America to Add $1 Trillion Debt Every Year - Forever

A short while ago, just an hour or so before this writing, the following news article was posted at Kitco:

Kitco News -- Gold futures have fallen back below $1,600-an-ounce mark on prospects for progress in U.S. budget and deficit-ceiling talks. Bipartisan “Gang of Six” senators have  offered a plan with $3.75 trillion in savings over 10 years that includes $1.2 trillion in new revenues, and the proposal has been supported by President Obama. “Something is making the stock market calm down considerably, and it’s probably the idea of the ‘Gang of Six’ mentioned by Mr. Obama as being on the right course,” says Sterling Smith, commodity trading advisor and market analyst with Country Hedging. Worries about the debt-ceiling impasse, and the potential for a U.S. default, had been one of several factors supporting gold lately, with observers saying a resolution could prompt a correction. “Being above $1,600 did make it vulnerable to a sell-off,” Smith says. As of 2:15 p.m. EDT, August gold was $14.90 lower at $1,587.50 an ounce

It’s plainly obvious to me that this ‘deal’ is just another spin on raising the debt ceiling and screwing the American taxpayer ever deeper into a financial coffin. The socialist Obama will not be happy until every last dime is extracted from those with “the ability to pay” and given to those who refuse to be productive. First off, the $3.75 trillion over ten years is coined as savings – not cuts. In all recent discussions with this bi-partisan group, the savings have merely been ‘less of an increase’ rather than a real cut in spending. A good analogy is that of a fat man who needs to lose 100lbs to regain his health. He needs to stop consuming 4500 calories a day and if can start consuming just 1500 calories a day he’ll be on track. Instead, he consumes 4000 calories a day and convinces himself that he is still losing weight because he has cut back his calories. A month later the scale shows he is heavier but to him that doesn’t matter, he's not fatter as fast as before. Such is the nonsensical argument of the democrats and the left wing republicans. (Thanks to Peter Schiff for imprinting this analogy)

Take a close look at what this ‘deal’ implies! $3.75 trillion is really $375 billion per year and that includes $120 billion in new revenues meaning the net cut in spending proposals is $495 billion. Since the current spending is $1.6 trillion beyond revenues, that means they are agreeing to spend $1.105 trillion beyond revenues in 2012 and beyond.

If we consider that interest rates on the debt cannot get any lower, then they must remain the same or go higher. As there is more debt, there will have to be a greater and greater portion of revenues being used to pay down the debt. More cuts will have to be announced next year in order to meet interest payments. Not only that, but Moody’s reported that 5 of 15 U.S. states that they currently have rated AAA  and that rely on Federal funding to make ends meet are now on a watch list for debt. If the Fed chooses not to bail out the States, then those states will see much higher interest rates from private sector borrowing which will be passed on to the taxpayers. With less personal income due to state taxes, there will be less money available for consumption causing further pressure on retailers in an environment where commercial retail properties are already experiencing sky high vacancies and record bankruptcies. The cycle will deepen and America will be forced to go deeper and deeper in debt to the tune of at least a trillion a year and I would suggest that is probably being conservative.

The only real hedge is physical commodities. I am buying commodity based companies and using the profits to buy physical commodities. I am also financing my mortgage debt at the longest time frame I can afford – 10 years. Sometime in the next 2-5 years, control of interest rates will have been relinquished to the bond market and rates will begin a homeowner crushing ascent. and everyone will be wishing they could buy gold for $2500 an ounce.

Stop Listening to Propaganda and Start Thinking for Yourself

You have been told so many lies that you no longer know what the truth is. For many people, perhaps most people that is exactly the scary truth. You have been told the national security is at stake so the military spending needs to be maintained if not expanded. You have been told that there is a social security trust fund to protect you when you retire. You have been told that public education is just as good as private education. You have been told a weaker currency is good for the economy because it helps develop the export market. You have been told that financing a country is not the same as financing a family home or a business. You have been told that turning corn into fuel will not affect food prices.

Tim Geithner is trying desperately to convince everyone that NOT raising the debt ceiling will be catastrophic for America.

In the last U.S. election, most of the American public and indeed the world was mesmerized by Barack Obama’s rhetoric. The lies were so pervasive that the Nobel Prize committee gave the new president a Peace Prize.

WAKE UP!!

Yes people, WAKE UP!! And start THINKING for yourself.

When individuals stop listening to lies and start reading only the facts, they will discover through connecting the dots – thinking is that easy – that much of what they hear on the news about the government and Wall Street is propaganda.

I’ll explain some simple facts starting with my favourite lie known as “the weak currency is good theory”. Like MOST things that have a sliding scale of good on one end and bad on the other, this one is pretty easy to disprove. Ask yourself this simple question, “if the existing money in bank account declines in value (it takes more dollars to buy basic necessities), then am I better off or worse off”?  Now ask yourself the opposite question, “If the existing money in my account grows in value (it takes less dollars to buy basic necessities), then am I better off or worse off”? Currencies work on a sliding scale from weak to strong. People who hold weak currencies are generally poor. People who hold strong currencies are generally not poor. Economic history clearly demonstrates that no country has ever achieved greatness nor maintained it by debasing its currency. Now let’s move on.

In America, your government spends more on its military than the rest of the world – combined! Do you think they are really under any threat of attack? Of course not, but there could be a threat in the future as I’ll explain, but let’s look at Mr Geithner’s debt ceiling first.

Good Ol’ Timmy is sounding the alarm trying to scare the pants off all the Members of Congress because they don’t think too clearly either. Ask yourself this simple question, “If I am in debt up to my eyeballs, will a bigger loan make the situation better or worse”?  

Ah, now there’s the rub. Timmy and his gang of monetary thugs are telling everyone that they have a long term plan to pay down the debt and they will be able to implement it if only they are allowed to spend more money now.” The comedy really is divine.

If America allows the debt ceiling to be raised, as soon as interest rates start to rise – and they will eventually – then the servicing the debt will cripple the country. When that happens, the spending cuts will have to be even more dramatic than they would have to be today. It is very likely that the US Military would experience drastic cuts in both active personnel and active equipment. When this occurs, the US will be much more on par with the rest of the world militarily although they will still have far superior equipment and technology. It is at that time when America will experience a real threat, but not today. The European Union faces the exact same situation. It is probably inevitable that within a generation, the Chinese will rule the world militarily. Fighting a false threat will bring on a real threat – like I said, its comedy.

How about public education? Can it be as good as private? Think of it this way. Take a bunch of motivated parents who decide to hire some teachers to teach their children. If they are putting in the effort, they’ll hire the best teachers they can find while the bad ones will always be working in public education. These parents will also try hard to make the facilities good to learn in. Not only that, but these parents will also be more likely to make their kids work hard in school so that the money they spend on the education is not wasted. Public education simply cannot compete. It’s not the kids’ fault, its just the way it is. Most kids from drug addicted or alcohol abused families will be in public education and the odds are heavily against these kids. The important factor is your child’s future – don’t worry about equity when it comes to ensuring them a good future. If you can afford it in America, get your kids in private schools.

President Obama, winner of the Nobel Peace Prize, unilaterally declared war on Libya – how funny is that?

Now it’s time for more thinking on your part. Ask yourself this question, “If one of the directors of the social security program can’t come up with any differences between social security and a ponzi scheme – like the one run by Bernard Madoff – then is there a difference?”.  We can thank Peter Schiff for exposing that one and you can watch it on YouTube.

On June 21, the US Senate killed a bill that would have ended the subsidies for ethanol. “Was this the right thing to do or the political thing to do?” That is your homework.