August 1, 2011
“It’s not going to get easier, it’s going to get harder. So we might as well do it now; pull off the Band-aid, eat our peas.”
— President Obama
The latest example of political hyperbole is that the U.S. Treasury is ready to default on its debt. An actual examination of the underlying facts is that the relative purchasing value of the currency has long ago swindled debt holder in U.S. Bonds of their promised returns. A default defined under this definition is part of the equation. Repudiation of the entire debt obligation is the real fear. Contrary to all the public scare tactics that the financial world will stop turning, the Federal Treasury has ample revenue to pay the interests on bonds and notes that come due. The essential issue is whether the new bond lenders are willing to roll over the debt that is coming due and keep the shell game going.
The late conservative journalist, Robert Novak’s favorite president was Calvin Coolidge, he is known for saying, The Business of America is Business.
The real statement comes from a speech by Calvin Coolidge called “The Press Under a Free Government” which was given before the American Society of Newspaper Editors in Washington, D.C. on January 17, 1925. The quote is really: “After all, the chief business of the American people is business.” However, Coolidge goes on to say that, “Of course the accumulation of wealth cannot be justified as the chief end of existence.” He discusses journalism and the thought that the business interests of newspaper owners should not taint reporting. He continues, “American newspapers have seemed to me to be particularly representative of this practical idealism of our people.”
A seminal truth about governments is that they do not function as a business. Every commercial enterprise eventually needs to pay their bills, since limitless borrowing is not an option for lenders. Bankruptcy is a favorite technique for repudiating debt, just ask the General Motors bondholders. Every survivor of the 2008 meltdown knows the rules of the game are now a moving target.
The media invariably seeks to blame the Congress for bringing the country to the brink. Most narrow in on the Republican Tea party freshmen as unreasonable. Little criticism is directed towards the intransigent Democratic leader Senator Reid. The reporting by the press no longer mirrors the standards of 1925 journalism, and the government no longer represents the practical idealism of the people.
Compare the recent settlement of the National Football League lockout with the drama of the Beltway National Theater. Both purports to have a countrywide audience, but only the NFL has avid fans. The government maintains their league through fear and phony promises. Football plays a man’s sport by dedicated lovers of the game. Presidents, Senators and Congressmen prepare their playbook to defeat their opponents, the citizens that elect them to office. The NFL is a business rewarded because of fan support. The Feds are a systemic extortion racket that forces its edicts upon a depressed and financially depleted citizenry.
The reason why the NFL players and owners settled their disputes, agreed to a decade era of labor peace, and anticipated prosperity is based upon the business nature of the conference. The reality why the Federal Government refuses to end the culture of deficit spending is based upon the dictatorial appetites of egomaniacs that serve their financial masters and deceive the public in an endless cycle of staged elections. As long as the State ignores the intrinsic nature of business principles, the social government will grow the welfare dependent society, as a way to dominate their subjects.
Tragically, many people know more about the free agency signing in the NFL, than the political positions of their own representatives. No one should be surprised about this development. Government is the ultimate monopoly and does not depend upon a free market of choice. Officials see spending as growth. However, the bigger a bureaucracy becomes, the more the financial lifeblood of business prosperity diminishes.
The will to correct this core failure is nonexistent, within the federal despotic fraternity. Their talent lies in designing new transfer programs to crony colleagues and constituents, funded by taxpayer levies or inventive exotic debt instruments.
No, wonder why so many American have totally given up on the political system. Unfortunately, that withdrawal of consent alone does not eliminate the treachery of career government officials. The GOP is poised to compromise and accept a dramatic rise in the debt ceiling. Their explanation will offend the most serious and sincere reformers. How else can the incessant spending end, unless the credit card is taken away from the addicted shopaholic?
The formidable financial sage, Paul Craig Roberts uses a political argument, when he warns about the response Obama might use to defeat sound business practices, in his article; The Unintended Consequences of Debt Ceiling Intransigence.
“The US dollar could plummet in exchange value and lose its role as world reserve currency. The US would no longer be able to pay its oil bill in its own currency, and as its balance of payments is heavily in the red, the US has no foreign currencies with which to pay its oil import bill. Or its manufactured goods import bill, or any other bill.
We are talking about a crisis beyond anything the world has ever seen. Does anyone think that President Obama is going to just sit there while the power of the US collapses? He doesn’t have to do so. There are presidential directives and executive orders in place, put there by George W. Bush himself, that President Obama can invoke to declare a national emergency, suspend the debt ceiling limit, and continue to issue Treasury debt. This is exactly what would happen.
- A d v e r t i s e m e n t
The consequences would be that the power of the purse would transfer from Congress to the President. It would be the end of the power of Congress. Congress, Republicans and Democrats alike, have already given away to the President Congress’ Constitutional right to decide whether the country goes to war. Now Congress would lose its power over debt, taxes, and the budget itself.”
Any sober reader should consider Roberts’ insights. Yet, what else can be done within the constitutional Federal system of separation of powers to stop the spending binge? The house of cards can no longer support the burden of the public financing through the fractional reserve fraud used by the Federal Reserve.
The alternative is for the Treasury to issue government bonds directly to the market. All interested paid to the banking elites that own and control the private Federal Reserve needs to take a thunderous haircut. This is the only solution to eliminate the curse of compound interest paid to a criminal cartel, which holds our country hostage.
The insane spending is unnecessary. No one who rationalizes that the federal budget is sustainable can be trusted. Anyone who refuses to cut and eliminate entire agencies is perpetuating an illegitimate bipartisan regime of coercive corruption.
The convoluted mechanics that will emerge to justify a higher debt limit will be just one more insult to the hard working citizens that conduct business on Main Street. The total disconnect of the government class from the most simple requirements of authentic wealth creation is at an all time high. The reason the Tea Party movement spontaneously erupted over the unbearable taxation demands demonstrates that common sense still lives in the minds and hearts of real Americans.
The socialistic mentality that relies on government to supply physiological reinforcement for their personal inadequacies and diminished mental capacities is no excuse for national betrayal. The Capitol Dome is the most distinctive landmark in this country. The weight of the burden from all government debt is undeniable. Even a mainstream newspaper like USA Today admits that the U.S. funding for future promises lags by trillions.
“The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.
“The (federal) debt only tells us what the government owes to the public. It doesn’t take into account what’s owed to seniors, veterans and retired employees,” says accountant Sheila Weinberg, founder of the Institute for Truth in Accounting, a Chicago-based group that advocates better financial reporting. “Without accurate accounting, we can’t make good decisions.”
Isn’t that lack of financial reporting, let alone accountability, the forestay of the political class? Do you really think that a sensible leader in the Calvin Coolidge tradition can be elected today? America is no longer a country that conducts business. The international banksters, who peddled the debt drug to a spending addict, own the global empire. The globalists are stealing any wealth that remains in a country of junkies. The political pimps that pump you full of dependency are masters of the delusion. The overdose leads to a terminal condition. Endure the withdrawal shock now, before it is too late.
Get your own house in order. Learn how to do business without debt. There is no signing bonus in this masochistic league of the establishment’s lie and steal game. The only sport left is to cheer for an early repudiation of the illegitimate public debt.