Showing posts with label Borrow. Show all posts
Showing posts with label Borrow. Show all posts

April 27, 2021

Motif For The U.S. Economy


This seems like it could be a major theme of the U.S. economy. 

"Buy Now, Pay Later!"

And then...

"Foreclosure"

You can't borrow infinitely.

It eventually has to be repaid. 

Where will the money come from?  

Print more.

Worth less!  ;-)

(Credit Photo: Andy Blumenthal)


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November 10, 2015

The Unsustainable U.S. Economy

The U.S. National Debt often touted at an enormous $18 trillion is really more than 3 times that amount and closer to a whopping $65 trillion!

That's when you actually count all the unfunded liabilities for civilian and military pensions, retiree healthcare, social security, and medicare.

For each of the 318.9 million people of that United States, it mean $203,826 of debt or for a family of four that's a debt of $815,303.

Put another way, the entire net worth of Americans is $84.9 trillion, but after subtracting the debt of $65 trillion, it drops to just about $20 trillion--coincidentally around the amount of our new debt ceiling.

Moreover, with the richest 1% owning more than 50% of the wealth by 2016 that leave only $10 trillion or $31,675 for each of us--not so hoity toity for 239 years of independence and founding as a nation or all the blood, sweat, and tears we put in every day of our lives.

In terms of our escalating debt, just this last year alone, social security spending went up to $944,143,000,000 or the equivalent of $6,345 for every American with a job. and this is projected to dramatically rise with the retirements of the baby boomers.

Projections are for social security to exhaust its funds by 2035, which could result in across the board 20% or more cuts in benefits of the already meager program where many seniors end up eating cat food.

Additionally, the retirement age already set to go to 67 by 2027 could be forced to go even higher, and social security would likely be curtailed or eliminated entirely above certain income levels.

Is this the financial security and brighter future we are leaving our children and grandchildren?

We can kick the can down the road, but the unsustainability of it all will eventually come back to haunt us. ;-)

(Source Photo: here with attribution to Pictures of Money)
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July 2, 2014

Money, It's Something

Just an observation today about there being so much poverty in the Nation's capital and around the country. 

Homeless, hungry, and sick people on the streets in one of the richest countries in the world. 


Yet, we have trillions going overseas to fight wars with seemingly little to no tangible benefits.


And so much ostensible waste with pork barrel politics, inefficiencies, and failed projects. 


A relative joked with me the other day saying, "It doesn't matter if you're rich or poor as long as you have money!"


Here we borrow money ($17.6 trillion ) and print money and the Federal Reserve buys debt ($4.1 trillion ) to keep interest rates low and the economy churning.  


People from real estate mogul, Donald Trump to Economist, Robert Wiedemer, who predicted the last recession, are warning of dire economic consequences because of these short-sighted policies. 


So do we have real money to continue to burn or is it smoke and mirrors and as Wiedemer says, "the medicine will become the poison"--what do you think?


(Source Photo: Andy Blumenthal)

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April 11, 2014

We're Not Deadbeats

Good book review in the Wall Street Journal on America's Fiscal Constitution by Bill White.

The main idea is that we have gone from a nation where fiscal discipline and paying off ones debts was a valued tradition to one now where excess rules and profligate borrowing runs through our veins. 

Both personal and national debt were viewed as a means of last resort and not something to be proud of, but rather as something done out of necessity to get through tough times. 

On a personal level, we only borrowed what we needed and we payed it back on time or even early.  Poverty was just one step away or even akin to servitude.  

Similarly, on a national level, public debt was viewed as a safety net to preserve the union (i.e. war), territorial integrity (e.g. Louisiana Purchase), or in a severe recession (i.e. to maintain the government's ability to spend in the short term). 

The best option was seen as "pay as you go," with the alternative, under limited circumstances, to "pay as soon as you can."

However, the value placed on self and national discipline and sufficiency was replaced with elements of entitlement, greed, and waste. 

The problem is once you have inequity in the system, then people feel the unfairness of it all, and give up caring about the system itself and just want to get what they see as their fair share. 

Some politicians cater to these feelings of relative deprivation and are no longer viewed positively for fiscal constraint and ensuring our economic security, but rather "politicians gain favor by spending money without having to raise unpopular taxes."

In essence, the government can give people more now, and they don't have to pay for it until future generations--hence the ability to buy citizen's political consent and even win elections by increasing the treasure chest even temporarily. 

No, this is not China raising the fortunes of the middle class to keep the Communist Party in power, but rather this is us in the U.S. of A racking up tens of trillions of dollars in debt to keep people happy now (forget the future generations, let them fend for themselves). 

Shake hands, kiss babies, and hand out dollar bills--give me, give me give me! 

What has happened to us fighting hard and driving into the future on our own feet--together in strength and not as a debtor nation getting handouts from anyone that will lend us. 

Soon, the Fed will be raising interest rates, and with a greater and greater national deficit to pay on, interest payments have the real potential to spiral out of control and leave our economy in shambles. 

Like a credit card with interest payments that eclipse the principle borrowed, soon you are in over your head and there is nowhere to go but Chapter 11. 

We're not an inherently debtor nation, and we sure don't want to be a deadbeat nation--isn't it better to have what we really have financially and be who we really are and value?   

Let's leave our children and grandchildren economic and national security and not a towering pile of shameless debt, from mom and dad with love.

(Source Photo: Andy Blumenthal)
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October 5, 2013

Debt Default--Now Or Later

So reopening the government, narrowing our deficit spending, and raising the national debt ceiling is coming together in planned negotiations this week. 

Despite all the talk, we continue to spend beyond our national means and basically we must raise the debt ceiling or else the game of borrow and spend is over. 

Almost like insatiable gamblers, we use up our money at the table, head to the pawn shop to sell our watch and car to replenish for the next game, and then borrow against our credit card to fuel our addiction to the game some more. 

Eventually though the house always wins and the borrower must pay up (or they get their legs broken or something nasty like that). 

So while the question posed by the pundits this month is whether the U.S. will default on its debt now, the real question is whether a default is just a matter of time anyway--as we continue to spend more than we generate in revenue as a country. 

Sure can we raise the debt limit again--hey, why not borrow more, if others are willing enough to lend to us (and for little to no interest too)?  

And can we through sequestration or more surgical spending cuts, decrease the rate of our deficit spending--however actually balancing our budget is not even on the table anymore, as booming entitlements for Social Security and Medicare are expected soon with the aging baby boomers to drastically increase our spending again. 

The hope that we will somehow, magically grow our way out is fanciful thinking--almost rising to delusions of national grandeur--that just don't mathematically add up (since we have a median GDP growth rate over the last 80 years of just over 3%). 

Perhaps, we don't care if we can't pay our debts, because we are the superpower and what is anybody going to do to us about it anyway?  

Or perhaps, we rely as a backstop on our ability to print more money and pay off old borrowed sums with worthless new money galore?

Maybe it's not a default if no one acknowledges it or we just get away with it...but somehow, someway, no one and no country can spend more than it generates in perpetuity.

If you believe in the endless virtual cycle of borrow and spend, then the mind control program is working just great, indeed. ;-)

(Source Photo: Andy Blumenthal)
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February 8, 2013

Going To An eLibrary


I've always loved libraries--the stacks of books and periodicals--all that information (almost like being a kid in a candy store)--and the quiet space to enjoy it. 

But in the digital age, where people are reading books and magazines on e-readers, news on smartphones, downloading videos with Netflix and watching shorts on YouTube--what is the new place for libraries?

Libraries will always provide a peaceful place for reading, thinking, and writing whether with hardcopy or digital media, but libraries need to meet peoples information needs, incorporate the latest technologies, and fit with the times. 

The Wall Street Journal  (7 February 2013) describes a new library in Texas that "holds no books"--it is all-digital--you "check out books by downloading them" to your own device or a borrowed one. 

While many people still like holding a physical books or paper to read--I know I do, especially when it involves anything more than browsing online--Generation Y is comfortable for the most part getting it all digitally--and then you can electronically highlight, annotate, and share as well. 

Some libraries are offering a mixture of paper and digital--actually "more than three-quarters of U.S. public libraries feature some digital books, and 39% offer e-readers for patrons to borrow."
One of the things holding back the all digital conversion are publishers who don't want to lose print sales, and so they won't offer all new titles electronically or they charge more for it than for paper copies. 

I envision that once we have 100% broadband penetration--where everyone in the country has Internet access--then we all can purchase or borrow the books, periodicals, music, and videos online from anywhere--in other words; libraries will become vastly virtual, instead of predominantly physical structures. 

With more information online than at any library in the world, information growing exponentially, and with online resources available 24x7 (versus set hours for a brick and mortar library), it would be hard for any physical library to keep pace in the digital age. 

Aside from physical libraries for traditional use, we need easy to use elibraries, where all information resources are available all the time, where students or those that can't pay can get it for free or at an appropriate discount--and where help is just a click away. 

Of course, many of us also don't mind a hybrid solution, like being able to go online and borrow or purchase a physical edition--maybe they can just drop ship it overnight or same day is even better. ;-)

(Source Photo: here with attribution to Ellen Forsyth)

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