Sunday, May 25, 2014

Balancing the Budget - Mission Impossible

Are you a Democrat?  Are you a Republican?  Are you an independent?  Does it even matter when it comes to the budget and budget spending?

Here's the problem America faces: Spending more than income is a huge economic problem.  It is simply unsustainable.  Spending must meet income.  The two must be reconciled.  But, here is the worst part of the news: it can and WILL NEVER BE reconciled?  Why?  Because here's the UGLY TRUTH about what America is facing:

(1)  EVERY SINGLE DOLLAR that the Federal Reserve prints is borrowed by the United States Government WITH INTEREST.  Every single bank that is chartered by the Federal Reserve also owns a share in the Federal Reserve.  THE FEDERAL RESERVE IS A PRIVATELY OWNED BANKING ENTITY and is independent from the United States Government.  Every single dollar printed is issued at a certain interest rate.  The Federal Reserve is neither "Federal" in any sense of the word nor is it a "Reserve" in any sense of the word.  It is impossible to drive down a debt when every single dollar is issued with interest.

SOLUTION: The Federal Reserve must be nationalized so we can bring down the debt.  There was no Federal Reserve prior to December 23, 1913.  Indeed, while it is famously known that the central bank was created in response to several panic outbreaks, it was created by secular forces and ungodly men IN SECRET.  Prior to this date, the money was printed by Congress (which is the way it was designed in the Constitution) "Congress shall have the power to mint..."

(2)  Government Should Be Limited on Borrowing Money.  Could you imagine giving a borrower the power to borrower without having a plan for repayment?  Of course not!  Then why would any lender give a government a loan?  Answer: Government have nearly "guaranteed" income in the form of taxes to repay. But, the taxation base of any taxing power is LIMITED AND FINITE.  Governments are spending more than they make EVERY SINGLE YEAR and WITHOUT ANY PLAN FOR REPAYMENT? Governments MUST formalize a plan to for repayment of any money borrowed regardless of tax base and taxing power.

(3)  Government Should Be Required to "Balance the Books" Year End and Year Out.  With the exception of an "emergency" such as World War II, Governments should be focusing on spending where spending needs to be spent.  This means spending on (1) Defense; (2) Infrastructure; (3) Investing in the health, education and economic improvement of society.  This means not a "hand out" but rather a "hand up" for people who need it and promote programs the inspire and motivate people with better living conditions and opportunity.

(4) Government Should Be Prohibited from Giving Tax Breaks In Times of Financial Deficits. Giving tax breaks when government coffers are in the red is a very stupid move.  Tax breaks should only be given to businesses to "lure them" into residency only.  Driving up deficits only serves to destabilize the national economy as a part of the whole.  A failure to pay bills by governments breaks trust to people and entities doing work on the part of government because fear builds and destabilizes trust.  If trust is broken too much, the government may suffer a credit downgrade.

(5) The Budget Is Based on Trust.  Once trust vanishes, even for an instant, investors will not trust to lend to government (even in national emergencies) because of fear of default.  Once trust in government's ability to repay vanishes, the entire economic system can and will collapse.  Credit markets (which is the fossil fuels of economic markets) will seize up and there will be nothing the government can do to recover from the loss of trust.

(6) Excessive Spending Horribly Drives Down the Value of the Dollar (Leads to Inflationary Pressure).  Printing too much cash and releasing too much money into a system where the dollar is steadily losing its value is a very serious concern.  Indeed, if the dollar were to devalue further, the United States of America can very well lose its reserve currency status in the world as the "preferred currency" for domestic and international trade.

(7) Repayment of Debts Owed Is NEVER A Political Bargaining Chip.  Ethically and morally, the government, just like anyone else, should be required to pay their debts according to the terms of the borrowing agreement.  It isn't up to political debate and the budget cannot and should never be "held hostage" for some other political gain.  Fair is fair.  The repayment of debts owed must be paid on time regardless of what the current "political agenda" is.

(8) The Debt Ceiling Is a STUPID Idea.  Government should never be capped by its ability to borrow.  A "debt ceiling" is a bad idea and a political "tool" to use in political negotiations.  There is no need for a debt ceiling to exist.  But, a plan to constantly "balance the budget" is an absolute requirement.

(9) A Constitutional Amendment to Present A Working Budget.  Congress must pass a budget EVERY SINGLE YEAR.  It is about time that an amendment to the United States Constitution be enacted (in conjunction with the 14th Amendment) to pass a budget that meets the essential needs of the American People and preserves the infrastructure of our nation.

In conclusion, the dollar is the biggest bargaining chip on the table.  But, the bargaining depends on trust and value of the chip sitting between buyer and seller, investor and investee, the lender and the borrower.  Once the trust is gone in the value of the chip (which is greatly linked to financial responsibility) what is left?  The financial scenario can only lead to a bartering and/or losing financial power to another foreign replacement reserve currency or a worldwide currency where "minting power" is no longer located in the United States. The consequences of which would pale in comparison to the Economic Crisis of 2007.

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