Turn Out the Lights; the Parties Over!

For an economics wonk, “such as I” observing the market guys, the economy guys and the political spinsters contort the economic health of America into a daily sound bite is like explaining Einstein’s theory of space and time by saying, “fast is slow”.

Practically absent in the economic debate is our blossoming debt and the dire consequences we face as it explodes under the Bamster. Don’t get me wrong; I bitched, moaned and opined when the Bushwhacker upped the federal ante. But, Obama has taken America’s credit card and not left the White House without it.

We have in the best of times, a $14 trillion dollar economy. We have $12 trillion dollars in debt, “mostly to China” and a Federal budget approaching $4 trillion dollars. Each year since 1969, Congress has spent more money than its income. The Treasury Department has to borrow money to meet Congress's appropriations.

We pay interest on that huge debt. And now the Treasury is having trouble finding lenders! Every week at the C.M.E., “Chicago Mercantile Exchange” we have bond auctions. Basically, this is the treasury selling our debt to finance our government largess. Up until a year ago, foreign investors, “China” hedge funds, and bond traders would purchase this debt in the form of long and short term treasury bonds…think I.O.U’s. Yet; those heady days are gone my friends. The world now treats the dollar much as a baby treats a diaper. So…enter the Federal Reserve, also known as Goldman Sachs. By the way; in a completely unrelated story…Lehman Brothers, “now defunct” was the only super bank allowed to fail and, “I’m just saying” just happened to be the only competition for Goldman Sachs, “AKA, the Federal Reserve”. Nothing to see here, keep moving. Where was I?

Oh Yeah, the monetization of our debt. Since the rest of the world is living in economic sanity our Federal Reserve is not only printing our currency, they are also using it to purchase our debt from their evil twin, the Treasury. Think of it this way; you use your credit card to buy that big screen television that you’ve been pining for. Then…you write a bad check to pay your credit card bill.

So…how is the Federal Reserve paying for our debt? Simple, they are printing dollars on every damn thing they can fit into their printing presses. The ensuing inflation that will result from this fiduciary folly will make Germanys Weimar Republic look like Mayberry’s lady druggist raising Aunt Bea’s miracle cure by a dime. Think of it this way; imagine moo juice at $100.00 a gallon and my favorite bourbon costing a Porsche.

Yet; sadly, that isn’t the worst or the signature of this ingenious postulation. Add to our increasing debt of $12 trillion dollars another $65 trillion in unfunded federal liabilities, currently on the books. As even the Bamster himself has said, “this is unsustainable”. Yet he and the Democrat congress keep spending.

Frankly; it is probably too late. Countries traditionally expire large debt with production. Think of the 110% debt to GDP ratio America incurred during WW2. Though; we held the anvil of production. We made things. Today a full 70% of our economy is service oriented. What are we going to do? Loan our shyster trial lawyers to China so that they can sue the hell out of each other? Not bloody likely governor.

Obama had a small window early in his Presidency to signal fiscal fidelity to a world awash in dollars. And…as the Federal Reserve halts Treasury purchases at years end, “as they have promised to do”. We will see the beginning of the end. By the way America; last man standing should turn out the lights…the parties over.

Conservative Springfield Staff Writer