A Strong Brown Light Shines on our Economy. And, We Spend More?

Abstract: Many economic sectors of the world are crashing in a debt-driven downward deflationary spiral and not enough alarms are being sounded. The consequences of debt are obvious in Spain, Ireland, California, New Jersey and other places yet the US seems to want to keep on spending. Economic disaster looms.  They left keeps on spending and borrowing with no end in sight and must realize what they are doing to our economy. That means the far left must have some plan to deal with social unrest and worse if the economy crashes in a blizzard of inflated money. Our dollar may become worthless and we might even get a second Bank Holiday-FDR style—where they close the banks and give us  back a dime to the dollar—a neat 90% wealth tax.

Many times I have attempted to alert the readers of my blog that bad times are ahead due to excessive debt. [1][2][3] We are in massive debt and subject to crushing punishments in order to pay that mountain off. [from a previous blog]: Our government has now chosen to fight this deflationary spiral with massive spending and hence massive debt. This is called monetizing the debt[4] and it has never been successful in curing any financial problems.  The process always leads to inflation or hyper inflation if the inflation rate exceeds 50% per month.  If the poor depend upon social program and housing assistance and welfare paid by others then we can suggest that those who provide the jobs be given preference when constructing measures to fight deflation. The government does not share this vision.

Apparently, since the tax structure was warped enough to allow the ‘poor’ to escape most taxes they seem to feel no risk if we ‘soak the rich’ and get on the reparations bandwagon. [5] Since the ‘rich’ provide almost all the jobs and all the funding in the US this notion flies into the steamy jaws of insanity but makes for a good political argument. California has spent more than a decade ‘fighting spending’ and loving every dollar they spend while celebrating all those expenditures. The salaries are high, the bennies wonderful in the extreme and they have such a neat society. [6] If only they could hike taxes on property and more on income and corporate taxes they could have Splendor[7] with Grass.[8]

Ireland has been in trouble with massive spending for a while and has been the subject of impending disaster by Ambrose Evans-Prichard of the London Telegraph.

 Four days ago, he wrote this:

“Events have already forced Premier Brian Cowen to carry out the harshest assault yet seen on the public services of a modern Western state. He has passed two emergency budgets to stop the deficit soaring to 15pc of GDP. They have not been enough. The expert An Bord Snip report said last week that Dublin must cut deeper, or risk a disastrous debt compound trap.

A further 17,000 state jobs must go (equal to 1.25m in the US), though unemployment is already 12pc and heading for 16pc next year.”[9]-- Fiscal ruin of the Western world beckons. For a glimpse of what awaits Britain, Europe, and America as budget deficits spiral to war-time levels, look at what is happening to the Irish welfare state. By Ambrose Evans-Pritchard
Published: 5:40PM BST 18 Jul 2009 [Emphasis is mine in all quotes.]

Anybody paying attention to California and can see some parallels?[10][11]

“No doubt Ireland has been the victim of a savagely tight monetary policy - given its specific needs. But the deeper truth is that Britain, Spain, France, Germany, Italy, the US, and Japan are in varying states of fiscal ruin, and those tipping into demographic decline (unlike young Ireland) have an underlying cancer that is even more deadly. The West cannot support its gold-plated state structures from an aging workforce and depleted tax base.”-- By Ambrose Evans-Pritchard 18 Jul 2009

Really? Well, they are going to try. California has no intention of cutting the astronomical salaries of teachers and state employees. They are going to tax anything they can and then crawl to Washington for a bailout.

Evans-Prichard sums up like this:

“The Fed's doctrine – New Keynesian Synthesis – has let it down time and again in this long saga, and there is scant evidence that Fed officials recognise the fact. As for the European Central Bank, it has let private loan growth contract this summer.

The imperative for the debt-bloated West is to cut spending systematically for year after year, off-setting the deflationary effect with monetary stimulus. This is the only mix that can save us.

My awful fear is that we will do exactly the opposite, incubating yet another crisis this autumn, to which we will respond with yet further spending. This is the road to ruin.”

And, that is just what is happening. There is no way the left can either cut spending or allow tax breaks for corporations that provide necessary jobs. They think they can tax and spend their way to power, a reasonable assumption given the recent political outcome, and then restore the economy with huge government spending and more and bigger government.

From an edited  previous blog: “Only half of the 130 million workers in the US pay taxes so a trillion dollars winds up to be $16,000 in tax liability for each worker who pays taxes. [12] Note that 20 trillion in debt becomes $320,000 in tax liability per worker who makes over $50,000. That means that the total equity [and more] of the homes of the average worker is in jeopardy.  The only people who can pay high taxes are those with wealth and property and they will be asked, or forced, to pay for most the new spending, debt service and new social programs. This debt is so large that it impacts the 401(k)s now so popular since Social Security is a grim  joke. The temptation by government is to seize the 401(k)s and blend this money into some federal retirement system patterned along the same lines as the USSR plan. All that wealth vanished in inflation by 1990.”[13]

So, if we assume that this information is common knowledge and above the crass cognitive skill base of the low class, then we wonder what the intent might be. We must assume that the leftist ‘intellectuals’ believe in at least some form of economic sanity and must accept that this massive debt and spending are not sustainable. Or do they? What if the system crashes and they can blame capitalism? Did the Bolsheviks lose anything when they grabbed the loot of the Czar and spent it all away on wars??

We better give some more thought to the motives of those who pull the purse strings in American and that begins with Nancy Pelosi and Harry Reid. Do either one of these political stuffed vegetables understand that if we keep printing money we will crash in a blizzard of worthless money? Unfortunately, we have losers and sophist ding dongs like Little Timmy Geithner [14][15] who promises us he can unwind this mess.

"We have the deepest and most liquid markets for risk-free assets in the world. We're committed to bring our fiscal deficits down over time to a sustainable level.

"We believe in a strong dollar ... and we're going to make sure that we repair and reform the financial system so that we sustain confidence," he said.”[16]-- Geithner tells China its dollar assets are safe On Monday June 1, 2009

This is not possible if we soar beyond the Gladwell’s Tipping Point, where we are certainly headed:

“Today we call this [e.g. the point where you cannot return ed]  "Gladwell's tipping point". Once it goes, you can't get back up. This is why the Federal Reserve has resorted to emergency measures that seem mad at first sight.”[17]--Federal Reserve is damned either way as it battles debt and deflation By Ambrose Evans-Pritchard 18 Dec 2008 [Emphasis is mine in all quotes.]

I am not sure whether the liberals are already geared up for this collapse and could use the destruction of our currency to nationalize everything in sight. We would still have tangible assets but no way to buy or sell them and would be subject to government regulations for food and energy, now being taxed as astronomical levels.

Obama favors huge energy taxes[18], an undisputed fact, and a tax that does not appear in the political discussions. If new energy taxes are passed along to consumers by corporations then the customers will pay the higher price. That is an indirect tax. In theory, corporations pay no taxes at all because all taxes are included in the costs of production hence they are included in the price paid by the end user. The notion that the ‘poor’ will not have to pay for the higher intrinsic taxes embedded in commodities like tooth paste and sodas is ludicrous. But, such nostrums are the very essence of political persuasion. The crevasse that separates the leftists from the capitalists forces the advocates of the have-nots to be devious and dishonest. They cannot tell the truth about taxes. They have few options other than begging or threats. The black black box [theory on inputs, mechanisms and outputs] must generate outputs in concert with this disinformation mandate and it does exactly that.[19]

So, we are showered with lies from idiots:

The Tax Essay:

Obama statements about taxes in a debate with Hillary:[20]” I not only have pledged not to raise their taxes, I've been the first candidate in this race to specifically say I would cut their taxes. [Emphasis is mine in all quotes.]

President-elect Obama famously claims, “I’ll give a tax break to 95% of workers and their families.” [21] 

Writing in The Wall Street Journal on Nov. 3, 2008  Obama said, “If you work, pay taxes, and make less than $200,000, you’ll get a tax cut.”[22]

This essay [from Nov. 2008] surges on and on while the actuaries and accountants show that people making about $80,000 will certainly experience an income tax increase. 95% of the workers yield for us the implausible number of about 125,000 people who would get a tax cut not counting illegal aliens and criminals who ‘work.’

Joe Biden [Plugs the Buffoon] has clarified this for us:

“"Read my lips," Biden said, using Bush's famous phrase while referring to a Barack Obama administration.”Nobody, nobody making less than $250,000 is going to see a penny of their taxes go up."[23]—Biden[24] in an incoherent rant at some county fairgrounds near the campus of Ohio University in Athens on Oct 15, 2008.

There is not a single word of truth in the Obama platform since the summer of 2008, a year ago. Now, we face massive taxes on energy and health care and everything we can think of.  The fed has printed some. Obama believes in the green revolution and tax whoring behemoths like Global Warming[25] and Carbon Caps[26] that will our destroy society like they are  doing now in England.[27]

Get ready to lose all your assets including your homes and your savings money in a massive inflationary blast. The liberals are hungrily waiting to grab all that you have and ‘redistribute’ it to the ‘poor.’

My awful fear is that they are planning another Bank Holiday so they can close doors, freeze accounts and then pay out ten cents on the dollar. That would be a 90% wealth tax and very fitting and proper under leftist theories.

rycK

Comments to: ryckki@gmail.com