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It is also available as a book with added comments and thoughts. It is a fundraiser for Multiple System Atrophy research - the disease that killed my wife and the catalyst for the blog. Please consider buying either a Kindle version from the Kindle store or a paperback version from Amazon. The title is "Living With A Snowman" by Scott Poole. It is available for purchase HERE.

Sunday, April 3, 2011

Spending and Spending

I almost hate to do this one for fear of running off people that don't want serious posts, or get bored with the same subject; but I feel I have to.

My last post went into the problem we have in this country with finances, specifically government finances. There are way too many people in this country that believe the government can just spend money whenever and on whatever they want (including a lot of politicians!). I won't redo that post. If you care, you can go look yourself.

This post however is going to be similar. I am gravely concerned about our national debt. Mostly because the spending/budgeting by the government seems to be ignoring it. The U.S. national debt now stands at over 14 TRILLION dollars! 14 Trillion! Our GDP (gross domestic product - the combined value of all goods and services of an economy) is about 14 Trillion dollars. So, the U.S. owes as much as it produces. Now this is not as much as is earns - but produces. Compare this to an individual that owes $50,000 in debt and has a $50,000 a year job. The U.S. government position is like the individual above - but his/her debt equalling what they produce and consume as well as salary. So, to equal the government's position on debt the individual above might owe $250,000 against a $50,000 salary. Now that in itself is not the end of the world. In fact, it is common when you include mortgages. But, what if that individual was adding debt each year to the tune of an additional $12,000? The debt the U.S. government adds each year is greater than what is paid back, by a long shot.

More perspective. (these numbers are rounded for comparisons, but accurate for illustrative purposes) If you take the GDP of every country in the world and take out the top ten - the U.S. national debt would exceed the rest of the world's GDP! Here is the scary part. For the past two years and in the budget on place today, the U.S. is adding national debt at the rate of over 1.5 trillion dollars a year! That is more than the national debt of countries like Belgium or Switzerland a year we are adding! This cannot stand!

I have told you over and over again - THERE IS NO GOVERNMENT MONEY! The only places a government can get money is taxes and tariffs, borrowing it, or printing it. All three have problems. Printing it just means what is out there is worth less and less. So, to print your way out of a financial crisis is impossible. The dollars you are printing become worth less than you need, so you print more. They are worth less, so you need to print more. This is obviously not an  answer. What about borrowing it? Well, this is fine except you have to pay it back. If you are broke, you cannot pay it back. So, you end up borrowing more to pay back the original. This is like using a new credit card to pay off an old one. Not sustainable.

Now the one that gets used a lot - taxes ( and tariffs - essentially a tax on certain goods). Taxing your way out of a financial problem cannot work because you are taking money from those that are producing. Everyone understands you cannot get money from those that do not have it. So, additional taxes are going to have to come from those that do. Those that have money are also the ones that fund banks, corporations, and companies. These are where the jobs come from. If you take that money out of the system just to pay government debt the economy will cease to produce. Taxes then go down. Producers of wealth and money stop producing as much. Taxes go down. Taxing your way out of a financial mess is impossible in the long term.

We have to get a handle on spending at every government level. That will mean a lot of government services will have to be cut back or eliminated. However, if we don't ALL government services will be cut back or eliminated. The government will be bankrupt. Call your Senator and Congressman and tell them to vote for spending cuts and tax reform. We will all be better for it.

I just read this and decided I made a BIG error. I failed to mention one of the scariest aspects of the finances of the U.S. government debt - the unfunded debt related to Medicare/Medicaid and Social Security. It is now over 100 TRILLION!! ONE HUNDRED TRILLION PEOPLE!! That is as of NOW. The amount is going up every day. If you don't beleive we need to have Social Security reform as well as reform the funding of Medicare/Medicaid you are crazy. There is NO OTHER CHOICE!!