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The United States of America is the biggest debtor nation in the world.
China is the biggest creditor nation in the world.
We owe China over $900 billion. We owe Japan nearly that much. Our total foreign debt owed is $3.96 trillion (link).
Our total federal debt is over $13 trillion, and climbing at a rate of about $1.7 million every minute of every day. In the 2010 federal budget, the government is borrowing 42 cents of every dollar it spends. Our federal debt is nearly equal to our GDP.
The federal government owes about $4.4 trillion to itself, mainly due to Congress stealing money from Social Security and Medicare surpluses (though Congress calls this "borrowing," the government has no funds on hand to repay this money. The funds come from you, Mr. and Mrs. Taxpayer). Both Social Security and Medicare face enormous future unfunded liabilities, meaning the government has made commitments to fund those programs without allocating any money to fund them.
A recent article by Pat Buchanan said our government now consumes 40% of our GDP. That's 40% and growing, because ObamaCare kicks in soon. The growth of government threatens to choke America to death with debt. Every year, hundreds of billions of taxpayer dollars go to no government program or service. Instead, they go to pay interest on our debt. That money goes to China and others. The interest on the debt is growing by leaps and bounds along with the debt.
Given this bleak economic picture, and even bleaker forecast for the future (Obama is on a path to add $9 trillion more to the debt at the same time the baby boomers retire and start demanding funds from those unfunded entitlement liabilities), our government has decided to, in it's infinite "wisdom"........bailout everyone in sight and jack federal spending up to unprecedented levels.
This brings me to our two major politicial parties - the Tweedledumbocrats and the Tweedlegops. The Tweedledumbs look at our unsustainable fiscal outlook and say, 'we need to spend and tax more !" This is equivalent to saying the problem with the Titanic was that the hole from the iceberg wasn't big enough. The Tweedlegop has a different strategy. They say "we need to cut taxes !" The Tweedlegop also says "we should cut spending !," which is the painfully obvious correct solution, but can anyone remember the Tweedlegop EVER actually doing that ? They did slow the rate of spending growth during the Clinton years, but if they ever actually cut spending, I must have been asleep that year. Even slowing the rate of spending growth flew out the window during the Bush years. The effect of GOP leadership has also been to make the hole in the Titanic bigger. You could even say the Tweedlegop has been worse, at least until Obama showed up and abandoned all fiscal reason. The Tweedledumbs 'tax and spend' policy may be marginally less terrible than the Tweedlegops 'tax cut and spend' policy. The difference really isn't worth arguing, however, because both policies lead us to bankruptcy.
Thus, we have two failed political parties contending to see who we will elect to fail us next. The Tweedledumbs blame everything on the Tweedlegop, and vice versa. The majority of pols are either in denial about our debt problem, or they are inveterate liars and hypocrites. I vote for the liars and hypocrites explanation, not that this should be news to anyone. We've all known this for a long time.
So what do we do as citizens who care about our country ?
I'd say we should elect Libertarians and Tea Party candidates to see what they'll do in office, but realistically, that's not going to happen in big enough numbers to effect change quickly. Even if we elected somebody completely different as President who would start attacking the debt problem, say, Ron Paul, he'd still have to deal with a Tweedle-de-dee Congress that would oppose him at nearly every turn. Ron Paul, a Libertarian disguised as a Republican, is even opposed by his own Tweedlegop party much of the time.
The only thing we can do is elect politicians who promise to cut spending and limit government, and hope they live up to their word. There aren't many such candidates in the Tweedledumb party, but there are a few. There are more of them in the Tweedlegop party, so that's the best place to look for fiscally conservative candidates for now, until the Tweedledumbs reject the liberal wing that dominates their party. The liberals are easy to spot. They are the ones saying we don't spend ENOUGH money. They point to the big government quasi-socialist entitlement countries of Europe as the models of compassionate liberalism, that represent the sum of all that is good and noble.
Here's the big problem with that.
As I mentioned earlier, the United States is the single biggest debtor nation, but that's in dollars, in the sheer volume of our debt. If you look at the liberals favored European big government quasi-socialist countries, you'll see that they are even worse off than we are. We've all seen the financial meltdown and subsequent rioting in Greece on our teevees, but check out the top debtor nations when compared to their GDP's. The second column from the left is the percentage of debt compared to GOP:
Europe is awash in debt. It's borrowed time is running out even faster than ours. This is not the model we want to follow. This list reads like a book called The Fall Of Western Civilization. The debt problem goes far beyond our country, and if we keep going on our current trajectory, what happens if China and other creditor countries decide they don't want to risk lending us more money ? I'll leave that as an open question for now.
In this discussion, I must again mention the dumbest economist in the world, Nobel Prize winner Paul Krugman, who writes for the New York Times. In a recent article Krugman wrote called We Are Not Greece, he actually tries to say we shouldn't worry about our debt (told you he was dumb). Here's why Krugman thinks debt is groovy, and people like me are fearmongers:
The U.S. economy has been growing since last summer, thanks to fiscal stimulus and expansionary policies by the Federal Reserve. I wish that growth were faster; still, it’s finally producing job gains — and it’s also showing up in revenues. Right now we’re on track to match Congressional Budget Office projections of a substantial rise in tax receipts. Put those projections together with the Obama administration’s policies, and they imply a sharp fall in the budget deficit over the next few years.
I don't know how to describe the above paragraph from Krugmen, other than to say it is 100% pure unadulterated bull excrement. Yes, the economy has been growing, but IT IS THE CBO WHO IS PROJECTING OBAMA'S $9 TRILLION DEBT RUNUP. The CBO has factored economic growth into it's projections already. The "sharp fall in the budget deficit over the next few years" of which Krugman speaks will still leave us with annual deficits larger than any we've had in the history of our country prior to 2008, in the neighborhood of $700-800 billion. That won't help us in any way. It leaves us on the direct path to failure.
But that isn't the worst part of Krugman's deception. He has another ace up his sleeve. Here's why he believes we are not caught in the same debt trap as Greece:
Greece, on the other hand, is caught in a trap. During the good years, when capital was flooding in, Greek costs and prices got far out of line with the rest of Europe. If Greece still had its own currency, it could restore competitiveness through devaluation. But since it doesn’t, and since leaving the euro is still considered unthinkable, Greece faces years of grinding deflation and low or zero economic growth. So the only way to reduce deficits is through savage budget cuts, and investors are skeptical about whether those cuts will actually happen.
You see, according to Krugman, because we have our own currency, the dollar, we can merely devalue the dollar to relieve our debt. This is known as monetizing the debt (printing a bunch more money). What Krugman the Nobel winner would have us do is to make the dollar worth a whole lot less. That in turn would make our debt worth less. It's genius, right ! WRONG. What Krugman doesn't bother to tell us is that devaluing the dollar also makes all our paychecks worth a whole lot less, our savings worth a whole lot less, and makes all our assets worth a whole lot less. He also doesn't bother to tell us that it would make all our goods and services cost a whole lot more, because it would take a lot more devalued dollars to buy them. This is how Krugman would "fix" our debt problem, by impoverishing us. I've never bothered to check exactly what Krugman won his Nobel Prize in economics for, but after this claptrap, he should have to give it back. Krugman isn't advancing any sensible economic theory, he's advancing progressive doubletalk. The sad part is that many innocent NY Times readers will be fooled by his nonsense.
Still, this administration continues with it's non-stop spendathon. Obama is proposing another bailout, this time of state and local governments, aka, the unions. Obama wants $50 billion for this bailout. Keep in mind that hundreds of billions of dollars already went to the states in Obama's Porkulus package. We have another Tweedledumb, Senator Bob Casey (D-PA), who has introduced legislation to bail out union pension funds with taxpayer dollars to the tune of $165 billion.
As for Greece, we're bailing them out too (we don't have the money, so I guess we can borrow it from China.) The European Union and International Monetary Fund (IMF) is bailing Greece out to the tune of a trillion bucks. The United States is committed to paying 17% of the IMF portion, which could put U.S. taxpayers on the hook for over $50 billion more.
But, hey, it's only money (money we don't have). The dumbest economist on the planet, Paul Krugman, says not to worry.
And the mainstream media keeps trying to condemn the Tea Party movement, endlessly wondering why it sprang up now, and falsely calling it racist and violent. Here's a newsflash media, and it comes from former President Bill Clinton - it's the economy, stupid !
I feel like I'm living in an episode of the Twilight Zone. Please, let's return to reality, before it's too late.