Steve H. Hanke
With Bulgaria’s May 12th election fast approaching, it is useful to reflect on past elections and the resulting economic performance of each elected government. To do this, I have developed a Misery Index inspired by the late Prof. Arthur Okun, a distinguished economist who served as an adviser to U.S. President Lyndon Johnson.
The Misery Index measures the level of “misery” in the economy. My modified Misery Index is equal to the inflation rate, plus the bank lending rate, plus the unemployment rate, minus the annual percent change in GDP.
An increase in the Misery Index indicates that things are getting worse: misery is increasing. A decrease in the Misery Index indicates that things are improving: misery is decreasing. The accompanying chart shows the evolution of Bulgaria’s Misery Index over time.
The Socialist Party government of Prime Minister Zhan Videnov created hyperinflation and a lot of misery. The Misery Index under the Videnov government’s watch peaked at 2138 in the first quarter of 1997. That number isn’t shown on the accompanying chart—if it was, the chart would take up an entire page of Trud.
So, the chart starts in the second quarter of 1997, with the Kostov government. Shortly after Kostov took power, Bulgaria installed a Currency Board System, based on a draft Currency Board Law, which I authored at the request of President Petar Stoyanov. The Currency Board brought an end to Bulgaria’s hyperinflation, which peaked with a monthly inflation rate of 242%, in February 1997.
Armed with the Currency Board, the Kostov government made a huge improvement over the Videnov government in Bulgaria’s Misery Index. From the second quarter of 1997 to the second quarter of 2001, the Misery Index dropped like a stone, falling by 1908.9 percentage points.
The National Movement Simeon II replaced the Kostov government and made further progress in bringing down Bulgaria’s Misery Index score.
Then, Sergei Stanishev’s European Socialist Party government took power and turned back the clock, adding 8 percentage points to the Misery Index.
As for the most recent government of Boyko Borisov, the Misery Index showed a very slight improvement. That said, it is worth noting that, at the same time Borisov’s government hardly moved Bulgaria’s Misery Index, the Misery Indexes for the rest of Europe were registering significant increases in misery.
So, while the Borisov government did not do much to reduce Bulgaria’s Misery Index score (improve economic conditions), it still succeeded in shielding Bulgaria from the economic misery being experienced by the rest of Europe.
What can we learn from this look at the economic records of past post-communist Bulgarian governments? First, the key to the massive improvement in the Misery Index under the Kostov Government was the implementation of Bulgaria’s Currency Board. Second, every time a socialist government has assumed power in Bulgaria, economic misery has increased. Third, while the Borisov government didn’t do much to improve Bulgaria’s Misery Index score, things could have been worse, when compared to the rest of Europe.
In short, while the rest of Europe was sinking, the Borisov government just managed to hold its head above water.
View full post on Cato @ Liberty
In what is either a case of blinders-wearing or just poor timing, today the Fordham Institute’s Kathleen Porter-Magee has an article on NRO, co-written with the Manhattan Institute’s Sol Stern, in which she and Stern take to task national curriculum standards critics who assert, among other things, that the Common Core is being pushed by President Obama. Yes, that’s the same Kathleen Porter-Magee whom it was announced a couple of days ago would be on a federal “technical review” panel to evaluate federally funded tests that go with the Common Core.
The ironic timing of the article alone is probably sufficient to rebut arguments suggesting that the Common Core isn’t very much a federal child. Still, let’s take apart a few of the specifics Porter-Magee and Stern offer on the federal aspect. (Other Core critics, I believe, will be addressing contentions about Common Core content).
Some argue that states were coerced into adopting Common Core by the Obama administration as a requirement for applying for its Race to the Top grant competition (and No Child Left Behind waiver program). But the administration has stated that adoption of “college and career readiness standards” doesn’t necessarily mean adoption of Common Core. At least a handful of states had K–12 content standards that were equally good, and the administration would have been hard-pressed to argue otherwise.
Ah, the power of parsing. While it is technically correct that in the Race to the Top regulations the administration did not write that states must specifically adopt the Common Core, it required that states adopt a “common set of K-12 standards,” and defined that as “a set of content standards that define what students must know and be able to do and that are substantially identical across all States in a consortium.” How many consortia met that definition at the time of RTTT? Aside, perhaps, from the New England Common Assessment Program, only one: the Common Core.
NCLB waivers, for their part, gave states an additional option – having their state college systems confirm state standards as “college and career ready” – but that came after RTTT had already pushed states to adopt Common Core, and offered only a single alternative. That’s probably why, to use Stern and Porter-Magee’s own words, “President Obama often tries to claim credit” for widespread adoption of the Core. He actually had a lot to do with it!
As for states having “equally good” standards somehow being able to get past RTTT commonality demands, well, that’s just not how it works. The rules were the rules, and states didn’t just get out of them by saying “I dare you to act like our standards aren’t super.”
Education policymaking — and 90 percent of funding — is still handled at the state and local levels. And tying strings to federal education dollars is nothing new. No Child Left Behind — George W. Bush’s signature education law — linked federal Title I dollars directly to state education policy, and states not complying risked losing millions in compensatory-education funding (that is, funding for programs for children at risk of dropping out of school).
This is a very curious, self-defeating argument. Basically, Porter-Magee and Stern are asserting that the Feds only supply a small fraction of education money, and yet all states got sucked into No Child Left Behind. Applied to Common Core, federal money needn’t be very large in percentage terms to be irresistible, illustrating the very point about compulsion that Stern and Porter-Magee hope to refute. And it’s not hard to see why relatively small bombs of federal money pack a big punch: Taxpayers – who live in states – had no choice about paying their federal taxes, and no matter how they look in relative terms, millions or billions of federal dollars seem like mammoth sums in most news stories.
Perhaps the clearest evidence that states can still set their own standards is the fact that five states have not adopted Common Core. Some that have adopted it might opt out, and they shouldn’t lose a dime if they do.
It’s true that five states have not fully signed on to Common Core (Minnesota has adopted the language arts, but not math, portions), but that’s likely in large part because Race to the Top did not put annual funding on the line, and waivers had a non-Core option. But forty-five state did sign on, suggesting that the push was still very forceful. And it is irrelevant whether Porter-Magee and Stern think that states that opt out shouldn’t lose a dime of federal money. The reality is that those that have opted out did lose a full chance to win Race to the Top money, and if Common Core and accompanying tests are made central to a reauthorized NCLB – and why wouldn’t they be, since almost every state has adopted them – then annual funding would be put at risk. Which is what Common Core supporters have probably wanted since before the Obama administration existed, writing in 2008 that the job of the federal government is to furnish “incentives” for state adoption of “common core” standards.
So please, do look at NCLB when thinking about possible federal control of the Common Core. It’s a clarion alarm about what’s likely coming.
View full post on Cato @ Liberty
What Will ‘Debt Jubilee’ Look Like?
Written by Jeff Nielson
Monday, 18 February 2013 14:20
The economies of the West (with few exceptions) are all hopelessly insolvent. Globally, debt-levels have reached such an extreme, bloated magnitude that outside of the banksters’ derivatives casino this is our new “biggest bubble.” For reasons which will be made clear shortly; many readers are unaware of the severity of this global debt-crisis. Let’s review the facts.
Virtually all Western nations are sitting with their highest debt-loads in history, meaning their debt-to-GDP levels are their highest ever – and most are well past the level which constitutes an official “debt crisis.” Worse still, all of these debtors have debts which are increasing at a much, much faster rate than economic growth (and this gap continues to increase).
In other words, those nations which are already insolvent have no rational hope of ever becoming solvent again; while those nations which are merely “nearly insolvent” have no rational hope of avoiding insolvency. Yet we have this collection of debtors assuring us again and again and again that they are “bailing out” each other.
How is this possible? It’s not. As an elementary premise of arithmetic/logic; it is impossible for one debtor to ever “bail out” another – directly. In fact there are only two ways in which one debtor may attempt/claim/pretend to be “bailing out” another debtor:
a) Borrowing more money one’s self, and then giving (i.e. gifting) it to the other debtor
b) ‘Kiting’ a cheque, and then giving that (illusory) “money” to the debtor
However, our governments have never claimed/admitted doing either one of those things. Here is what our governments are telling us.
They claim to have “bailed out” these insolvent debtors (starting with Greece) by lending them more money. Again, as an elementary premise of arithmetic/logic it is impossible to “bail out” an insolvent debtor by lending that debtor more money.
Not only does it make the insolvent debtor even more insolvent; it instantly turns that debt-market into an open Ponzi-scheme. Only ever-increasing quantities of new loans can delay implosion, and the longer the Ponzi-scheme is perpetuated the more damaging/devastating the ultimate collapse must become.
The original rebuttal of our governments (and bankers and the media) to such obvious criticism was simple: none of these debtors “would ever default”; such as when Greece’s banker – EU “monetary chief” Olli Rehn – told reporters over and over (in 2010) that there was “no possibility” of a Greek default. Obviously these “leaders” were forced to stop making this inane assertion after Greece defaulted on its massive debt.
So when these debtor-governments, and their bankers, and the “economic experts” in the media claim that these nations are being “bailed out” they are lying to us. They are lying as a matter of simple logic. And the lies have been demonstrated as such, empirically, through the harsh prism of hindsight.
This brings us to what our governments have not been telling us: where are they getting the “money” for these phony “bail-outs”? Obviously the lesser-debtors are not borrowing the money to give to the greater-debtors. Even our political drones can operate a calculator well enough to understand that borrowing money, and then throwing it away by funneling it into these Ponzi-scheme debt markets would make the “lesser-debtors” also greater-debtors; and in about as much time as it takes to say the words “compound interest.”
This means our lying governments have been kiting cheques in order to perpetrate these sham bail-outs, the only other economic possibility. Of course these serial-liars don’t admit to this either; rather, they tell us they are “using their printing press.”
What does a Deadbeat Debtor do when he/she kites a cheque? He takes an ordinary piece of paper (with absolutely nothing “backing” it), hands it his creditor, and (after signing his name to it) claims that a debt has been “paid.”
What do our Deadbeat Governments do when they use their printing press to perpetrate one of their (endless) “bail-outs”? They take an ordinary piece of paper, with nothing backing it, they hand it to creditors, and they claim that debts have been paid.
But wait! Our governments tell us that the paper which comes off of their printing presses is magic paper: it has “value” even though there is absolutely nothing backing it. How does this magic paper acquire its value? Our governments tell us the paper is valuable, and (of course) if our governments tell us something it must be true.
Such is the wonder of “fiat currencies”, where our governments can turn ordinary paper into magic paper, just by turning on their printing presses (and saying the magic words). Of course from the time we were children we have all been familiar with “magic” goods. Jack traded the family-cow for some “magic beans”, and went on to fame, fortune, and glory.
Unfortunately that’s just a children’s fairy-tale. In the real-life “fairy tales” spun by our politicians, bankers, and media talking-heads; there are no “magic beans.” Trade-in the family cow, and all you’re left with is one, less cow.
So we have our Deadbeat Debtor governments kiting cheques, injecting this fantasy-money into Ponzi-scheme debt-markets, and claiming they are “bailing out” the other Deadbeat Debtors – as part of “solving” this debt-crisis. At what point do even the most-comatose minds begin to suspect that something isn’t quite right here?
However, there is still one more lie which the politicians/bankers/media talking-heads continue to pass-off on the Sheep successfully: it’s “impossible” for any nation with its own printing press to ever default on its debts. Those readers (above the age of 10) who have ever accepted this farcical statement as truth should be thoroughly ashamed of themselves.
Germany’s Weimar government claimed it would/could never default, because it too had a “magic” printing press. What happened? Excessive money-printing totally destroyed the value of its currency, devastating its entire economy, impoverishing all of its citizens – and then it defaulted. Except by then its debts were a hundred times larger.
There are no “magic printing presses”; no “magic paper”. Printing infinite quantities of fiat currencies cannot prevent any debt-default. All that can ever do (as a proven proposition of history and arithmetic) is to take a (relatively) small debt-default and turn it into a gigantic debt-default – while completely destroying one’s own economy in the process.
This brings us to “Debt Jubilee”: wiping the slate clean by burning all(?) of the bad debts created by these bankers and politicians. It is a regular, recurring event throughout History; as whenever one or more governments sink to such a level of political/moral/economic corruption debt-default is usually one of their lesser sins.
So what will our 21st century Debt Jubilee look like? With History’s most-corrupt governments, expect the most-corrupt “solution.” The debts of our governments, the Big Banks, and the wealthiest Oligarchs will be totally erased. We will be told they are doing this to “save us” from drowning in their (reckless/fraudulent) debts.
However, the Little People will face a somewhat different future. Their debts will be maintained at 100-cents-on-the-dollar. The bankers, politicians and Oligarchs (via their Corporate Media) will tell us that this is necessary to “protect the integrity of the System” (their System).
Think this level of perversity/injustice is impossible? We already have precedent. After the Wall Street banks had caused (created?) the Crash of ’08 (with their reckless fraud/gambling); and after they took their $15+ trillion from the U.S. government in assorted hand-outs, 0% loans, tax-breaks, and “loss guarantees” (i.e. more hand-outs); the Wall Street banksters kept their massive bonuses.
We were told this was because of “the sanctity of contracts.”
Then after this massive give-away; various U.S. governments began unilaterally hacking-and-slashing the wages, pensions, and benefits of their own workers – which had been freely/fairly negotiated in their own contracts. The reason? After giving $trillions to the bankers; the workers were told the government “couldn’t afford” to honour their contracts.
Statistics: Posted by yoda — Tue Feb 19, 2013 2:23 pm
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The Fed is a mystical entity for most Americans, a place where economic shamans conjure up money and master the a universe that spins around us.
But the folks at the Fed aren’t shamans, and though many may think they are, masters of the universe they are not.
The central bank does however have an excellent PR department and that is why most people remain snowed.
The post A Look Inside the Federal Reserve (An Infographic) appeared first on AgainstCronyCapitalism.org.
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Timely Political Calculations:
Assuming that President Obama continues his policy of not negotiating in good faith with U.S. congressional leaders on federal budget matters, what might your paycheck look like in 2013 after President Bush’s 2003 income tax rate cuts expire?
That matters to you because if you earn either wages or a salary from a job, your income taxes will increase. And with that increase, so will the amount of taxes that you have withheld from each of your paychecks also go up.
You can find out by how much using this tool.
And for extra fun, multiply your results by the number of paychecks you get per year to see how much extra you’ll have pulled out of your paycheck over the entire year!
View full post on MyGovCost | Government Cost Calculator
If you are unemployed for an extended period of time, people are going to look at you differently. Unfortunately, this is especially true if you are a man. In our society, men are primarily defined by “what they do”. If you have been unemployed for a long period of time, that can make social interactions even more awkward than normal. Most people will instantly become more uncomfortable around you when they find out that you are unemployed. Many will look at you with pity, and others will actually look at you with disdain. Women will not want to date you, and if you are in a relationship unemployment will put a tremendous amount of strain on it. Once you “don’t have a job”, you will not get the same level of respect from former co-workers, friends, members of your own family and possibly even your own wife. So why does our society look down on unemployed men so much? Well, it is generally expected that men are supposed to be the “breadwinners” for their families. If a woman stays home with the kids nobody has any problems with that, but if men do the same thing it tends to raise eyebrows. But there is a big problem. Our economy is not producing enough jobs for everyone. In fact, there are millions upon millions more workers than there are jobs. It would be great if this was just a temporary situation, but as I have written about previously, there will never be enough jobs in America ever again. So there will continually be millions upon millions of men that are looked down upon by society because they can’t get jobs, and as a result we are going to have millions upon millions of men that are constantly battling against soul-crushing despair.
It can be really hard to “feel like a man” when you aren’t making any money.
And most women simply are not interested in becoming romantically involved with an unemployed man. Just check out what one recent survey found….
Of the 925 single women surveyed, 75 percent said they’d have a problem with dating someone without a job. Only 4 percent of respondents asked whether they would go out with an unemployed man answered “of course.”
“Not having a job will definitely make it harder for men to date someone they don’t already know,” Irene LaCota, a spokesperson for It’s Just Lunch, said in a press release. “This is the rare area, compared to other topics we’ve done surveys on, where women’s old-fashioned beliefs about sex roles seem to apply.”
Those are some pretty overwhelming numbers.
So is it the same way when the roles are reversed?
Not even close.
When men were asked the same question, the difference was absolutely shocking….
On the other hand, the prospect of dating an unemployed woman was not a problem for nearly two-thirds of men. In fact, 19 percent of men said they had no reservations and 46 percent of men said they were positive they would date an unemployed woman.
Admittedly, men are often thinking about other things when they are evaluating whether they want to date a women or not. Yes, there are some men these days that are concerned about how much money a woman makes, but the truth is that men tend to be much less concerned about income levels than women are.
In fact, a UK study that was released last year discovered that British women are even more concerned about the education and income of a potential mate than they were back in the 1940s.
So if you are unemployed you are probably not going to find much success in the romance department either.
If you are married, being unemployed is likely to put a huge strain on your marriage. The following is a short excerpt from a recent Business Insider article entitled “TRUE CONFESSION: I’m Sick Of My Unemployed Husband“….
I can’t even remember when my husband stopped working.
And frankly, I don’t have time to think about it, between my full-time job and my fledgling business, volunteering at an after-school program to help teenagers prepare for the professional world and mothering two children.
But when I do think about it–when I think about all the times I come home to see evidence of his entire day’s activities cluttering the coffee table, or when I have to take our shared car to work and strand him at home because he doesn’t feel like getting up to drive me–I’m angry.
If a husband is unemployed for an extended period of time, there is a very good chance that the wife is going to start feeling very resentful.
If things get bad enough, many women will pull the plug on their marriages and will get rid of their “unproductive” husbands.
Last year, Time Magazine reported on a study that indicated that unemployed men were significantly more likely to get divorced than employed men were.
My goal in writing this is not to “bash women”. I am just pointing out how hard things are for unemployed men in our society. Many wives (and their extended families) simply do not understand that our economy has fundamentally changed. In the old days just about any hard working man that wanted a job could go out and get one. That is most definitely NOT the case today.
Hopefully we can get more women to understand this. I know that it can be hard to be patient when your husband is unemployed for month after month after month.
But at a time when husbands need their support the most, many wives withdraw emotionally and become very angry.
For example, how many women have you ever heard declare how proud they are of their unemployed husbands?
Of course there are definitely situations where these roles are reversed and employed husbands are badgering their unemployed wives about getting a job, but in general our society tends to have a greater degree of tolerance for unemployed women than it does for unemployed men.
Sadly, most people simply do not understand how dramatically things have changed in our economy.
The following chart shows the stunning decline in the percentage of working age men with a job over the past 60 years….
Back in the 1950s, there were times when nearly 85 percent of all working age men had jobs.
We will never get back to anything close to that ever again.
Prior to the last recession, about 70 percent of all working age men were employed.
Since the end of the recession, that number has not gotten back to 65 percent at any point.
That means somewhere around 5 percent of all working age American men have been displaced from the workforce permanently.
The mainstream media would have us believe that we are experiencing an “economic recovery” but that is a massive lie. The real unemployment numbers are much worse than we have been told.
If you take a look at all working age Americans (men and women), there are actually more than 100 million of them that do not have jobs right now.
I know that statistic can be hard to believe. I had a hard time believing it at first. But it is actually true.
But this is not a trend that just started recently. According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.
We are in the midst of a long-term economic decline and it is time for all of us to admit how bad things have really gotten.
So what are all of the men who are not working doing these days?
But the overall percentage of “Mr. Moms” is still very, very low according to Fox News….
There were only about 81,000 Mr. Moms in 2001, or about 1.6 percent of all stay-at-home parents. By last year, the number had climbed to 176,000, or 3.4 percent of stay-at-home parents, according to U.S. Census data.
The vast majority of working age men still want to work outside of the home and earn a living for their families.
Unfortunately, most families need more than one income to make it these days. In fact, in many cases both parents are working multiple jobs in an attempt to make ends meet.
This is hitting our young people that are just starting out particularly hard. For example, during 2011 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed.
And as I have written about previously, this is resulting in huge numbers of our young people moving back home with Mom and Dad.
This is particularly true when it comes to young men. According to CNN, American men in the 25 to 34 age bracket are nearly twice as likely to live with their parents as women the same age are….
The number of adult children who live with their parents, especially young males, has soared since the economy started heading south. Among males age 25 to 34, 19% live with their parents today, a 5 percentage point increase from 2005, according to Census data released Thursday. Meanwhile, 10% of women in that age group live at home, up from 8% six years ago.
How are our young men going to be able to get married and start families if they can’t find jobs and they are living in our basements?
Sadly, things are really hard for everyone right now. Since June 2009, we have supposedly been in “the Obama recovery”, but median household income in America has fallen during that time period by $3040.
People keep waiting for things to “get better”, but it just isn’t happening. This was beautifully illustrated the other night during a Saturday Night Live skit that had “Barack Obama” speaking in front of a rally of unemployed and underemployed workers. You can find video of that skit right here.
There are millions upon millions of men (and women) all over America that are ready and willing to go back to work.
Sadly, there will never be enough jobs for all of them ever again, and that is not going to change no matter who wins the election.
In fact, when the next wave of the economic collapse hits the United States it is likely that unemployment is going to get a whole lot worse.
What will our society look like when that happens?
View full post on The Economic Collapse
Bob Woodward has a new book out, The Price of Politics (review), taking an inside look at the U.S. debt crisis from the summer of 2011, where the federal government came within just $5 billion, or just half a day’s worth of its typical spending, of defaulting on its debt payments. While much of the focus on the story has been on its revelations that President Obama had no “Plan B” in case the deal being negotiated by congressional leaders broke down, which led to his being dressed down directly to his face by a congressional staffer, perhaps the most disturbing excerpt provided by the Washington Post from Woodward’s book involves how the crisis finally played out in the mind of U.S. Treasury Secretary Timothy Geithner:
Geithner thought there was one other consideration. He did not mention it to anyone, not even the president, but he had thought about it a great deal. It was not just that Obama faced an economic choice or a political choice. He faced a moral choice.
The president should not put himself in the position of saying unequivocally that he would veto, Geithner concluded, for one simple reason: No one could be sure how to put the American or the global economy back together again. The impact would be calamitous.
“And the people who would bear the pain of that would be the people less prepared,” Geithner told others, “less able to absorb that cost. It would be something you could not cure. It is not something you can come back and say, a week later, ‘Oh, we fixed it.’ It would be indelible, incurable. It would last for generations.”
Obama never had to confront the veto question. A few days later, House Republicans dropped their insistence on the two-step plan. The final plan accepted a debt limit increase that would take the country through the 2012 presidential contest. It also postponed $2.4 trillion in spending cuts until early 2013.
The long-term deficit crisis had not been solved, but merely put off, leaving the United States at the edge of the fiscal cliff, where it remains today.
Perhaps the most disturbing element of this story, aside from the documented failures of leadership and the fact that it will resurface within weeks after the November 6 election, is that the U.S. Treasury Secretary never thought to provide this kind of council regarding the consequences of defaulting to the President, or anyone else, while the crisis was ongoing. And that is yet another failure of leadership.
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Barack Obama has destroyed the future of America in order to improve his chances of winning the next election. Under Obama, 5.3 trillion dollars has been ruthlessly stolen from our children and our grandchildren. That money has been used to pump up the debt-fueled false prosperity that we have been experiencing. When the U.S. government borrows money that it does not have from someone else (such as China) and spends that money into the economy it is going to make our economic numbers look better. Even if the government spends that money on incredibly stupid things, it still gets into the hands of average Americans who in turn spend that money on food, gas, clothes, etc. If we were to go back and take that extra 5.3 trillion dollars out of the U.S. economy, I guarantee you that we would be in a rip-roaring depression right now. We would look a lot like Greece at this point. For several years Greece has been raising taxes and cutting government spending in an attempt to balance the budget and these austerity measures have resulted in an unemployment rate of over 23 percent and an economy that has contracted by close to 25 percent. Most Americans don’t want to go through pain like that so they are okay with continuing to financially rape our children and our grandchildren. Just imagine how you would feel if your parents died tomorrow and you found out that they had left you with a million dollar debt that you were legally obligated to pay off. How would you feel, knowing that you had just been sold into debt slavery for the rest of your life? Well, that is how our children and our grandchildren are going to feel. We are destroying the greatest economic machine the world has ever seen, we are accumulating the biggest mountain of debt in the history of the planet, and the coming economic collapse that we have caused is going to wipe out the promising future that our children and our grandchildren were supposed to have. If they get the chance, future generations of Americans will curse us bitterly and will spit on our graves. What we are doing to our children and our grandchildren is the kind of stuff that horror movies are made of. You should be ashamed of yourself America.
The federal budget deficit for 2012 will be larger than the entire U.S. national debt was 30 years ago. In 1982 Ronald Reagan was in the White House and the U.S. national debt was considered to be a tremendous national crisis. But somehow we have allowed our national debt to grow from about a trillion dollars back then to approximately $16,000,000,000,000 today.
By the end of Obama’s first term, the U.S. national debt will have grown more than it did from the time that George Washington became president to the time that George W. Bush became president.
That is hard to believe.
Obama is going to outdo all the presidents from George Washington through Bill Clinton in just one term.
At this point, the U.S. national debt is more than 22 times larger than it was when Jimmy Carter became president.
This has allowed us to enjoy a standard of living far beyond what we deserved to. We have stolen from the future to make the present more pleasant.
But hardly anybody wants the party to end. Especially not our Congress critters – they are living like kings and queens at our expense. Our “representatives” in Washington D.C. love to give speeches about being “financially responsible”, but most of them never take any serious action about the debt because the way things are working now has been incredibly good to them.
And the truth is that both political parties have been responsible. In 2010, Republicans took control of the House of Representatives with a clear mandate to get government spending under control. Not a single penny of government money can be spent without their permission. But since they took control, the U.S. national debt has increased by another 1.8 trillion dollars.
At this point, this current Congress (controlled by both Republicans and Democrats) has added more to the national debt than the first 97 Congresses combined.
We expect this kind of nonsense from the Democrats, but the Republicans are supposed to know better.
Of course our entire financial system is designed to permanently entrap our federal government in an endless spiral of debt, but neither political party ever talks about that.
Sadly, the U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.
But we never hear about the link between the Federal Reserve and our national debt from either political party or on the mainstream news.
So most Americans do not even realize that our system is designed to create government debt.
It is absolutely disgusting.
We say that we care about our kids, and yet we are passing down a $16,000,000,000,000 debt to them.
Talk about child abuse.
Most people have a really hard time grasping how much money 16 trillion dollars actually is.
If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
And it would take you more than half a million years to spend 16 trillion dollars.
This is a debt that is impossible to pay back. Just look at how it has exploded over the past 40 years….
In a previous article I discussed the distressing rate at which our debt is growing….
It took more than 200 years for the U.S. national debt to reach 1 trillion dollars. In 1986, the U.S. national debt reached 2 trillion dollars. In 1992, the U.S. national debt reached 4 trillion dollars. In 2005, the U.S. national debt doubled again and reached 8 trillion dollars. Now the U.S. national debt is about to cross the 16 trillion dollar mark. How long can this kind of exponential growth go on?
If we can’t even slow down the growth of our debt, how do we ever expect to repay a single penny?
The sad truth is that we aren’t ever going to start paying down our debt. We have gotten to the point where if we take our foot off the debt accelerator we plunge directly into a depression and the entire system collapses. It is like a really sick version of the movie “Speed”.
Where is Keanu Reeves when you need him?
Since Barack Obama entered the White House, he has approved a whole host of measures that have been good for the economy in the short-term. TARP, the stimulus packages, the auto industry bailout and the payroll tax cut are just a few examples.
Barack Obama has wanted to do everything he possibly can to stimulate the economy in the short-term so that he can win again in 2012.
But what about the future?
Barack Obama could not care less about the future. He is just like so many of our other politicians. He is blinded by selfish ambition.
Since Barack Obama became president, the U.S. national debt has increased by an average of more than $64,000 per taxpayer.
Are you willing to write a check for your share?
Oh, let’s just pass this horrific debt on to our children, right?
The path that we are on as a nation cannot go on too much longer. The truth is that we are headed for financial oblivion.
A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.
Of course we will never get to the point. Our financial system will collapse long before then.
Sadly, the United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.
So why are we not like Greece or Spain yet?
Well, it is because we are still able to borrow huge piles of money very, very cheaply.
But at some point that will come to an end, and when it does the consequences are going to be nightmarish.
Historically, the interest rate on 10 year U.S. Treasuries has averaged 6.68 percent. If the average rate of interest on U.S. debt rose to that level today, we would be paying more than a trillion dollars a year just in interest on the national debt.
And when you consider our future unfunded liabilities things get even more frightening.
According to Boston University economist Laurence Kotlikoff, the “fiscal gap” is “the present value difference between projected future spending and revenue”. His calculations have led him to the conclusion that the United States is facing a fiscal gap of 222 trillion dollars.
And this gap is rising at a breathtaking pace.
The following is an excerpt from a recent article co-authored by Kotlikoff….
In 2007, the first year the CBO produced the Alternative Fiscal Scenario, the gap, by our reckoning, stood at $175 trillion. By 2009, when the CBO began reporting the AFS annually, the gap was $184 trillion. In 2010, it was $202 trillion, followed by $211 trillion in 2011 and $222 trillion in 2012.
But if we interrupt this debt cycle we immediately go into a depression.
We are a debt addict that will die without more debt.
Meanwhile, our national ability to produce wealth is going down the toilet.
All over the country businesses are shutting down, factories are being closed and millions of jobs are being sent overseas.
Many Americans end up flat broke at the end of their lives these days. In fact, one study found that nearly half of all retirees end up with $10,000 or less when they die.
So where is all of the money for servicing this gigantic national debt going to come from?
Even if Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.
So what is the solution?
If we keep spending money like this we are doomed, but if we stop spending money like this we are doomed.
And debt is not just a problem that the federal government is facing.
Posted below is a chart that shows the growth of all forms of debt in the United States over the past several decades. 40 years ago, there was less than 2 trillion dollars of total debt owed in the United States. Now there is nearly 55 trillion dollars of debt owed. This generation has destroyed the future and has set the stage for an unprecedented economic collapse. Shame on you America….
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Do you want to know when the “economic collapse” is going to happen? Just open up your eyes and take a look. The “economic collapse” is already happening all around us. So many people talk about the coming economic collapse as if it is some massively hyped event that they will be able to point to on the calendar, and a lot of writers spend a lot of time speculating about exactly when it will happen. But as I have written about before, the economic collapse is not a single event. The economic collapse has been happening, it is happening right now, and it will be getting a lot worse. Yes, there will be moments of great crisis. We saw one of those “waves” back in 2008 and another “wave” is rapidly approaching. But all of the waves are part of a process that is continually unfolding. Over the past 40 years, the United States and Europe have piled up the greatest mountain of debt in the history of the world, and now a tremendous amount of pain is heading our way. Economic conditions in the United States and Europe have already deteriorated badly and they are going to continue to deteriorate. Nothing is going to stop what is coming.
But many people are still in denial about our economic decline. Some people still believe that everything is going to be just fine. Way too often I get comments on my site that go something like this….
“I just don’t know what you are talking about. Where I live everything is just fine. The malls are packed, the restaurants are full and everybody I know is going on vacation this summer. Personally, I am doing great. I just bought a 60 inch television and a new boat. Every year all the ‘doom and gloom’ types such as yourself proclaim that an economic collapse is right around the corner but it never happens. And you know what? It is not going to happen. Those in charge know what they are doing and America has the greatest economy on earth. We have overcome challenges before and we will be able to handle whatever comes this time. Your lack of faith in America and in the American people astounds me. Everything is going to be just fine, so why don’t you just *************************************.”
You get the idea.
I definitely understand that most Americans are terribly self-involved these days, but when I read comments like this I am once again amazed at just how delusional some people can be.
Why can’t people just open their eyes and look at the evidence of economic collapse that is all around us?
Yes, there are wealthy enclaves all over the country where things may seem better than ever, but that is not the reality for most Americans.
All over the country, our infrastructure is in shambles.
All over the country, our once proud cities are being transformed into hellholes.
All over the country, formerly middle class families are living in their cars.
There are dozens and dozens of economic statistics that clearly show that we are in the midst of a long-term economic decline. I have listed 65 of them below, but I could have easily doubled or tripled the size of the list.
I simply do not understand how anyone can believe that things are “great” or that the U.S. economy is going to be “just fine”.
We are living through a complete and total economic nightmare, and hopefully we can get more Americans to wake up from their entertainment-induced comas so that they can begin to understand exactly what is happening to this country.
The following are 65 signs that the economic collapse is already happening all around us….
1. Since Barack Obama entered the White House, the number of long-term unemployed Americans has doubled from 2.7 million to 5.4 million.
2. The average duration of unemployment in the United States is nearly three times as long as it was back in the year 2000.
4. Unemployment in the eurozone has hit another brand new record high. It is now sitting at 11.2 percent. It has risen for 14 months in a row.
5. The U.S. economy lost more than 220,000 small businesses during the recent recession.
6. The percentage of Americans that are self-employed fell by more than 20 percent between 1991 and 2010.
7. Overall, the number of “new entrepreneurs and business owners” dropped by a staggering 53 percent between 1977 and 2010.
8. The unemployment rate in Spain is now up to 24.6 percent.
9. Morgan Stanley is projecting that the unemployment rate in Greece will exceed 25 percent in 2013.
10. Since Barack Obama became president, the price of a gallon of gasoline has risen from $1.85 to $3.49.
12. About three times as many new homes were sold in the United States in 2005 as will be sold in 2012.
13. While Barack Obama has been in the White House, home values in the United States have declined by 12 percent.
14. According to AARP, 600,000 American homeowners that are 50 years of age or older are currently in foreclosure.
15. Right now there are now 20.2 million Americans that spend more than half of their incomes on housing. That represents a 46 percent increase from 2001.
16. According to Gallup, the current level of homeownership in the United States is the lowest that they have ever measured.
17. Federal housing assistance increased by a whopping 42 percent between 2006 and 2010.
18. In some areas of Detroit, Michigan you can buy a three bedroom home for just $500.
19. All around us our cities are crumbling. According to the American Society of Civil Engineers, 2.2 trillion dollars is needed just to repair critical infrastructure in the United States.
20. The unemployment rate in New York City is now back up to 10 percent. That equals the peak unemployment rate in New York City during the last recession.
22. The U.S. Postal Service is about to default on a 5.5 billion dollar payment for future retiree health benefits.
23. According to Graham Summers, “when we account for all the backdoor schemes Germany has engaged in to prop up the EU, Germany’s REAL Debt to GDP is closer to 300%.”
24. According to the Federal Reserve, the median net worth of families in the United States declined “from $126,400 in 2007 to $77,300 in 2010“.
25. The U.S. trade deficit with China during 2011 was 28 times larger than it was back in 1990.
26. The United States has lost more than 56,000 manufacturing facilities since 2001.
27. During 2010 alone, an average of 23 manufacturing facilities permanently shut down in the United States every single day.
28. The U.S. government says that the number of Americans “not in the labor force” rose by 17.9 million between 2000 and 2011. During the entire decade of the 1980s, the number of Americans “not in the labor force” rose by only 1.7 million.
29. Eight million Americans have “left the labor force” since the recession supposedly ended. If those Americans were added back into the unemployment figures, the unemployment rate would be somewhere up around 12 percent.
31. At this point, one out of every four American workers has a job that pays $10 an hour or less. If that sounds like a high figure, that is because it is. Today, the United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.
33. According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 declined by 27 percent after you account for inflation.
34. In 2007, the unemployment rate for the 20 to 29 age bracket was about 6.5 percent. Today, the unemployment rate for that same age group is about 13 percent.
35. According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980. Today they account for approximately 16.3%.
36. Medicare spending increased by 138 percent between 1999 and 2010.
37. Over the next 75 years, Medicare is facing unfunded liabilities of more than 38 trillion dollars. That comes to $328,404 for each and every household in the United States.
38. Back in 1990, the federal government accounted for 32 percent of all health care spending in America. Today, that figure is up to 45 percent and it is projected to surpass 50 percent very shortly.
39. Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every 6 Americans is on Medicaid, and things are about to get a whole lot worse. It is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
41. Since Barack Obama entered the White House, the number of Americans living in poverty has risen by 6.4 million.
42. The number of Americans on food stamps has risen from 32 million to 46 million since Barack Obama became president.
44. The number of children living in poverty in the state of California has increased by 30 percent since 2007.
45. Child homelessness in the United States has risen by 33 percent since 2007.
46. According to the National Center for Children in Poverty, 36.4 percent of all children that live in Philadelphia are living in poverty, 40.1 percent of all children that live in Atlanta are living in poverty, 52.6 percent of all children that live in Cleveland are living in poverty and 53.6 percent of all children that live in Detroit are living in poverty.
47. Approximately 57 percent of all children in the United States are living in homes that are either considered to be either “low income” or impoverished.
48. According to the U.S. Census Bureau, the percentage of Americans living in “extreme poverty” is now sitting at an all-time high.
49. In the United States today, somewhere around 100 million Americans are considered to be either “poor” or “near poor”.
50. It is now being projected that about half of all American adults will spend at least some time living below the poverty line before they turn 65.
51. Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.
52. Total consumer debt in the United States has risen by 1700 percent since 1971.
53. Recently it was announced that total student loan debt in the United States has passed the one trillion dollar mark.
54. According to one recent survey, approximately one-third of all Americans are not paying their bills on time at this point.
55. In 1983, the bottom 95 percent of all income earners in the United States had 62 cents of debt for ever dollar that they earned. Today, the bottom 95 percent of all income earners in the United States have $1.48 of debt for every dollar that they earn.
56. The United States was once ranked #1 in the world in GDP per capita. Today we have slipped to #12.
57. According to the U.S. Census Bureau, 49 percent of all Americans live in a home where at least one person receives benefits from the federal government. Back in 1983, that number was below 30 percent.
58. Incredibly, 37 percent of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.
59. Today there are approximately 25 million American adults that are living with their parents.
61. During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.
62. Overall, the U.S. national debt has grown by nearly 10 trillion dollars over the past decade.
63. The U.S. national debt is now more than 22 times larger than it was when Jimmy Carter became president.
65. As Financial Armageddon recently point out, so many homeless people are pooping on the escalators at San Francisco’s Civic Center Station at night that the escalators are breaking down and repair teams have been called in to clean up the mess. As the economy gets even worse, will scenes like this start playing out in all of our cities?
View full post on The Economic Collapse