On the Debt Crisis... - The Blytheco Blog

On the Debt Crisis…

The stock market has been going up and down 500 points a day.

This manic market is being driven by divergent views over: (1) the fallout from recent political events; (2) the extent to which the economy has slowed; (3) the potential impact upon corporate earnings; (4) the effectiveness of central bank policies; (5) world market problems such as Eurozone issues.

However, none of that changed day to day last week. Whenever you have that level of irrational activity in the market, it is clear that we are at a tipping point. My take is that business and consumers have lost total confidence in our leaders to act in a logical manner. The debt crisis is just the last in a long line of recent issues. This madness affects us all in a negative way – business owners, employees, unemployed, and our children. We all want confidence in our government and stability in the markets. We need to require action from our representatives to develop a long term solution – not an annual patch.

If you want to understand the magnitude of the recent debt and budget reduction actions agreed to by Congress and the President, this non-partisan example really put it in perspective. After months of chest beating and political rhetoric we have nothing. We should be demanding a real solution. We can no longer live on the future earnings of our children and grandchildren.

U.S. income: $ 2,170,000,000,000

Federal budget: $ 3,820,000,000,000

New debt: $ 1,650,000,000,000

National debt: $14,271,000,000,000

Recent budget cut: $ 38,500,000,000 (about 1 percent of the budget)

It helps to think about these numbers in terms that we can relate to. Therefore, let’s remove eight zeros from these numbers and pretend this is the household budget for the fictitious Jones family:

Total annual income for the Jones family: $ 21,700

Amount of money the Jones family spent: $ 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 budget: $ 385

If you were a banker or a family member or friend, would you lend any money to the Jones family? I would expect you would recommend bankruptcy! If we do not insist that the governments get their financial houses in order, bankruptcy of our children’s future is what we will get.

We need to insist on a balanced budget and a planned approach to pay down the deficit. Cut entitlements, aid to non-citizens and foreign assistance. Require Social Security and Medicare to be solvent and prefunded. Require drug testing for assistance programs, and any raised taxes to be applied only to debt reduction. These would be a good start.

I also agree with the proposed 28th Amendment to the United States Constitution: “Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators and Representatives; and, Congress shall make no law that applies to the Senators and Representatives that does not apply equally to the citizens of the United States.”

We need to strip our representatives of their entitlements that only apply to them. We need to hold their feet to the fire. I would also propose that our representatives do not get paid if they do not comply with a balanced budget amendment. There needs to be accountability for the pork barrel spending and increased entitlements that assist them in getting re-elected.

With the tragic mismanagement of taxpayer dollars at the Federal and state levels, it’s hard to explain it in one minute or less. For a video that does, check out: http://www.lewrockwell.com/blog/lewrw/archives/92839.html. The video is called “The Doorbell” and it creatively brings the severity of the fiscal situation facing taxpayers home in sixty seconds.

This has to stop – But that’s just my opinion, I could be wrong. Tell me your thoughts.

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