Monday, February 28, 2011
"Even with all of the crazy government spending that has been going on the U.S. economy is still on the verge of total collapse."
There is no getting around it. The U.S. dollar is dying. U.S. government debt continues to grow at a very frightening pace and the Federal Reserve is now buying up most of the new debt that is being issued. At this point there is simply not enough money in the rest of the world to continue to feed the U.S. government's endless thirst for more debt so the Federal Reserve has had to directly intervene in order to keep the Ponzi scheme going. Other nations are rapidly losing faith in the U.S. dollar as they realize that there is simply no way that the U.S. government will be able to service this soaring debt for much longer. Even now we are watching the U.S. dollar rapidly fall against a vast array of hard assets. Virtually all major agricultural commodities have exploded in price over the past year, the price of gold is over $1400 an ounce again and last week U.S. crude oil prices topped $100 a barrel for the first time since 2008. Meanwhile, the Federal Reserve continues to print dollars as if there is no tomorrow and the U.S. government continues to spend dollars as if the party is never going to end. Yes, we are most definitely witnessing the death of the dollar.
As a result of the decline of the dollar, U.S. consumers are really starting to see some substantial inflation at the supermarket and at the gas pump. In fact, the average price of gasoline in the United States increased 17 cents to $3.33 a gallon in just the past week, and more increases are expected in the weeks ahead.
Unfortunately, most Americans still don't understand that the monstrous debt that the U.S. government has accumulated has us on a road that is going to lead to economic ruin.
Back in the early 1980s, the U.S. national debt was considered a major national crisis and politicians were pledging to do something about it.
Well, they did something about it alright.
Today, the U.S. national debt is over 14 times larger than it was back in 1981.
Unfortunately, it is only going to continue to increase in size.
Entitlement programs such as Social Security and Medicare account for 58% of all U.S. government spending. Those are "sacred cows" politically and very few politicians will even talk about making cuts to those programs.
Defense spending accounts for another 20% of all U.S. government spending. This is another area that is very tough to cut politicially.
So that leaves only about 22% of the budget to cut. Sadly, that entire 22% could be eliminated from the federal budget and we would still be running an absolutely massive budget deficit.
Yes, we are in a huge amount of trouble.
So what are our politicians doing about it?
Well, over the past decade they have shown that they are very good at voting for increases to government spending but they are very poor at voting for cuts to government spending.
For example, during Barack Obama's first two years in office, the U.S. government added more to the U.S. national debt than the first 100 U.S. Congresses combined.
In fact, if Barack Obama has his way government spending is going to increase by another 50 percent over the next decade. In the new budget that Obama recently proposed, the U.S. government would spend 3.7 trillion dollars in 2012 and by 2021 the U.S. government would be spending a whopping 5.6 trillion dollars per year.
But when it comes to cutting the budget nothing ever seems to happen.
Right now, Republicans and Democrats are fighting tooth and nail over $61 billion in budget cuts.
But even if the Republicans get all of those cuts it would be just a drop in the bucket.
After all, what does it really matter if the U.S. budget deficit is 1.59 trillion dollars instead of 1.65 trillion dollars this year?
But listening to the Republicans and the Democrats blow hot air you would think that the fate of the world is at stake.
Meanwhile, our states are going broke as well. In fact, 30 U.S. states have borrowed a total of $41.5 billion from the federal government just so that they could continue paying out unemployment benefits.
California alone has borrowed $9.8 billion in unemployment benefit money from the federal government, and nobody is really quite sure when they will be able to quit borrowing more unemployment money from the U.S. government.
Things have gotten completely and totally out of control.
But if the U.S. government quits borrowing and spending money so feverishly it will cause a dramatic slowdown in the U.S. economy and nobody seems to want that.
Even with all of the crazy government spending that has been going on the U.S. economy is still on the verge of total collapse.