Ayn Rand said, “You can ignore reality but you can’t ignore the consequences of ignoring reality”. The ruling class, consisting of people from both political parties, resembles the ostrich; because they all have their heads buried in the sand ignoring reality. The political kabuki theatre in DC is merely a distraction to the real problems. Perhaps an intervention is in order.
If you listen to the ruling class or their sycophants in the main stream media all you heard are lies, distortions, and demagoguery. It’s time the people referred to by the ruling class as peasants and serfs, are told the cold, hard truth. Here are the facts that matter:
1) The debt ceiling is an artificially created political thing that merely limits the amount of money Congress authorizes the executive branch to borrow more money to spend. It has nothing to do with default and nothing to do with credit ratings.
2) Defaulting on the debt is a political decision that rests solely with the executive branch. This is a simple matter of prioritizing the payment of expenditures. It has absolutely nothing to do with the debt ceiling.
3) The credit rating agencies don’t care about the debt ceiling as that is a political event. In fact, the credit rating agencies are required to evaluate and assess financial information only to determine an entity’s credit worthiness. In fact, last weekend the credit rating agency Egan & Jones downgraded the U.S. credit rating.
4) The ruling class has a spending problem. The government spends 50% more than it receives through taxation. That money must be borrowed. The government’s insatiable appetite to spend other people’s money must end.
5) I am not aware of a single plan by Republicans or Democrats that addressed how the outstanding debt of $14,500,000,000,000.00 will be paid down. The discussions revolved around how much future spending would be reduced. Any in every case those future reductions results in a deficit. The government would still borrow money and increase the debt.
Let’s put this in terms everyone can understand. Note, this is information that has been circulating recently.
Federal Income through taxation: $2,170,000,000
Federal budget: $3,820,000,000,000
This year’s deficit: $1,650,000,000,000
National debt: $14,271,000,000,000
Cuts in budget deal: $38,500,000,000
If we translate this into a household income by removing the trailing 8 zeroes from each number we get:
Annual Family Income: $21,700
Amount of money spent by the Family: $38,200
Amount of new debt added to the credit card: $16,500
Outstanding balance on the credit card: $142,710
Amount cut from the family budget: $385
Is it reasonable to cut $385 from the family’s annual budget when the amount of new debt added annually is $16,500? Does the plan address how to pay down the outstanding credit card balance of $142,710?
The ruling class ignores this very straight-forward problem because it is politically expedient to do so. In fact, the ruling class already knows they cannot pay off the current debt in the currency in which it is denominated. Moreover, the ruling class knows they cannot tax or borrow their way out of the debt and entitlement problem.
This leaves the ruling class, including the Federal Reserve, with one option; to debase the currency. In other words, to increase the base money supply (M0) by injecting cash into the banking system. Inflation is taxation without legislation. Inflation erodes purchasing power and destroys wealth (wealth denominated in the currency).
The ruling class doesn’t have the political will to make the difficult decisions required today to solve the debt and spending problems facing our generation and future generations. The ruling class cares first about themselves and, secondly, about their re-election. The ruling class knows it will be political suicide to make the difficult decision today. Instead they punt. They kick the budget and debt can down the road for this and future generations to deal with. The ruling class exacerbates an already tenuous situation to the detriment of the very citizens they were elected to represent.
What did those people get that wanted more severe spending cuts and solutions to the current problems? The ruling class and the lapdog media, led by no other than the President of the United States, called the people hostage takers and terrorists. Concerned citizens were told they were holding a gun to the President’s head.
The irony in this is many people refer to our government as a democracy. That is simply wrong. But if they believe we are a democracy where the people participate in it, why is it the ruling class complains when we participate? They want us peasants and serfs to bow down before the table of government benevolence. They say bow down, shut up, and be quiet. When subjugated under boot it matters not what brand of boot. Whether that is a monarch living on the other side of the Atlantic or tyrants in Congress and the White House.
Did you notice during the debt negotiations that the government whined and cried, threw hissy fits, and issued threats about retirees not receiving a social security check or the military may not get paid. The ruling class acted like a petulant child because, for once, we the people told the ruling class no! We will not authorize you to spend other people’s money. The ruling class didn’t like it when we told them to sit down, shut up, and be quiet. That’s the way it ought to be. They are our servants. They are our fiduciaries. It’s time the ruling class grows up and acts accordingly. Otherwise, resign and crawl back into the hole from which you came.