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Letters by a modern St. Ferdinand III about cults

Gab@StFerdinandIII - Plenty of cults exist - every cult has its 'religious dogma', its idols, its 'prophets', its 'science', its 'proof' and its intolerant liturgy of demands.  Cults everywhere:  Islam, the State, the cult of Gay and Queer, Marxism, Darwin and Evolution, 'Science', Globaloneywarming, Changing Climate, Abortion....a nice variety for the human-hater, amoral, anti-rationalist to choose from.  It is so much fun mocking them isn't it ?

Tempus Fugit Memento Mori - Time Flies Remember Death 

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Wednesday, January 6, 2010

American debt, financial collapse and the ugly reality of Statism

Obama and Louis the XIV as soul mates ?

by StFerdIII




Only during the late 19th century was America a free-market system. Even during this halcyon period of individualism, capital formation, energy, innovation and the conquering of an entire continent, the US political system was still wedded to tariffs and trade distortions. But the facts are irrefutable. With the corruption and meanness of government constrained and limited, the Americans were able to invent many, if not most, of the technologies which informed the modern world and which established the basis of everything which is used today. Yet how different the cultural milieu is only four to five generations later. America is well on its way to financial insolvency thanks to the unfettered illiteracy and criminality of statism and socialism. At least $100 Trillion in US-government debt and obligations now exists. There is no possibility whatsoever, of paying this off. Bankruptcy either at the state [California] or at the national level in some form, is a real possibility.

The US Federal government was expanded 40% by G. W Bush – the supposed conservative - from $2 Trillion to $3.3 Trillion per annum. Bush was no more a conservative than the most important man in history or MIMH – the Black Jesus. Under the MIMH the Federal tax revenues have gone from $3.3 Trillion to $4 Trillion [so much for that recession]. Under the big government-Liberal Bush, the US National debt almost doubled from $5.3 Trillion to close to $10 Trillion. And of course under the MIMH the debt will double to $20 Trillion with 4 years.

Against Federal revenues of say between $3.5 Trillion and $4.0 Trillion per annum, the US national debt of even $15 Trillion is unsustainable. At $15 Trillion the interest payments alone would consume almost 30% of all Federal taxes. This would mean that on average US taxes – just to pay off the interest on the total debt – will need to go up by at least 30% from current levels. Such a tax increase on income, capital and dividends would cause a contraction in investment, jobs and economic activity and actually result in fewer US national tax revenues and thus a larger problem in trying to service the debt and pay the various welfare expenses now demanded of the national government.

Consider the following real world facts – in trillions of USD when considering debt between now and 2030:

  1. US Federal Governmental Debt – 2015 : $20 Tr

  2. State and Local Governmental Debt – currently: $5 Tr

  3. Unfunded Socialized Medicine – current est: $65 Tr

  4. Unfunded Social Security - current est.: $15 Tr

  5. Government guaranteed pensions – est: $ 7 Tr

  6. Current TARP/Financial Bailout: $ 3 Tr

  7. Future Fannie/Freddie Subprime bailout: $1 Tr [min.]

             Total: $ 116 Trillion

The US thus has an existing $116 Trillion total debt and future obligations spread over the next 20 years. Fully 60% are in socialized medicine – Medicaid and Medicare – two bankrupted systems that the MIMH and his union appeasing elitist political friends want to extend to the entire US health system. Once national health care is passed the total US debt over the next 20 years will likely be more than $130 Trillion. At $130 Trillion, total US debt and obligations will be at least 6 times the size of the US economy and national income – and that assumes a reasonable GDP growth which given the future realities is not going to happen.

Debt levels at 600-700% of national income have never been recorded in the national accounts of any modern state. Bankruptcy is therefore a foregone conclusion. It will be impossible to fund all this debt. Consider the following:

-$100 to 130 Trillion of debt, over 20 years, means another $5 Trillion per year in obligations – much of it at the Federal level – which is more than double current Federal tax revenues.

-To fund and pay off this extra $5 Trillion per year [which is really what needs to happen to account for and put on the balance sheet these very real obligations which are now pushed off the balance sheet and ignored by government ], which is the equivalent of 35% of total GDP, it would be necessary to almost double all Federal taxes on income, capital, investment and assets.

-Since doubling taxes is politically impossible, only two things can be done; issue more debt and, or, print more money.

-Both of these options will depress and maybe destroy the value of the US dollar. This is especially true since currently the Fed Reserve is sitting with a balance sheet of some $2 Trillion in bad assets that it can't unload – and when or if it does, the US dollar has to go down.

Given the actions of the MIMH's administration and the complete politicization of the US Central Bank, here is how the US will hope to avoid bankruptcy:

 

The US will print money, devalue its debt obligations, and attempt to increase its Federal tax revenues by 50%, over the next 8 years. It will also allow states like California and New York to declare bankruptcy.

 

The US dollar will continue its unraveling. The consequences for the US empire and for the world will be immense. But the policies, politicians and attitudes now in place make it clear what the American elite will attempt to do. The US political elite in order to avoid doing the obvious will try to 'Argentinize' their debt obligations and selectively allow debt defaults and trying to inflate their way out of the mess.

And that is just government debt. Keep in mind that currently US households owe $15 Trillion in debt including $11 Trillion in mortgage debt; and $4 Trillion in credit card and student debts. It is unclear how many private citizens are going to go bankrupt but the number must be large. Incomes do not match debt levels or debt obligations.

An American bankruptcy might not happen. But the current conditions and realities suggest it is certainly plausible and even likely, at least in part. Statism, socialization and buying votes has its nefarious consequences.

Given the current crop of incompetent politicians it is hard to believe that the Americans will actually do what needs to be done, to avoid a massive debt default. Facts are not only stubborn things, according to John Adams, but they are also not grey - but rather black and white.

One has to wonder what old John Adams would think of his new Republic looking more like the bankrupted French state of Louis the XIV.

Obama and Louis as historical soul mates ?

 

 

 


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