
REID HAD WHAT AMOUNTS TO COMPLETE CONTROL OF THE FEDERAL GOVERNMENT FROM
JANUARY 2009 THROUGH JANUARY 2011. THEY DIDN'T EVEN ATTEMPT TO ADDRESS THE TAX
CODE. THEY DIDN'T EVEN ATTEMPT TO DO AWAY WITH PERHAPS THE MOST EGREGIOUS
LOOPHOLE IN THE ENTIRE FEDERAL INCOME TAX CODE - THE HEDGE FUND MANAGERS'
LOOPHOLE - aka: CARRIED INTEREST!
FOLKS... THESE BERNANKE POLICIES... THESE GIVEAWAYS TO
THE BANKS... THESE CONTINUING BAILOUTS TO CRONY CAPITALISTS... OBAMA IS BEHIND
THEM! THIS ISN'T BERNANKE ON HIS OWN; THIS IS BERNANKE IN CLOSE COOPERATION
WITH TIM "THE TAX CHEAT" GEITHNER - OBAMA'S SECRETARY OF THE
TREASURY!
FOLKS... HATE ROMNEY ALL YOU WANT... BUT AT LEAST HE
WANTS TO GET RID OF BERNANKE! ROMNEY AND RYAN HAVE BEEN SLAMMING BERNANKE AND
QE3! OBAMA AND THE DEMS... THEY SUPPORT IT!
Did you know that funding for federal regulatory agencies
and their employment levels are at all-time highs?
YES... YES, I DID!
In 2010, the number of Federal Register pages devoted to
proposed new rules broke its previous all-time record for the second
consecutive year. It's up by 25% compared to 2008.
FOLKS... UP 25%...
DOES... THIS... SOUND... REASONABLE...?!?!
President Obama's budget will raise the federal
debt-to-GDP ratio to 80.4% in two years, about double its level at the end of
2008, and a larger percentage point increase than Greece from the end of 2008
to the beginning of this year.
DOES... THIS... SOUND... REASONABLE...?!?!
The Fed's policy of keeping interest rates so low for so
long means that the real rate (after accounting for inflation) is negative,
thereby cutting significantly the real income of those who have saved for
retirement over their lifetime.
NOT TO MENTION THE FACT THAT INFLATION IS DELIBERATELY
UNDERSTATED! NOT TO MENTION THAT IN ADDITION TO CUTTING SIGNIFICANTLY THE REAL
INCOME OF THOSE WHO HAVE SAVED FOR RETIREMENT OVER A LIFETIME, THE DELIBERATELY
INFLATIONARY POLICIES OF THE FED ARE STEADILY IMPACTING AMERICAN LIFESTYLES!
FOLKS... BOAR'S HEAD ROAST BEEF IS $12.99 LB.! GAS - REGULAR - IS UP ABOVE
$4-gal. IN MUCH OF THE COUNTRY! MY HEALTH INSURANCE PREMIUMS WENT UP 17% THIS
YEAR!
The issue is not merely how much we spend, but how
wisely, how effectively. Did you know that the federal government had 46
separate job-training programs? Yet a 47th for green jobs was added, and the
success rate was so poor that the Department of Labor inspector general said it
should be shut down.
(*GNASHING MY TEETH*)
This is all bad enough, but where we are headed is even
worse.
Under President Obama's proposed budget...the debt
expands rapidly to $18.8 trillion from $10.8 trillion in 10 years.
The interest costs alone will reach $743 billion a year,
more than we are currently spending on Social Security, Medicare or national
defense, even under the benign assumption of no inflationary increase or
adverse bond-market reaction.
For every one percentage point increase in interest rates
above this projection, interest costs rise by more than $100 billion, more than
current spending on veterans' health and the National Institutes of Health
combined.
(*PURSED LIPS*)
ALLOW ME TO NOTE THAT - THANKFULLY - THIS PROPOSED
OBAMA BUDGET DIDN'T GET ONE VOTE IN CONGRESS... NOT ONE REPUBLICAN VOTE... NOT
ONE DEMOCRAT VOTE. BUT HERE'S THE THING... THIS WAS OBAMA'S PROPOSAL! THIS WAS
THE BUDGET HE SENT TO CONGRESS! WHAT DOES THIS TELL YOU ABOUT HIS
MINDSET...?!?!
Worse, the unfunded long-run liabilities of Social
Security, Medicare and Medicaid add tens of trillions of dollars to the debt,
mostly due to rising real benefits per beneficiary. Before long, all the
government will be able to do is finance the debt and pay pension and medical
benefits. This spending will crowd out all other necessary government
functions.
FOLKS... WE MUST CHANGE COURSE...
No comments:
Post a Comment