Before I get into the heart of the matter I'd like to share a quote with you."If we are made in some degree for others, yet in a greater, we are made for ourselves...nothing could so completely divest us of that liberty as the establishment of the opinion that the state has a perpetual right to the services of all it's members." -Thomas Jefferson.
Yes , it's another swipe at the welfare state, but that's not what this report is about.
Now, the Report.Good news, Bad news:
The talk from the Washington Beltway about paying down the Debt has finally come to fruition. According to the year 2001 edition of Statistical Abstract of the United States, the Gross Federal Debt has gone down by 4 billion dollars.THAT'S RIGHT, THEY HAVE ACTUALLY REDUCED THE DEBT BY 4 BILLION DOLLARS.
This is Incredibly good news. We should all be celebrating right now.
If the Debt had gone down by only one dollar, I would still be cheering, except, I know better.
Don't get me wrong, any debt reduction is a good thing. It's just that things are not that simple, I only wish they were.First of all, the last year's values in this data table is estimated, and considering the effects of the recession we are now coming out of, I think these numbers will not hold.
However, let's assume for now that they will, just for the sake of argument.The average person needs to be aware that there are two debts, two accounts that make up the Gross National Debt. And, when you look at them separately, then this debt reduction is considerably less impressive.
First:
A portion of the National Debt is held by the Public: (Savings Bonds, T Bills, Etc)The following chart shows the part of the Federal Debt that is held by the public. And you will notice that after the Republicans took over the Congress, this part of the debt started going down.
(A hearty "Thumbs Up" to the GOP.)The data is taken from: Statistical Abstract of the United States 2001," U.S. Department Of Commerce, Economics and Statistics Administration, Bureau of the Census, Section 9, page 302, table 457. And is available on the web at, http://www.census.gov/prod/www/statistical-abstract-us.html
This is the essence of the debt reduction.However, there is a skeleton in the economic closet. And just for the record The Republicans did not father this skeleton, This skeleton resembles the shade of Franklin D. Roosevelt.
Second:
A portion of the National Debt is held by the Government itself:The following chart shows the federal debt that is held by the Government
As before, The data is taken from: Statistical Abstract of the United States 2001.
As I stated in earlier Reports The Trust fund system, of which the Social Security Trust Fund is the largest, requires new debt every year in order to function. And that is the essence of this debt increase.The gross federal debt is the sum of debt held by the public, and that held by the government. If you are a tax payer the distinction is meaningless, because you pay for the debt no mater where it comes from.
The Republicans Have done the right thing in reducing that part of the debt they could affect, (i. e. the public held debt), However, the government-held debt is a part of the debt they dare not touch, because it means a drastic change in the Social Security system. And the American voter will simply not tolerate that.
Even with all the needed changes, Social Security may still survive, but the myth that your money is invested in some grand scheme will be lost, and you will be forced to face the simple fact, Social Security is just welfare, it always was, the grand investment scheme is just smoke and mirrors. So please don't tell me how you've paid into Social Security these many years, all you and I did, was pay a tax, nothing more.All the talk about moving Social Security to investment in the private sector, like the stock market, is a well meaning and fruitless gesture. No private system is big enough, and no private system is without risk.
So what happens now.
We can project what the debt might do in the years ahead. If we use the values of 2001 for each year after that. Based on these assumptions the debt will perform as the following graph indicates.
A best case scenario:
If we subtract 235 billion dollars each year from the public held debt. (as in 2001.)
eventually this part of the debt reaches zero.If we add 235 Billion dollars each year to the Government held debt, (as in 2001)
eventually that debt climbs until it reaches the gross debt's current value, at that point the government debt is the gross federal debt. And, after that, it just keeps climbing. On the other hand, the Congress will have thirteen years to boast about how they're controlling the debt, but in the end we will come full circle and find our selves right where we are now.As before, The "past" data is taken from: Statistical Abstract of the United States 2001.
The Gross Debt is the sum of Public held National Debt, and that debt held by the Government.As I said the above table is a best case scenario, but, with talk of fiscal 2002 having a 100 billion dollar deficit, we can throw best case scenarios in the trash. So this chart is extremely hypothetical. I place it here to show you that at best the current form of debt reduction is a delaying action. Paying off the public held debt is almost the last card they can play, some years from now they will start to disassemble the lesser trust funds, the ones that don't get in the nightly news. By doing that they will slow the growth of the debt, but, as long as just one trust fund exist in the current form, the debt will continue to increase. After that, there will be no other options for Congress. They will have to eliminate the Social Security Trust Fund.
The 2001 Recession:
let's move away from the estimated values for 2001, and look at the firm values of the fiscal year 2000, from the data presented here.The debt rose only 23 billion dollars in fiscal 2000. That is a comparatively small number. The smallest debt increase in a long while.
The basic tenet of "It Came from the Rock Report" and "The Rock Report of the Serria Madre" is that... Half a century of constant borrowing has artificially stimulated our economy to levels it would not normally have acheived . All this talk about the powers of capitalism is mostly bullshit. Sure, pre depression history has proven capitalism to be the best system out there. (I didn't say perfect, just the best, in an imperfect world.)
As good as capitalism is, it gets so much better when you dump 100 billion free dollars a year into it, in fact you get a absolutely phenomenal economy. At least until the time comes to pay it back.Consider this, what happens in a year that you don't dump quite as much money into the artificial economy? Just like the 2000 fiscal year.
If my tenet is correct, the economy will begin to slump down towards a more normal level.
And isn't that exactly what we have seen? An economic slump?Again, if my tenet is correct, returning to high dollar borrowing should restore the slumped economy. Like the projected 100 billion deficit for 2002.
And is that not what's happening right now?The economy moving down to a normal level, is like a heroin addict getting only half his daily fix. He doesn't like it very much. So, by all means line up your complaints about the 2001 recession. You and I are the addicts.
So, Am I telling you that this is proof that my notions about the economy and the debt are correct? Hell no.
The system under discussion is far too complex and too convoluted for me to stand up and say I am right. There are just too many variables in the equation.
On the other hand I'm just saying that to be polite, am I right? Bet your ass.The world turned upside down.
In Washington, both the Left and the Right will give themselves hernias trying to blame the 2001 recession on each other. However, if my tenet is correct, I have to tell you that the 2001 recession is the fault of the Republicans in congress.
What did they do to cause it?
They imposed a minor amount of fiscal responsibility.In the next election, I'm going to vote for the very same bastards that caused the recession, with the total expectation that they will cause another one. And I'll curse them every time they return to borrowing to stimulate the economy. (I expect to very hoarse in the future.)
And that is exactly what you need to do. You have to vote for people who may very well make you unemployed. That is the insanity of our situation.
(Did you really think that nearly six trillion dollars of debt would not come without a price tag?)I really don't expect that anybody will do that, so I expect we'll just ride our wave of prosperity until the system crashes. And We'll all have a good time while it last.
Much like all the people on the Titanic, they were very happy with the first thousand mile or so. It was only the last two and a half miles that people bitched about. (2 1/2 miles straight down).Disclaimer:
Now that I have been so depressing, I'll let you off the hook.
Not being a well-educated man, I of course have no training in economics. And I'm standing before you with only observation, logic, and I hope common sense.
On the other hand there are countless experts out there with degrees, books, and countless honors. And you'll be hard pressed to find one who would agree with me.
So go ahead and believe whatever makes you feel good.Of course, I could always make this much more acceptable by creating some fiction that this situation is the result of the wealthy, or perhaps large corporations. Just to appeal to our cultural paranoia, I could even find a way to blame it on Socialism, and that would be almost correct.
We always feel better thinking that there was somebody who stabbed us in the back. However, the simple fact is that we have done it to ourselves, you and I, and several generations of average American Voters.So, that's it. That the crash will happen is a certainty in my mind, when it will come, I just do not know. Maybe ten years, maybe fifty years, but it could be next year.
What will it be like? I don't know, but I suspect it will be exceedingly nasty.
How to prepare for it? I don't know that either. I am not a survivalist.That's all I've got for now, future reports will chronicle the debt's changes.
In the event that you were wondering:
Why Statistical Abstract of the United States?
It is in my opinion the most honest, non politicized source of data out there. You can find the data to prove almost any assertion, but I believe Statistical Abstract it to be the most reliable data available, the only problem is that you have to wait so long to get the non-estimated values.So now you have read yet another blistering report... Thanks.
If you agree with it, pass it around for comment by others.
If you disagree with it, then write your own damn report and submit it for comment.Submitted for your review by.
Mr. Eric (Rock) Andersen
A citizen of the USA.
Thus given the Right to have and express an opinion.
Also:
A taxpayer of the USA.
Thus given the Right to have and express an attitude.
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