Every second, the U.S. national debt grows by about $46,000."      ~Factoid

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News and opinion from all over the political universe.  Much of it to be taken with several grains of salt.

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   February 23rd, 2019

                                             "We Can't Fix a Debt Problem with More Debt"                           
  • U.S. “official” national debt is $22 trillion
  • Global debt is about $250 trillion
  • Debt is growing exponentially and much faster than the economies which must support the debt. (Trouble ahead!)
  • Debt can’t be repaid unless dollars/yen/euros/pounds are devalued.
  • Default and/or hyper-inflation are visible on the horizon.
  • The coming recession will devastate tax revenues and worsen the debt crisis.
  • We can’t fix a debt problem with more debt.
    These points are made by Gary Christenson in a piece called   DOWNTURNS AND FINANCIAL CRISES

  What about it? Is this just silly paranoia about the danger of ever-growing debt? Isn't it possible an expanding economy can meet the challenge of paying down debt?  Besides, we only owe it to ourselves.

  We don't actually "owe it to ourselves."  We owe it to all the holders of those bills, bonds, and other U.S. securities floating in the folios of individuals and nations all over the world. Moreover, while it's true a flood of devalued currency (steep inflation) allows the repayment of debt with cheaper money, it invariably gets out of hand and results in chaos. (See Zimbabwee, Venezuela, et al.) 
Day of Reckoning for Venezuela.     
“We will have a fantastic opportunity this Saturday to accept important humanitarian aid that dictator Nicolás Maduro has forbidden. We have a fantastic example to pull our country out of this crisis.”
Interim President Juan Guaidó, Venezuela. 

               Mainstreasm media are so fixated on Washington political developments, not to mention coverage of entertainment "news", they have not given much time and space to the shocking unravelling of an entire South American country - namely, Venezuela. The collapse of Venezuela is a classic example of decades of socialism. 

    Couldn't we sell off the gold at Fort Knox to pay off the national debt?

    Crazy idea.  Here's why:  - All the gold in the world mined since the dawn of time adds to about 190,040 metric tons. At the current per-ounce price of about $1,300, the world’s gold hoard worth over $8.5 trillion would be not enough to pay off the U.S. debt accumulated between 2009 and 2016.

Clearly, selling off the U.S. gold hoard, which is only a fraction of the world stash, would be a mere drop in the bucket.  Besides, the U.S. Treasury, Congress, and the Administration aren't giving a thought to reducing the exceptional weight of the public debt...now more than $22 trillion.  And the Treasury is about to borrow another $226 billion, although  a news report calls it "auctioning $226 billion in securities next week."

      To remind ourselves of the enormity of a $226 billion loan just multiply $1 million by 226,000.  When citing these figures hardly anyone refers to the amount of INTEREST they carry.  Before you know we'll soon be committed to absolutely unpayable debt.

    Then what?

"Illinois Hopes to Fix $134 Billion Pension Shortfall By Issuing More Debt "
   Curious headline.  The State of Illinois finds itself 134,000 million dollars short on its promises to pensioners,  so what does it do? GOES DEEPER IN DEBT.  "Issuing more debt" simply means "borrowing more" and increasing the debt load on Illinoiis taxpayer.  What a dumb thing to do - borrow millions more when you cannot pay what you already owe. 

     Small wondeer the pie-in-the-sky promises of the socialist left are rapidly gaining speed.  But no debt can go forever unpaid, although proponents of limitless borrowing hold out hope that a booming economy will arise to save the day.  They fail to make clear they mean that higher rates of inflation will create the momentary illusion of prosperty (but inevitably lead to currency debasement).

It won't be surprising to witness a greater exodus of more wealthy people from Illinois to lower tax states like Florida and Texas. 
*  *  *  *  *  *  *  *  *

    "H.Res.109 — 116th Congress (2019-2020) is the Green New Deal, the product of extreme man-made climate change fanatics who expect catastrophe in short order and who want to assert their control over practically every major economic decision that Americans make. They would gladly interfere in every major market process and thereby create havoc, just as the original New Deal did, but to a far higher degree."  ~Michael S. Rozeff

Professor Rozeff notes the fast rise of Alexandria  Ocasio-Cortez as chief promotor of the "Green New Deal."  He is already on record, as many Americans are, opposing the leftist promotion of a socialist government framework.   But she is turning out to be a darling of  GOP Trump supporters who regard her as a key to the president's re-election in 2020. 

       Perhaps.  If Rep. Ocasio-Cortez can create a national debate about the sharp differences between socialism and capitalism some good might come of it, although the preponderance of opinion at the moment favors the socialist approach.  Since the New Deal of the 1930s Americans have been taught to rely on federal government and its myriad agencies to steer the Ship of State.  The ship is scraping its keel on the shoals of socialism.  Promoters of big government are careful to call it "progressivism", avoiding the word socialism.  

       Ocasio-Cortez says Trump is scared of socialism.  

        Good.  He should be.
Our Shameful Stint as Interlocuter
     Virginia's Gov. Ralph Northam is in hot water because of a politically incorrect college yearbook photo published in 1984.  His critics are demanding he resign on the grounds that if someone makes a stupid social error in college there is no chance he or she could have matured in the intervening 30+ years.

      If that be the case we hang our head in shame and admit to a similar callous error  in Junior High School, today called Middle School.  It was 1941 and country schools in New England were still putting on Minstrel Shows, holdovers from an earlier time.  We were  asked to be the Interlocutor -  a fast talking Caucasian sitting in the middle of a row of boys wearing blackface makeup.  They wore homemade tophats and gawdy costumes.  The Interlocuter was a kind of MC who kept the uptempo show in motion with repartee and corny jokes aimed at the "end men" who would fire back with evern cornier comments.

      Now that Americans have so much time on their hands they can spend hours tracking through the trivia of other people's lives in search of scandal we decided to 'fess up.  Our scandalous role was played nearly 80 years ago, but judged through the lens of the 21st century it was an "unforgiveable faux pax."  Frankly, we hope it can be omitted from our obituary.  But in this day and age one can never tell. 

   In 1775 the Continental Congress authorized the issuing of paper dollars. The paper experiment was such a disaster the new U.S. Constitution of 1789 specifically authorized Congress to COIN MONEY. No one has noticed the mandate has never been annulled or amended. It has just been abandoned in favor of the present fiat currency fad.

   A U.S. Supreme Court ruling in 1884 (Juilliard v. Greenman) declared that paper notes were legal tender.  "Congress is authorized to establish a national currency, either in coin or in paper, and to make that currency lawful money for all purposes, as regard the national government or private individuals."

   That's where the confusion began.  The high court declared that Congress had the power to print a piece of paper and call it legal tender OR  make  coins of silver or gold  legal tender. By 1933 the circulation of gold coin was terminated and by 1968 silver coins had vanished from circulation. In the mid `1980s, however, the U.S. Mint was authorized to issue legal tender coins of gold and silver denominated in such low face values as to insure no one would actually use them in  trade. 

   Curiously, the law is two-faced with regard precious metal coins. They will be accepted for bank deposit or for payment of taxes only at face value. However, if an employer should pay wages in precious metal coins they cannot be reported to tax authorities at face value. The market value must be calculated. Thus, if an employer pays a worker, say, two one-ounce U.S. gold coins (face value $100.00) the payment must be reported as income worth about $2,600.00. THAT is a question the courts will not touch.

   Obviously, the money system is askew.  Abandoning the constitutional directive was a bad idea.

Socialism simply means a happy world where people are taken care of."

   What nonsense!  Who would believe such stuff as this?

  Senator Bernie Sanders, for one. NYC Mayor Bill de Blasio for another. Millions of American young people
consider socialism a viable and even noble approach to organizing society. They appear totallyi unaware of the piles of bodies various socialist governments produced in the 20th century.

   And then there's the newly elected Alexandria Ocasio-Cortez who has already been interviewed by CBS's "Sixty Minutes", although the interviewer (Anderson Cooper) failed to offer much in common-sense challenge to her socialist schemes. 

    Jeff Deist sees the growing enthusiasm for socialism in the U.S. as a serious threat.
"Liberal Baby Boomers still think it’s 1968 and conservative Baby Boomers still think it’s 1985. Generation X and Millennials will exhibit the same blinders. It may be disheartening to keep fighting what should be a long-settled battle against socialism, but today we have no other choice."  STILL FIGHTING SOCIALISM

     Deist points out that people like Ocasio-Cortez and de Blasio believe there's "Plenty of money out there," but it's in the wrong hands.  He also thinks conservatives are doing a lousy job of promoting capitalism. He's right.

Recession?  What recession?

    Everyone knows we're in the midst of an economic boomlet.  In fact, the Federal Reserve has been raising the basic Fed Funds rate ever so slightly to put the brakes on the possibility of overheating the general economy. 

    However, Fed chairman Jerome Powell has lately worried aloud about the possibility of a slowdown and has hinted that future increases in interest rates may be delayed.  And an increasing number of U.S. economists are suggesting we may need to buckle up for another of those pesky recessions.  (The word "depression" was removed from the economists' lexicon after the awful performance of the economy in the 1930s. )

     But right now local and state governments are counting on a non-stop flow of tax revenues and are planning to pour big money (from future tax flows and borrowing) with no thought to the impact of the next recession.

     Spend and borrow, borrow and spend has become the mantra for government at all levels, and individuals as well.  The evening news fills us in on the dire straits many government workers are in because of the federal government shutdown.  Whatever happened to private savings?  Why are so many people living from paycheck to paycheck?  Something is seriously out of whack. 

    At any rate - if history be a guide (and it is) recessions come along on a quite regular basis and even more than a century of management by the Federal Reserve System has not stopped the recurrence of recessions every five years or so.

     Now comes Charles Hugh Smith to warn of another reckoning. 

     "The public sector is also ripe for uneven distribution of recessionary impacts. Local government and its agencies in boomtowns such as the SF Bay Area, Seattle, Los Angeles, NYC, etc. have feasted on soaring tax revenues and multi-billion dollar municipal bonds.

     "The Powers That Be in these boomtowns are confident that the good times will never end, and so the modest rainy-day funds they've set aside are widely viewed as immense bulwarks against recession when in reality they are mere sand castles that will melt away in the first wave."  THE RECESSON WILL BE. .

    Years ago someone told us it was wise to have enough cash put by to pay all of one's expenses for at least three months in case of unexpected unemployment.  The lesson apparently never took hold or has been lost, according to current reports on the plight of suspended government workers.  Too bad.  The old fashioned idea of "saving for a rainy day" needs to be resurrected.

Immigrant Incentives  

                 Drugs find their way into the U.S. from Latin America by the ton.  Droves of immigrants have set their sights on entering the U.S. by fair means or foul, and if they can't enter overland there's always the sea or small aircraft, although expensive for the average immigrant.

       No easy answers to the constant immigration problem. We can't imagine borrowing more then 5 thousand million dollars to put up a fence on the southern border will change things very much.

       Maybe cutting out incentives for immigrants is the answer?


A Matter of Life and Debt
The contrarian aims to be as free of debt as possible.  Why?

   We're pretty sure government and private debt has piled too high .  The words of the ancient philosopher Publilius Cyrus echo in our head - "All debt is paid, either by the borrower or the lender" - suggesting that one of those nasty economic corrections may arrive on the doorstep to undo the imbalance multi-trillion dollar debt is causing. 
   Now comes Mac Slavo with suggestions of how to  whittle one;s debt down in the face of an economic slowdown:  
"Global public (government) debts and private debts are at all time (and terrifying) highs. This historic debt is really at the core of most people’s economic decline.  Granted, not all debts are incurred through overspending or buying a car out of your price range, but if you want to be prepared for any downturn in the very volatile economy we all are living in, the best bet you’ve got is to go debt free."    GO  DEBT  FREE  IN  2019

Easier said than done, right?  If skating on the thin ice of heavy debt makes you happy, ignore this advice.  But if you're uneasy about the future check Mr. Slavo's advice.