“Where would U.S. incomes, earnings and corporate cash-flows be today if it weren’t for the $4.5 TN increase in federal debt over the past 10 quarters? Ponder for a moment the liquidity backdrop in the Treasury market had the Fed not intervened in the marketplace with quantitative easing (#1) and “QE2” - in the process convincing the marketplace that the Fed had committed to operating as a reliable market “backstop bid?” What would be the state of the household balance sheet today if not for the unprecedented fiscal and monetary policy response? Is it sound analysis to trumpet the pristine state of the corporate balance sheet and celebrate the improving household balance sheet - when the Fed is doing unconscionable things to its balance sheet and the federal government is in the process of destroying theirs?”
“How would global markets and economies be functioning these days had it not been for the almost $1.6 TN increase in international central bank reserve holdings over the past 12 months – or the $2.75 TN, 40%, growth in two years, to $9.45 TN?”
“Today, ECB President Trichet stated that “it is important that the dollar is a strong currency.” He also said that “fixing imbalances must focus on deficit countries.” To this day, Greenspan argues that foreign central bank Treasury purchases were instrumental for the rate environment that inflated our nation’s housing Bubble. And the argument that our trading partners – and their undervalued currencies and steady accumulation of American I.O.Us – are most responsible for global imbalances will not be resolved anytime soon.”
“Let the world adjust; just ensure that the Fed keeps doing what it's doing. And I just scratch my head in disbelief at how little we’ve allowed ourselves to learn over a turbulent 20 year period of interplay between “activist” policymaking and serial market Bubbles. After doubling mortgage Credit in seven years, our system is now on track to double federal debt in 4 years. And the markets couldn’t be more pleased with it all. It leaves one pondering what type of circumstance will be necessary to finally force us to start getting our house in order – to return to some semblance of disciplined central banking and fiscal responsibility.” David Nolan - Weekly Commentary
As I was reading the above quote I really started to think about everything our government has inserted itself into and had to start thinking: Where would our economy be if our government had not made money and services so easily accessible to all?
I think that really you can take two views on that. You can either say that we would be in a complete pit of depression for years (probably what the fellow I quoted believes) after each economic correction or you can believe that deep down that Americans are workers. When our backs are against the wall, and sometimes even when they aren’t, we step up to the plate and work harder putting us into a new boom cycle.
So where do I think we would be without government “help”? I think we would be regularly going through the boom and bust cycles we have been, but with a lot less of the extremes like we saw in 2008, and in general we would be prospering. Of course the government and central bank did step in too much and now they will have to get out or we will again have a huge burst. When they do step out of the way it is going to hurt. This interference has become very much like a splinter that has been allowed to fester for too long. Sure we could leave it there and keep covering it up or we can remove it (with all of the complaining and whining that comes with it) and finally start the healing process. While I don’t believe that many of our current representatives have the stomach for it, some do. Also, while there is a lot of anger out there and most can’t agree on how to start getting the splinter out, most agree (according to some polls I have read) that it has to come out now.
3 weeks ago
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I agree. I was thinking about all the welfare issues and etc, and would cutting it off be more tragic than someone losing a job? I know that oversimplifies things a bit, but its gotta happen.
Sitting on the cusp of what is the assumed retirement window, I can see this couldn't be more true. 13 years ago when I started getting my own spiritual house in order, it was neither a fun nor particularly rewarding (monetarily, at least) experience. We are now starting to really get there, finally, on a monetary basis. Where we couldn't balance the books on $110k/yr, we now are making progress on $80k. It had to do with a promise we received at the time that if we were faithful, we would "have sufficient".
Now my idea of sufficient has not always been in line with the Lord's, but he has always been right.
As for our country, the massive moral obligation known as Social Security has nothing in the bank, is now running an annual deficit (last year was the first and it was $3B), and the big wave of entitlement babies has barely started. (I would argue that the special issue bonds held in a vault in West Viriginia, issued by the US govt in exchange for revenues collected by the IRS as FICA taxes, which were then spent as general revenues, with the IS bonds payable to the US govt, do not constitute a liquidable asset.)
So what do we do? Raise ages for early and regular retirement. Reducing scale of benefits depending on post retirement income, although this rewards profligacy by those with large pre-retirement incomes. Change Medicare from central pay to premium support with a wide array of options rather than the soon to controlling IPAB (rationing board). Block grant Medicaid and do away with all fed control. Sell all BLM and most Forest Service lands to make them productive and tax paying as well as to pay off national debt.(Takes about 10 years to do in an orderly way to avoid fire sale giveaways). Do away with most non-defense fed programs.
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