CONSUME TO OBLIVION

BEST OF BILL BUCKLER
February 10, 2006
Americans spent $US 42 Billion more than they earned last year. That turned the annual US savings ratio negative, it fell to minus 0.5 per cent last year. This is the first time the US savings ratio has gone negative for an entire year since way back in 1932 and 1933 when the US was struggling to cope with the Great Depression. In December 2005, US consumer spending rose by a bigger-than-expected 0.9 percent while incomes were up by just 0.4 percent. That forced the savings rate down for the month to a negative 0.7 percent. The US national savings rate has been negative in eight of the last nine months. This shows that economically as well as financially, Americans are back in the situation they were in the "dirty thirties". Only the US welfare state, which didn't exist in 1932-33, disguises this fact. What also disguises it is the huge increase in Treasury borrowing. They can't tax, to do so would break the façade….
To "cover" for UNFUNDED promises amounting to $US 51 TRILLION that close to 100 million Americans count on, Congress could raise taxes in the US by that amount over the next 25 years. That is additional taxes piled on top of all the present ones. Were that to happen, it would condemn all younger Americans to being serfs for their retiring elders. It is only the productive who can pay taxes out of their current production. The unproductive leave no present economic goods to tax.
The alternative is piling these unfunded promises on top of what the US Treasury already owes. Having the US Treasury borrow this additional money will make the Federal Government crash under the weight of its debts while leaving unsolved how even the interest payable on this debt can be paid.
The last solution, deep cuts in government expenditures, is the only real economic solution. But that will leave these nearly 100 million older Americans destitute. They will become destitute because they have next to no individual private savings accumulated over a lifetime with which to sustain themselves. An enormous human crisis is on the horizon. The past generations of politicians got away with it. They all retired before this crisis arrived. It is the present day politicians who will have to face the music. The crisis will arrive while they are in office and there is no "magical" solution to the economic problem….
There is an immense crisis over the horizon. It is rolling towards us all, especially towards the USA. We are nearly at the end of the line. The STATE is financially bankrupt and has liabilities it can't cover. If you stand with some property held free and clear of debt and with Gold and Silver coin - you'll make it.
Ó 2006 – The Privateer
http://www.the-privateer.com