COULDN'T SAY IT BETTER MYSELF

George Offerman

I came across this article written by Simon Black.  There are times one runs into an article that states the point better than what he is able to express, and Mr. Black is talented in that he nails his subject fairly well and consistently.  (sent from my home computer at 10:05 pm)

I apologize for what you're about to read
Simon Black

It’s really hard to ignore what’s happening today; the election phenomenon is global.

Over the last several weeks, I’ve traveled to so many countries, and EVERYWHERE it seems, the US presidential election is big news. Even when I was in Myanmar ten days ago, local pundits were engaged in the Obamney debate. Chile. Spain. Germany. Finland. Hong Kong. Thailand. Singapore. It was inescapable.

The entire world seems fixated on this belief that it actually matters who becomes the President of the United States anymore… or that one of these two guys is going to ‘fix’ things.

Fact is, it doesn’t matter. Not one bit. And I’ll show you mathematically:

1) When the US federal government spends money, expenses are officially categorized in three different ways.

Discretionary spending includes nearly everything we think of related to government– the US military, Air Force One, the Department of Homeland Security, TSA agents who sexually assault passengers, etc.

Mandatory spending includes entitlements like Medicare, Social Security, VA benefits, etc. which are REQUIRED by law to be paid.

The final category is interest on the debt. It is non-negotiable.

Mandatory spending and debt interest go out the door automatically. It’s like having your mortgage payment autodrafted from your bank account– Congress doesn’t even see the money, it’s automatically deducted.

2) With the rise of baby boomer entitlements and steady increase in overall debt levels, mandatory spending and interest payments have exploded in recent years. In fact, the Congressional Budget Office predicted in 2010 that the US government’s TOTAL revenue would be exceeded by mandatory spending and interest expense within 15-years.

That’s a scary thought. Except it happened the very next year.

3) In Fiscal Year 2011, the federal government collected $2.303 trillion in tax revenue. Interest on the debt that year totaled $454.4 billion, and mandatory spending totaled $2,025 billion. In sum, mandatory spending plus debt interest totaled $2.479 trillion… exceeding total revenue by $176.4 billion.

For Fiscal Year 2012 which just ended 37 days ago, that shortfall increased 43% to $251.8 billion.

In other words, they could cut the entirety of the Federal Government’s discretionary budget– no more military, SEC, FBI, EPA, TSA, DHS, IRS, etc.– and they would still be in the hole by a quarter of a trillion dollars.

4) Raising taxes won’t help. Since the end of World War II, tax receipts in the US have averaged 17.7% of GDP in a very tight range. The low has been 14.4% of GDP, and the high has been 20.6% of GDP.

During that period, however, tax rates have been all over the board. Individual rates have ranged from 10% to 91%. Corporate rates from 15% to 53%. Gift taxes, estate taxes, etc. have all varied. And yet, total tax revenue has stayed nearly constant at 17.7% of GDP.

It doesn’t matter how much they increase tax rates– they won’t collect any more money.

5) GDP growth prospects are tepid at best. Facing so many headwinds like quickening inflation, an enormous debt load, and debilitating regulatory burdens, the US economy is barely keeping pace with population growth.

6) The only thing registering any meaningful growth in the US is the national debt. It took over 200 years for the US government to accumulate its first trillion dollars in debt. It took just 286 days to accumulate the most recent trillion (from $15 trillion to $16 trillion).

Last month alone, the first full month of Fiscal Year 2013, the US government accumulated nearly $200 billion in new debt– 20% of the way to a fresh trillion in just 31 days.

7) Not to mention, the numbers will only continue to get worse. 10,000 people each day begin receiving mandatory entitlements. Fewer people remain behind to pay into the system. The debt keeps rising, and interest payments will continue rising.

8) Curiously, a series of polls taken by ABC News/Washington Post and NBC News/Wall Street Journal show that while 80% of Americans are concerned about the debt, roughly the same amount (78%) oppose cutbacks to mandatory entitlements like Medicare.

9) Bottom line, the US government is legally bound to spend more money on mandatory entitlements and interest than it can raise in tax revenue. It won’t make a difference how high they raise taxes, or even if they cut everything else that remains in government as we know it.

This is not a political problem, it’s a mathematical one. Facts are facts, no matter how uncomfortable they may be. Today’s election is merely a choice of who is going to captain the sinking Titanic.

IT'S TIME TO ACT

George Offerman

It seems over the past few years when I take two weeks off, things seem to happen.  This particular vacation, I was expecting to see major movements in the financial world, and my expectations were met, if not exceeded.  This was not unexpected, and the rumblings in the financial world are really at the beginning phase of an all out collapse.  I have been telling people for some years now, how by simply using mathematical principles taught in the 8th grade, anyone can come the conclusion that the only outcome from blatant money printing and institutionalized deficit spending is collapse. 

Before I go on, I will point out once again, that this issue is not only linked to legalized child killing, it is the genesis of it.  Anyone who has ever done any sidewalk counseling knows the number one reason cited for killing children is lack of money.  The individual say it, planned parenthood says it, and even our government has alluded to this.  If we had fair and honest money, we would not be in the mess we are in.  But because we have a tendency to compartmentalize everything, we will continue to wander in the financial desert until we get the connection and do something about it.

Getting back to the issue, our debt in this country is increasing in a geometric progression.  Our productivity or ability to pay it back is at best increasing in an arithmetic progression, but more likely stagnating, if not actually regressing.  With this being the case, it is a MATHEMATICAL CERTAINTY there will be a crash, and this will usher in a need to reset the whole economic reality of this country.  Because the whole world is on a fiat based currency system, there is no historical precedent in which to refer to, so we are truly in ‘uncharted territory’ concerning the severity and duration of this reset.  There cannot be any other outcome at this time, and it is only a matter whether we have the gumption to pay now with great pain, or later with greater pain, plus interest and penalties.  But pay we will.

This is why both parties ‘caved’ on the debt limit ceiling.  Very few of these people are statesmen, and they don’t want to be known as the ones who caused the ‘greater depression’.  So they did what all previous congresses and presidents have: kicked the can down the road.  The problem is there is not much road left on Debt Avenue.  So, economically, we are treading water until the main event begins in earnest.

I have included a brief snippet from an author I am learning to really appreciate.  It discusses what children may learn from the current economic situation, but it also reflects rather accurately the behaviors of the average American.  This is taken from Simon Black’s article, and his writings can be found at:  www.sovereignman.com



I have to imagine that any child watching the goings-on of American politics would conclude that:

- debt is wealth
- living beyond your means is completely sustainable
- if anyone tells you otherwise, denounce their mathematical errors
- if at first you don't succeed, keep trying the same thing over and over
- working hard and saving money is bad
- spending money and not working is good
- if you have a problem, the government will bail you out
- people are entitled to things that they didn't work for
- no one should be held accountable for the consequences of the risks they take
- it's not illegal if the government does it
- despite what our eyes and ears tell us, inflation is not a concern
- everything is going to be OK simply because the government says so

The financial system is completely different than what it used to be, and the basic premises have been thrown out. The dollar is no longer stable. The US is no longer "risk free". The government is not there to help. The happy-go-lucky days of safely putting our savings in bank CDs and T-bills are gone for good.

http://silverbearcafe.com/private/08.11/piggybank.html     



Two years ago, I discussed gold and silver for the first time on this site and mentioned how the majority of the pundits were trashing both metals, despite the increasing price for both over the past 8 years.  I also mentioned how there were a few people back then (just 2 years ago) that discussed $1,500 gold and $50 silver.  The majority of people back then did not imagine, nor believe these prices would be breached.  Just two years later, it has been done, and in the most recent few days, a few commentators in the arenas I read have discussed $20-25 K gold.  We haven’t even hit any type of hyper inflation, and the predicted numbers have grown ten fold in just 2 years.  These numbers would have been laughable to even the most strident of gold bugs, yet there are credible authors and gurus of these markets now openly making these claims.  (I can’t wait to see the numbers two years from now!)

This wouldn’t be happening if our economic troubles were improbable.  These numbers only make sense in an economic crash scenario, and it seems more and more of those who study these markets are coming to this conclusion.  We really are at the threshold of something catastrophic, and it is very important that people begin to see this.  It is time that we begin to act on what we know, and take actions that will be positive for ourselves and family.  Godl and silver will go to heights that no one can really believe at this time, but it will be common knowledge in short order, and many will have regrets they did not act on this information.