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At this Point... Does it Really Matter?

Steve Whitman
1 February, 2014

Well, it’s that time of year again with the 2016 presidential election coming in November. Only a small portion of us are busy studying the candidates, listening to their TV ads as they bomb the air waves and turning to political pundits trying to learn more about the candidates. Sadly, the rest of the population is generally clueless as they are just happy watching their football games, eating their chips and drinking beer. To them, life is good and they could care less who is running or even what any of the candidates stand for. But are they wrong? Whether you are a democrat, republican or even an independent, the constant barrage of political messages will infiltrate our homes in the coming months, each trying to tell us that their candidate is the one that we can all depend upon to “deliver us into the promise land." Candidates have promised to make our military the strongest in the world, strengthen social security, and provide free college educations for everyone. Additionally, visions of free health care, bringing back jobs from overseas, and helping the so called "poor" with more entitlement programs, are just some of the items on each politician's proposed list of "goodies." We are all led to believe that this is going to be done, of course, while still cutting our taxes…..all we have to do is tax the rich.

The national debt, as everyone knows, is approaching a phenomenal 20 trillion dollars. Each year, our country spends approximately one trillion more than the country takes in from taxes and other revenues, causing the debt to rise even further into oblivion. Our politicians continue to spend money at an alarming rate, paying little attention to our ever increasing debt while they attempt to buy votes in order to remain in power. The American empire for the past many decades, since World War II, has expanded to all reaches of the globe. Trillions of dollars have been spent on foreign aid, military actions, and other measures trying to force our way of democracy on its various peoples. However, our nation is now withering on the vine, starving from money and manpower to maintain our influence. Like all empires before it, whether they were the British, Spanish, French, Persian, and others, our empire will soon diminish and perish due to the same reasons. It is a simple fact that all such empires can not endure the test of time due to the lack of available resources and money required to support such an endeavor. Yet, mostly all of the current politicians promise us that they will destroy Isis, keep the homeland safe from terrorists, and continue our massive influence around the world. They all want to maintain our current military bases around the globe and further expand our presence to maintain “peace” throughout the world. Again, they assure all of us that this is obtainable, while still cutting our taxes.

The current Federal budget is shown below. Over 65% of the budget is taken up by entitlements which are comprised of social security, welfare, food stamps, disability payments, veteran’s benefits and other social programs. If interest on the debt (at the current interest rate) which makes up 6% of the budget is added to it, along with affordable housing, and a few other minor programs, then this number increases to over 75% of the total budget. It is severely doubtful that any of these line items in these categories will ever be considered for cuts to balance the budget, as the politicians do not have the stomach for it. Removing 75% of the budget leaves less than one trillion dollars to run the rest of the government. The military, EPA, FBI, CIA, Homeland Security, the entire Government Administration, Education, etc. are all funded by the remaining dollars. Additionally, in order to balance the budget at the current time, about 600 billion to one trillion dollars needs to be cut from the yearly budget of 3.8 trillion. This amount is heavily dependent upon the interest rate of our current debt. If interest rates rise only slightly (and they will), the fixed costs of debt interest will eat up even more than 6% of the total budget. This could add billions of dollars to the budget deficit each year. It does not take a rocket scientist, to realize that there is no way on earth that taxes can be reduced, since we are not paying for what we spend now. And this does not even include the future liabilities of Medicare, etc. which is well over 100 trillion dollars!

Of course, the music that once taxes on businesses are reduced as this will produce more jobs is always played by politicians to justify the massive current and future expenditures. Currently, over half the people in this country do not pay any federal taxes at all. In fact, many of them receive checks from the federal government known as “earned income tax credits.” To add to the misery, over 50 million people receive food stamps through EBT cards and millions of young people who are capable of working receive disability payments. There is no doubt we need more jobs to generate tax revenue, but how are they going to be created?

In the mid twentieth century, manufacturing jobs ruled our economy. We were a highly industrialized nation that included steel and textile mills, shoe factories, heavy equipment manufacturing facilities and other industries. The jobs provided by these industries, for the most part, were good paying jobs that could support a normal middle class family. Unfortunately, today, they are all gone now, due to cheap labor abroad and free trade policies. Companies have literally "picked up shop" and moved out of the country. Limited, and in some cases no tariffs being imposed on imported goods have been one of the reasons why companies have taken their business and jobs overseas. Another reason for companies leaving is our corporate tax rate, which is one of the highest in the world. For years politicians have been playing the song, "for our tax revenues to increase, the amount of good paying jobs needs to increase." That is an undeniable economic fact and there is no getting around the axiom that these industries are an absolute necessity. They must be brought back to America for us to even have a chance of balancing the budget and paying back our huge debt. But the question is... how do we get the industry back?

Any jobs that are created without this type of industry today are simply “paper pushing jobs” which are generally formed by and contained within the government. These jobs produce nothing in relation to growth and expansion of the economic engine. In fact, they generally hinder its progress, by promoting restrictions on project and research development through additional "red tape" being imposed on our businesses. We have no choice, but to make it more attractive for companies to manufacture in the United States again. But to bring quality jobs back will not be simple, as it will require heavy tariffs on imported products, thus making us even more unpopular with the rest of the world. Doing this, however, will be a double edged sword as it will increase the cost of goods to the American consumer. Such items as flat screen TV’s, clothing, power and hand tools, cell phones and other products will greatly increase in price as they are currently not manufactured here, but in foreign countries with cheap labor. Do you really think the public will put up with prices increasing on these products 50% to 100% and more? Unfortunately, our nation has become a “consumer nation” that has grown addicted to cheaper products. And to add to the problem, these products generally have a very limited life span and have become commonly known as "throw aways." If you don't think our nation has become wasteful, take a trip to a dinner buffet sometime and notice how much food is generally thrown away by the public. What you will see, may surprise you.

As in all industrialized nations, manufacturing costs eventually catch up with a company and become an issue. Since nations over seas are becoming industrialized we are starting to see that phenomena occur. In fact, at the current time, wages are rising in China, causing unemployment to sky rocket and goods to halt from being exported, due to lack of demand. Since products are not being produced, the amounts of raw materials are not being utilized like they have been in the past. Goods are not being consumed at the same rate, as well, and shipping containers have become almost non existent on our oceans.

Another troubling issue is the amount of personal debt in our country and the availability of “real" or tangible cash. Several numbers have been thrown around in the media, but personal debt has been placed around 19-21 trillion dollars in the United States. (Some economists place this number even higher) There is only about 1.5 trillion dollars in “real cash” available in the banks as most "cash" utilized in business transactions is “digitized.” Unfortunately, if the situation arises, such as in the movie “It's A Wonderful Life,” starring Jimmy Stewart, which most of us have seen, where people decided that they wanted to acquire cash from their savings, a "run" will be experienced by our local credit unions and banks. With millions of people trying to retrieve their savings in "real" cash, one can only imagine, how long the banks would remain open. Paper money would instantly dry up; banks would close, leaving millions stranded with no cash availability. Few people realize that for every dollar of a person’s cash savings, that printed dollar, is actually being used by many other people for their purposes, as well. That same dollar is lent to many other people for their mortgage, car loan, business venture or other activity. This scheme is very similar to gold and silver certificates that are sold as ETF’s. Each individual certificate for each ounce of gold or silver is held (owned) by literally hundreds of people or more. There is no way, if all of the people holding certificates, turned them in and demanded physical gold to be placed in their hands that it could ever be accomplished. There is simply not enough gold or silver to go around. It's similar to a pyramid scheme with one ounce of gold at the top, being owned by hundreds of people below it. Simply put, many people although originally promised, would get nothing in return for their certificate.

Our entire country runs on credit, but it was not always the case. People in the 50's and 60's never used credit cards, as they always paid with cash. If you could not afford something, you simply did not buy it. Through the years, wages, however, have not kept up with inflation and the populace has learned they can live beyond their means via credit. Cash is no longer needed, as you can buy almost anything on a credit card, especially when upper limits on cards have been raised to $20,000 dollars or more. Plus, why have one card? When three, four, five, or even more cards are better? Many people have five or more credit cards in their wallets and many families live on them from day to day. In fact, it has gotten so out of control, that some sources put the average household credit card debt in this country at around $8,000 dollars. More shocking is if you only consider the number of households who actually use credit cards, then the number becomes $17,000 per household. If the credit card system crashes and cash becomes king, at least for a little while before gold and silver take over, then what happens? As a result, in the very near future, going to the ATM machine and trying to retrieve some cash might be a rude awakening for many people when nothing comes out of the slot. And when their credit card is refused, as well, to purchase their favorite coffee at Starbucks, the reality of the whole situation will come crashing down on them like a ton of bricks. But by then, it will be too late….for preparation that is.

Sadly, most of the above problems can be traced back to the country going off the gold standard in the early 70's. This allowed the government to turn up the printing presses for the massive production of physical cash. And when they couldn't print it fast enough, "digitizing" became the norm. This marvelous invention allowed the government to place a bunch of zeros after a one on paper and transfer it back and forth electronically. Thus, creating money out of thin air! Naturally, if money does not have gold or some other precious metal behind it, then money is left backed by only one thing, and that is faith. Realistically, the only thing propping our dollar up now is faith by the people that are using it. And when that weakens or disappears?....….let the games begin as the dollar will crash. But that is a story for another time.

So where does all of the above leave us in our quest to determine the best candidate for President? With all the politicians promising “business as usual” by spending money out of control and keeping the massive money printing machine in full operation to appease the masses and prevent civil unrest, it doesn’t make our choice any easier. If you sit down and really think about all of the lies and misinformation that has been spilled onto us by various politicians, in order to get our vote, the situation we now find all ourselves in can become pretty depressing.

So when you go into the voting booth this spring during the primaries and fall to make your final decision for president, you must ask yourself this one question… "At this point…does it really matter?"

But after answering that, then ask yourself this more important question…..

"Am I prepared to weather the upcoming storm?"℠ (Right-side navigation page SSI insertion)