Monday, July 20, 2009

How Much is Too Much?

The National debt is at least 10 trillion dollars. Today pundits are suggesting that it may cost us the government 24 trillion dollars to cover the banking mess, which figures out by their calculations to $80,000 per each person in the US.

Obama-our-mama is suggesting that we will have to spend a trillion a year extra to stimulate the economy, add another 4 trillion (4 year term). Then there is health care, figure another two trillion. So we have 10 +24 +4 +2 for a grand total of 40 trillion dollars. If interest rates go to 10 percent, there is no need for math. An empty gas tank is an empty gas tank, you walk.

The interest on 40 trillion dollars at 5 percent is 2 trillion dollars a year. We can’t possibly pay the interest let alone pay on the principle.

I do not get this Trillion here, Trillion there routine. Our government doesn’t have a trillion dollars in taxes coming in, in a year. We do have some Federal Reserve nut running around saying that this is an approach that has never been attempted and has a good chance of working. The words "Pipe Dream" come to mind.

My only question is this, why do we have to spend to keep this mess going? Let it fail. The poor have nothing to lose except their government check. The drug trade in this country could collapse from that alone. Big conglomerate shopping stores would go broke and Mom and Pop stores would rise up. There wouldn’t be ten restaurants on every block, people would take time to go home and cook.

This administration and the one before seemed to think that we can pull money out of a toilet. These Candy-Asses in charge have no concept of the mind boggling amounts of money they are trying to spend. They are nothing more than drug addicts that need their fix today. Tomorrow is another day. Keep the game in play. They will ruin us.

This can’t last much longer, maybe two or three months. How many American dollars do you want if they are going to triple the amount in circulation? Look for a collapse in the Chinese banking markets (they are on a roll like we had here). From there, the house of cards will fall. Paper money is backed by faith. When faith fails, gold, silver and your wife’s smile are all that is left. I rest my case.

16 comments:

Sackerson said...

It started with Reaganomics, sadly (for he was such a nice chap).

I'll settle for my wife's smile, that at least can't be stolen.

Tyrone said...

Jim, you are not alone in your thoughts.

And when they give each household 100,000 worthless dollars, I want mine in fresh singles... MONEY BATH!!

JMS said...

I'm getting real nervous now. I'm trying to time when the hyperinflation will begin. I see it coming real soon maybe 3-4 months?

Anonymous said...

...why do we have to spend to keep this mess going? Let it fail.

I beleive that's exactly their intention. The easiest way to achieve a mandate to re-structure society is to destoy it first. Who will be left standing write the new rules?

Why, the government, of course.

This is your 'dump the dollar' signal. Get rid of them while you can.

Anonymous said...

Jim,

Have you seen "Are You Smarter Than A 5th Grader" on TV? If not, its a "real" reality show that challenges your knowledge of 1st through 5th grade subjects using a few smarty pants 5th graders to help you win up to a cool million.

Needless to say, after a couple of seasons... there is still no winner of the grand prize. And just last week, a contestant actually failed the 1st grade!

The show, in my opinion, summarizes the state of the mental capacity of the average American to comprehend what is going on around them. Most folks either don't get it when it comes to basic knowledge of our economic machine or just don't care.

Either way, a nation with an intelligence level below the average 5th grader seems to be just where our politicians want us. Ignorant constituents means job security and unbridled control for these folks.

ATP

Jim in San Marcos said...

Hi Sack

Reagonomics got us off to a great start. From there is was one hell of a party.

Family is the only real wealth. You don't have to spend it to enjoy it.

Take care

Jim in San Marcos said...

Hi Tyrone

You might think twice about having it all in singles. It could take you all day to count that out just for a loaf of real bread from the Bernanke Bakery. and of course, your going to need a Geitner wheel barrow (made by GM) to cart it in.

Jim in San Marcos said...

Hi JMS

I'm nervous too. My son starts college in one more year. It could be a whole new ball game when High School graduation comes around.

I figure I'll be able to retire at the age of 85. Just unhitch me from the plow if I don't make it.

Jim in San Marcos said...

Hi ATP

I think you have it backwards, the 5th graders in Congress are running the show;>)

The thing that really burns my butt is you can see what they are doing is wrong, but until the ship sinks, it's their show, and we pay for it. Being smart doesn't count, they keep changing the rules.

Take care

Jim in San Marcos said...

Hi Anon 7:28

I wouldn't just dump the dollar. Use them to buy things that you need at a real good price.

I need a sail boat (like a hole in the head) but if the price is right, it's going to be mine.

If you don't own a home and can pick one up for a song, then buy one, it's a great hedge against future inflation. (Forget that last statement if you live in California)

There are going to be some good deals coming up if you have cash. You won't get rich but you won't go broke trying to pay for it.

I do think as time progresses you will be proved right. The whole world will be trying to dump the dollar. It's a little like a gift store that issues a billion dollars in gift certificates and runs out of product to sell. You can't redeem the certificate and are stuck holding the bag.

Thank you for your comments.

Anonymous said...

Jim, this is Anon (7:28) here again. For those who have never experienced a real-world currency collapse, it is a deeply disturbing & surreal experience. It will redefine how you see the world.

I lived in Moscow from '93-'95 working as a private contractor to the U.S. government. I lived out in town, just like a regular Russian, except that I was priviledged to be paid in dollars, not rubles. People were destroyed as the ruble collapsed. Gang violence went through the roof as they vied for territory. (I'm not making this up) Car bombings became normal. Drive-by grenade attacks and shootings occurred daily.

Some days the ruble lost up to 20% of its value. As soon as my Russian friends got paid they'd rush over to me (& other westerners) in hopes of selling their rubles as fast as possible (I only needed so many to get by each day.) 'Good' young women (law students, etc.) resorted to prostitution because there was no other way to make money. It was an awful and very sad thing to witness.

But I'm glad I did, because now I understand. I "get it" now. I hear all these young 20-somethings running around saying, "it could never happen here; this is America".

BS. It could ABSOLUTELY happen here. It can happen ANYWHERE, and it's going to be a gut-wrenching experience for everyone. They remind me of my grandparents' generation who came of age just as the Great Depression hit. It defined their lives. I remember as a kid, my grandmother would 'steal' all the little sugar packets at Denny's & IHOP, and stuff all the left-over biscuits in her purse as we left.

I always thought, "What the heck is wrong with her? She doesn't need all that crap!"

Yes, she DID need all that crap. It gave her reassurance. It made her feel safe. I'm afraid her past is our future.

Snoop-Diggity-DANG-Dawg

Anonymous said...

Anon. you are right I lived trough similar thing too (another post communist country)... it happened at the most unexpected time the country was starting to recover.. we had two inflation hits the first one ~100% and several years after that in Jan-1992 ~200% inflation..
What happened was first there was food shortages in the groceries but you had the money to buy it... the next stage was there was enough food, but you didn't have the money to buy.

I was replacing a friend at his job in Jan-1992 when the second inflation shock hit and got a monthly salary of $6 (six dollars under the exchange rate at this time and I was well paid. Sounds like oxymoron ;) ).
The reason for the second hit was that
the second socialist gov. declared moratorium on the debt payments (I think it is not that different than massive money printing happening here)

Then we took the gov. down and the new
transitional (non socialistic gov.) was
able to recover the salaries back to ~$100 probably half where they were before the crisis (with the help of the Euro union).

What I'm trying to say the the only thing required for this to happen is that your creditors lose the trust in you paying them back, nothing fancy-shmansy Keynesian rhetoric.

I'm dismayed how can some politicians lose their common sense, because this is the only thing you need to get the right decision !? You don't need computer models or other bullcrap....

Anonymous said...

Anon @6:21, I'm with you, brother. Our (sadly) spoiled and delusional) American siblings are about to get a very serious wake-up. I hope thay have what it takes to survive, because it 'takes' A LOT!

Anonymous said...

This could be the plan of the elite. The dollar is the strongest barrier to a one world currency. Knock it down and opportunities open up.

Anonymous said...

I agree they are stupid and "printing" all the money will lead to inflation, but we aren't going to collapse.I

n 2 or 3 months when we are still here are you going to admit we didn't have an economic collapse?

Anonymous said...

In 2 or 3 months when we are still here are you going to admit we didn't have an economic collapse?

Who said anything about "two or three months"? It could be 2 years. It could be 5 years.


The bottom line is that our government's economic policies are absolutely unsustainable and WILL eventually crash. It may be a slow-motion train wreck, but a train wreck nonetheless.

And it's going to be EXTRAORDINARILY painful.

Snoop-Diggity-DANG-Dawg