Monday, October 19, 2009

2 + 2 = Infinity…

...At least that’s what the maniacal bankers and bought off politicians would have you believe. Math, it seems, only applies to you and me, not to them.

Here’s a quick reminder of the lesson… remember Congressman Stark? You see, when you’re a twisted and conceded Keynesian Haaarvaaard trained criminal (errr, I mean politician), you learn that traditional math, as taught in elementary school, simply doesn’t apply to you or your governmental decisions:

Yawwwn, he makes Larry Summers, Obama’s chief advisor for the twisting of Keynes & proponent of never ending credit, look smart and awake…

To “thinkers” like these, when the economy is in trouble because people can’t pay their debts, then surely the solution must be found in creating more debt! The never ending fiat kind of debt that ruins mere mortals lives, yet places bigger and bigger bonuses in the kitty for the maniacal math purveyors of Wall Street.

And that makes someone in this story nuts, as in INSANE, but lately I’m wondering who that is, exactly? Is it the ones who engineer the fantasy, or the ones who let themselves be raped by it? Just something to think about as you ponder the Congressional Budget Office’s (CBO) latest monthly Budget Review. Keep in mind that September was an important month, the end of our nation’s fiscal year:

I have pointed out repeatedly that our government is spending more and more while taking in less and less. And yet one “expert” after another lines up on CNBC and CNN to tell Americans that they see the “structural” problems but that, “in the short term” bailing out the banks and spending more than we take in is a good and necessary thing to do. Oh, and there’s never been a better time to buy stocks and real estate, but some day, in the future, we’ll have to address those “structural problems,” but just not today, that wouldn’t be prudent!

Our supposed and much trumped up/ fluffed up GDP numbers have been running in the $13+ trillion dollar range and we see all types of reports comparing those goods and services to our national debts. Of course the amount of goods and services produced in our country has NOTHING to do with our debt, but that’s what the “experts” like to talk about… it sounds good and important, like they know something you don’t.

Trust me, they don’t!

What you know is correct… namely that what matters to debt is YOUR income, not the production numbers of your neighbor!

Our nation takes in money through the collection of taxes, a mere formality if you listen to Congressman Stark. I’ll bet that he and his Haaaarvaaard training had a tough time predicting that our country’s revenues would be falling as dramatically as they have. This is a chart produced by CNN… the relationships are correct, however the scale on the left, supposedly trillions of dollars, is not correct for the current year (the figures are less), please refer to the CBO’s revenue numbers above for the correct figures:

Note that our nation’s INCOME (receipts) peaked at about $2.7 trillion and has since fallen back to only $2.1 trillion, a 16.6% plunge in the past year in overall receipts!

Personal income taxes are down a stunning 20.1% and corporate tax receipts are down a record setting 54.4%!! Wow! Note that all categories of income were down, including Social Security which fell by $9 billion.

Now, in YOUR family, when you lose your job and your credit is maxed out, the rational thing to do is to cut spending, right? Well not if you’ve gone to Haaavaaard, you stupid, untrained, American dolt! No, no, you see, you have to spend more to increase indebtedness and thus, well thus, “credit will be flowing nicely again,” yeah, that’s the ticket! How many times have you heard ex-President Bush or President Obama use the phrase, " get credit flowing again?"

And with that exact logic, your “leaders” have managed to spend ever increasing sums of money they don’t have:

Notice that while total income has plunged 16.6%, total government outlays have zoomed 17.8%! Wow, it’s a good thing they have the higher edumacation, otherwise us dolts might have ruined the country and actually balanced the budget!

Oh, and note that every single category of Government spending has increased except one – the interest on the public debt! Wow, Stark was right and Jan was wrong! How did they manage to spend less on interest? Why, by purchasing their own debt at zero percent interest, of course! There you go again, thinking with that “linear” math. Gee, I wonder what happens when interest rates go up? Hmmm… does not compute, that never happens.

At least not since 1980...

And so, with great fanfare, we have spent ourselves into the greatest deficit of any nation throughout the entire history of the planet! Another $1.4 trillion in the hole, here’s how the chart of the official deficit looks for fiscal year 2009:

And if you think that’s the stuff of great nations… Wait! There’s more!

Least you think I’m whacko for adding it all up, as I did last year in Death by Numbers, using the most conservative numbers possible, this time I’m going to let Larry Edelson charm you with some figures of his own… it seems that Larry also owns a calculator or two, and can thus add up figures that nary a Haaavaaard trained economic “expert” can:
Washington's Tower of Debts

The total amount of U.S. government debts and obligations is far greater than what most people realize.

Uncle Sam is saddled with...
-An officially recognized national debt of $11.8 trillion, which will likely exceed $12 trillion sometime this month.

-Unfunded national obligations of $104 trillion!

-Another $9 trillion in cumulative deficits over the next ten years.

-Plus another trillion dollars for health care reform, no matter what bill finally makes it through Congress.
Grand total: $125.8 TRILLION of public debts!

All told, that means that each and every household in America is now indirectly responsible for more than 1 MILLION DOLLARS in government debts and obligations. And that assumes no new government spending, no new social programs, no new wars, no new economic disasters or bailouts. Worse, it assumes no new deficits in the meantime!

Put another way, even if the government could somehow pay off that debt at the rate of $100 million PER DAY, it would take 3,446 years before the total government debts and obligations are paid off.

Even if Washington were to pay off $1 billion per day, it would still take nearly 345 years to pay off those debts!

Patently unsustainable debts? Yes! Patently unpayable? You bet it is!

Of course, Washington will never default outright on its obligations. But it doesn't have to. By devaluing the dollar, Washington can effectively pay off its debts with a cheaper currency.

This is why the dollar is falling... and why savvy investors all over the world are beginning to lose confidence in Washington and our currency .. and why it's all leading to a massive renewed bull market in natural resources, especially gold.

Make no mistake about it: By doing nothing, your finances become a victim of a falling dollar — a currency whose purchasing power has already lost more than 36 percent of its value in the last decade... will lose a lot more purchasing power in the months ahead...

LOL, ONLY $1,000,000 for every household in the United States? Gee, I thought it was way more than that by now. You see, the tooth fairy came and whispered in my ear that Larry Summers has everything under control, and then the Cheshire Cat appeared but was quickly displaced by the Mad Hatter who, a graduate of Haaaraaard, kept yelling 2 + 2 EQUALS INFINITY, over and over…

Jefferson Airplane - White Rabbit:

When men on the chessboard
Get up and tell you where to go
And you've just had some kind of mushroom
And your mind is moving slow
Go ask Alice
I think she'll know

When logic and proportion
Have fallen sloppy dead
And the White Knight is talking backwards
And the Red Queen's "off with her head!"
Remember what the dormouse said;

"Keep your head"