Thursday, July 2, 2015

There are none so blind as those who will not see


In a comment to my previous post, reader "Ms. d'Memieux", quoting from that article, asked:

> deficit spending is simply digging our fiscal hole even deeper

Who is this "our" you write of?

Well, "Ms. d'Memieux", here's what I'm talking about.



It’s an imperfect analogy, but imagine the green is your salary, the yellow is the amount you’re spending over your salary, and the red is your MasterCard statement.

The chart is brutally bipartisan. Debt increased under Republican presidents and Democrat presidents. It increased under Democrat congresses and Republican congresses. In war and in peace, in boom times and in busts, after tax hikes and tax cuts, the Potomac flowed ever deeper with red ink.

Our leaders like to talk about sustainability. Forget sustainable — how is this sane?

. . .

All of the figures come from the U.S. Treasury and math doesn’t care about fairness or good intentions. Spending vastly more than you have, decade after decade, is foolish when done by a Republican or a Democrat. Two plus two doesn’t equal 33.2317 after you factor in a secret “Social Justice” multiplier.

. . .

Like many Americans, I haven’t had the privilege of visiting Greece. Unfortunately, Greece will be visiting us unless we change things and fast.

There's more at the linkEssential reading.

If anyone can look at that graphic and not be truly frightened for the future of this country, they're either so stupid as to be beyond help, or insane ditto.  I don't see any other possibility.  As for what it means if "Greece visits us" . . . see here.

Peter

EDITED TO ADD:  In such a risky financial environment, it's no wonder that 'insiders' - those who have a clearer understanding of and insight into the markets than almost anyone else, including central banks - are selling off their assets and boosting their cash reserves.  See these two reports for more information.  If the pro's are doing this, the rest of us should be learning from them - and, I dare say, emulating them.  I'm doubling my cash-on-hand reserve.

6 comments:

Theother Ryan said...

There is a really good picture thing where they knock 6 (I think) zero's off the numbers to make it comparable to a household budget. The numbers are truly staggering. I do not want to be alarmist but we have significant financial issues.

Sunnybrook Farm said...

It doesn't look like it could be fixed, almost like the Titanic after so many compartment flooded, the weight of the water/debt will pull everything under very quickly at the end.

Stephen J. said...

Okay, here's a stupid question. The USA owes 18 trillion in debt. Just who or what is this money owed *to*? As the Fugger banking house found out when they loaned money to the English crown, when you owe the bank a million dollars, you have a problem; when you owe the bank 100 million dollars, the bank has a problem.

Conversely, the consequences by debtor may also be relevant. Owing a thousand bucks to my friend will cost me heartbreak if I screw him over; owing a mere hundred to Big Guido will cost me a lot more if I default, so that makes a difference who i try to pay back first. Who will retaliate and how, if things do go south?

MadMcAl said...

What many people who say it is the problem of the lenders seem to forget is that making debt is a habit.

A bad habit. So when these 18 Trillion of debt mature and are not payed off, it will indeed be the problem of the lenders to get their money back.
But at the same time the US will have a hell of a time to get new money.
And with the habit of making debt everything will grind to a stop until the budget is balanced.

Kyle said...

There's something goofy with this graphic. The deficit and the debt don't add up. For the debt level to increase so dramatically, there has to have been a dramatic increase in deficit spending. Unless someone is suggesting that suddenly the T-bill market is paying out triple digit dividends?

Daniel said...

The deficit is the annual shortfall. As you fall short every year for decades...the principle and interest on your running debt balloon out of control.