We have very recently passed a law raising the amount of debt that the government can acquire. In exchange, the government has agreed to cut future spending over the next ten years. This means that the government can spend money now but may or may not cut future spending because no Congress can dictate how a future Congress will handle the country’s finances.
Sure enough, our government has just announced that they plan to spend another $447 billion or so to create jobs. The last time they did that, one can argue that the temporary jobs they created cost us about $250,000 per job. Instead of hiring more teachers and public workers, the money was diverted to shore up public union pension funds. And it appears that they plan to do this again.
Here is where we stand right now. The budget deficit is at 10% of Gross Domestic Product, the Federal Debt is 67% of GDP and Federal spending is 25% of GDP. Keep in mind that we are not talking about the income the Federal government collects in one form or another. We are talking about the Gross Income of all producers in the United States.
A business normally shoots for a net profit margin of 5% of gross sales. So if sales are $100,000 per year, a $5,000 net profit would be ideal. Using the figures above, the government, if it were a business, is spending $110,000, or, $10,000 more than its gross sales. This also means that the business has credit card debt of $67,000 and must also pay $25,000 in taxes to support the government.
Only 58.1% of the population is working and of those 9.1 % unemployed, 45.9% are considered long-term unemployed. The home ownership rate has dropped to 59.7%, even though the foreclosures have been delayed by force of law for the past few years.
Only 49% of taxpayers pay income tax. Most of the 51% who don’t pay are actually receiving refunds called “refundable tax credits” like earned income credits, child care credits, etc. We have made our citizens into slaves because 47% of the population are receiving one or more federal benefit payments. We are punishing those who are productive and rewarding those who do not work.
And we have given our government this power. You hand our politicians a baseball bat and everything looks like a baseball and they’ll swing away just for the fun of it.
The ones who are being hurt the most are the very elderly. Most live on a fixed income and see the prices at the grocery stores rise every week. Dining at fast food restaurants is not something that they can afford anymore. Even plate lunches from lunch wagons are no longer affordable for them.
Does it make sense that the government proposes to spend more? I am of the belief that the elite schools that our elected officials attended no longer teach common sense.
How will the government obtain the $447 billion it intends to spend? From you, of course. The government is a parasite. It has no money of its own. It feeds off of productive people.
They propose to tax the wealthy and the corporations. Most citizens are covered by pension plans and those plans invest in stocks. If the corporations are taxed more, then the corporation earn less and your plans’ investments will decline in value.
Or, the corporation could raise their prices on its goods and services and you pay more when you consume their products and services. It is likely that you will be subjected to both. Stated another way, if you're financially responsible, you pay two ways. Once when your corporations that you invest in pay taxes and again when you consume their goods and services.
A corporation is in business to produce a profit. It has no other purpose for existence. It is not there to provide employment, pay taxes, pay unemployment insurance benefits, provide medical insurance or any of those silly things we’ve forced them to do. If it cannot produce a profit, it goes out of business. Or move to a climate that is friendlier to businesses.
The politicians have taken away our rights under the 10th Amendment. AMENDMENT X: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
We cannot change the politicians. They have demonstrated that they will say one thing and do another. They plan to increase their voter base… those who do not pay taxes so that the politician can be rewarded by getting re-elected.
We can change our behavior. Investing in the short term can produce good returns. As long as the market’s moving one can make money. If you believed that the market will drop as predicted early this summer, you would’ve sold short (sold stocks you do not own) and then buy when the market actually dropped to cover your shorts. If you believe that the market will go up, you would buy when it’s down and sell when it eventually rises.
Nothing will save us in the long term if the politicians continue on the path they’re heading. The currency will collapse. Imagine a society where there is no currency. No public safety, no food at stores, unsafe water because no public workers and no utilities. There will be chaos because those who prepare themselves and plan for this new way of life will be attacked by those who do not.
Hopefully, we can come together as a society and a community to help each other without governmental interference. There will be no care homes and our kupunas have no chance of survival unless we all pitch in.