Keys to The Kingdom

Ah, so good to be given the keys to the kingdom. 

Even if only for a day. 

What to do:

- 1st key - Heal the sick, feed the hungry, raise the downtrodden.

- 2nd key - World peace, for sure. 

- 3rd key - Revitalize our ailing planet and make it sustainable.

- 4th key - Unleash innovation and give everyone a decent living wage to care for themselves and their families. 

- 5th key (the Capstone) - Bring the Messiah and everyone behaves righteously and worships the one true G-d of all.

Uh, and I need one more key to balance the budget and pay off the National Debt. ;-)

(Source Photo: Andy Blumenthal)

Keys to The Kingdom

The Unbelievable Stupidity Of Raising Interest Rates

Interest rates have been near zero since the recession of 2008.

That supposedly to stimulate the economy. 

However, aside from a stock market bubble again, not sure we have a much stimulated economy.

We have a false low on the unemployment rate, while the the true percentage of the labor force working is the lowest in almost 40 years!

Moreover, manufacturing is down almost 40% from the 1979 peak with a loss of over 7.2M jobs. 

Commodities are at firesale prices as demand is sluggish and there is short-term oversupply. 

And innovation is facing a global slowdown. 

So people are out of work, we're not making things, demand is depressing prices, and even ideas are few and far between--not too rosy a picture, regardless of what some politicians may have you believe. 

Let's not forget that we have an over $18 trillion federal debt, and this is projected to grow ever greater as we borrow to fund social entitlements such as social security, medicare, etc. 

In this scenario, why would the Federal Reserve ever want to raise interest rates?

Well, if they don't raise rates, then they can't lower them later again when the economy really stalls out and goes into deep recession. 

Hence, this is seen as a tool for their financial toolkit--and if there are no tools with which to manipulate the economy, then there is no need for a (neutered) Federal Reserve. 

But think for a second what happens when the Fed raises rates, it's going to slow the economy even further than the chug chug chug economy that we are already dealing with. 

Maybe even more important, it will raise the amount of interest payments we must folk over on the trillions of dollars of debt we owe.  

Simply put, when we raise interest rates, we pay more interest on our already astronomically high national debt, and this pushes our national deficit up even higher as we borrow more to pay the interest on the previous debt. 

If you did this with your credit cards, you'd probably be looking at the equivalent of debtor's prison sooner or later. 

Rather than feed the Fed's toolbox with interest rate bumps and drops, why not keep rates low as long as they can stay low, reducing our interest payments, and curtailing our national deficit and debt. 

What about the stock bubble...that's a lesson investors will be learning about in their own good time--it's the stock market, stupid. ;-)

(Source Photo: Andy Blumenthal)

The Unbelievable Stupidity Of Raising Interest Rates

Self-Perpetuating Immigration For All The Wrong Reasons

So this is the prevailing misguided logic by some for more immigration. 

We need immigrants to "reduce the ratio of retirees to workers."

Why? 

Because the birth rate has fallen to below replenishment rates (roughly 2.1 births per women). 

And since our "trust funds" for social security, medicare, pensions, and the like have NOT been been kept in trust, BUT INSTEAD have been squandered on other things...

Therefore, according to this warped thinking we now need a wave of immigrants to come save us--have lots of babies and grow our economy--to pay for what we should be able to, but can't--because of gross mismanagement and corruption with the money that was taken out our payroll all our lives supposedly to care for us in our elder years. 

The wrong reasons for immigration are expressed by Charles Kenny in Bloomberg Businessweek.

- According to Kenny, "More immigration is both the cheapest and most effective response to the challenge of a shrinking, aging population," which he frets is "ominous for pension and health-care costs."

- Kenny's approach to immigrants is that they are not vital and talented human beings, but rather basically baby machines with higher birth rates for population replenishment, as he states, "Although immigrants rapidly adopt the fertility patterns of their new countries, they still tend to produce more children to begin with."

- And he says, because most come over as adults, we have the benefits of the workers "without the expense and delay of rearing...[them as] children."

- Oh, and by the way, Kenny says, "Some newly arrived workers help provide cheap child-care options."

Wow, how biased, cold, and condescending is that!

Not once does Kenny mention or advocate for immigration for any of these truly worthy reasons:

- Shelter from persecution 

- Political asylum

- Promote diversity

- Bring in needed skills, investment, and innovation 

- Rejoin families

And what is the result of bringing in immigrants to pay our way?

Well, we'll need to bring in yet another and another, wave after wave of immigration, because we can't balance of budget and spend rationally, responsibly, and with an eye toward the future--it's self-perpetuating immigration for the sake of deadbeatism. 

Sweet land of liberty is being thrown out for a bunch of economic opportunists who feel we need "immigrants to [come to] the rescue" rather than join together with us in being great in terms of compassion, humanitarianism, and mutual respect. 

(Source Photo: Andy Blumenthal)

Self-Perpetuating Immigration For All The Wrong Reasons

Your Bowling Help Desk At Your Service

This was the sign in the Eisenhower Executive Office Building Bowling Ally that I mentioned in a post yesterday.

[Note: I've removed the phone number so don't try calling.] 

Yeah, I've heard about a help desk for a lot of things, especially for Information Technology, but for bowling???

Thinking about calling a help desk for trouble with bowling [equipment], I couldn't help imaging how this may go and chuckling a little:

"Hello, this is the bowling help desk at your service--what is the nature of your bowling emergency?"

Or

"Press 1 if your bowling shoes are too tight.

Press 2 if you've dropped the bowling ball on your foot.

Press 3 if you've bowled 2 or more gutter balls in a row.

Press 4 if the bowling machine is in a frustratingly stuck position.

Press 5 if you've lost your bowling ball or need a replacement.

Press 6 if you need additional scoring sheets.

Press 7 if you're a lousey bowler and need bumpers to help your game. 

Press 8 if your fingers are caught in the ball and you can't get them out. 

Press 9 if you'd just rather be ice skating or going to the movies. 

Press the # key, if you need to speak to a bowling representative."

Lastly, I wonder if they open a help desk ticket for the bowling challenged and what their response time is. 

Yep, help is only a call away when you've got a bowling problem in the works. 

Now, if only they could fix the highly troubled DC Metro system--there should definitely be a robust help desk for that!  ;-)

(Source Photo: Andy Blumenthal)

Your Bowling Help Desk At Your Service

Seriously Big And Out Of Order

I took this photo in Washington, D.C., and I don't know about you, but I hate when things are out of order.

We count on everything to be in normal working condition, and for life in general to function with at least a modicum of structure, process, and according to basic laws of nature. 

But these days, the world is seriously off-kilter and here are just a few examples:

- Russia, post the Cold War Soviet Union, isn't supposed to do a blitkreig and just take over Crimea and fight an undeclared war in sovereign nation, Ukraine. Additionally, our vital economic partner, China, presumably wouldn't have near unfetterd access to our industrial and government secrets, including the personnel records of the entire Federal workforce. 

- The major world powers comprising the P5+1 normally wouldn't treat Iran deferentially and as a negotiating equal or even more than than that with near open negotiations and crucial concessions, especially when dealing with no less than the proliferation of nuclear weapons of mass destruction. 

- Terrorist organizations such as ISIS, Hezbollah, Hamas, Boko Haram, Al-Qaeda, and more wouldn't be taking over swathes of the Middle-East, Africa, and Asia, and we are not sure what our strategy even is or whether we have one yet. 

- Advanced industrialized nations wouldn't be polluting themselves and the rest of the world towards the environmental catastrophic brink all the while denying that our lifestyle is not sustainable and that global warming even exists. 

- Smart democratized nations wouldn't be living incessantly beyond their means and borrowing themselves into national debt oblivion--from Greece to Spain, Portugal, and Italy, and right here in the United States of America. 

- The Center for Disease Control doesn't handle deadly biological pathogens callously and negligently with the potential for a massive lethal outbreak, while admitting to a serious pattern of safety lapses.

- Medicine isn't just another "business and medical treatments for the sick shouldn't cost $250,000 a year for a regiment of one or two pills a day, medical professionals don't simply extend quantity of life without weighing it's quality, and those in hopeless cases with severe pain and suffering wouldn't be forced to go on "living."

- The richest 1% of the world can't truly hold more than 50% of the world's wealth, live in mega mansions and drive fleets of cars, yachts, and planes, while masses of people are malnourished, diseased, homeless or in substandard living conditions.

No life is not perfect and certainly, even those perfectionists among us wouldn't expect everything is be in 100% working order all the time--things break down, accidents and mistakes occur, and sh*t happens--but when life is getting shamelessly more out of order than in order than we need to be asking ourselves some serious and potentially life-altering questions, like what the heck is going on around here? ;-)

(Source Photo: Andy Blumenthal)

Seriously Big And Out Of Order

Time Runs Out - What Are We To Believe?

Time runs out, but we are still chasing highly elusive goals (just some examples): 

1) Iran - Time runs out on deadline for a nuke deal even after "the framework" was supposedly set three months ago. And as Iran's Supreme Leader and the Iranian Parliament chant death to America, can we really believe that Iran will ever truly give up their pusuit of nuclear weapons of mass destruction (and terrorism) to use on you know who?  

2) Greece - Time runs out on an extension of more Greek bailout funds, and they default on payment to the International Monetary Fund potentially leading to their exit from the Euro and the EU. With a Greek debt of $271 billion, can we really believe they will ever be able to repay this? 

3) Social Security and Medicare - Time is running out on the solvency of our own social entitlement system in the U.S.  For example, the Social Security Disability Trust Fund runs dry already next year in 2016, Medicare is exhausted by 2030 and Social Security by 2033. With just 16 and 19 years of funding left for these major programs that tens of millions depend on, can we really believe that magically we will dig our way out of this mega mess of a financial hole? 

4) Global Warming - Time is running out on cutting carbon emissions leading to global warming and catastrophic climate change. With global warming denial still in vogue and reluctance by the industrial nations to significantly cut back on emissions in time, can we really believe that catastrophic enviornment damage will be averted? 

5) War - Time is runing out as potential for eventual war looms on the horizon with China, says respected DoD Futurist, Peter Singer. With disputes in the South China Sea and with Taiwan, China bulking up on advanced weapons, and the U.S. pivoting to Asia, the fears of a serious confrontation are there. Similarly, with Russia and it's annexation of Crimea and ongoing fighting in eastern Ukraine, threats to it's Balkan neighbors, confrontations on the European borders, and an increasingly nuclear and militant Russia, the Cold War is heating up. The last world war ended 70 years ago, can we really believe that the peace will continue to prevail with powerful adversaries in turbulent and uncertain times? 

Yes, hopes and dreams are important, but real concrete action is too or time will simply run out and then what? ;-)

(Source Photo: Andy Blumenthal) 

Time Runs Out - What Are We To Believe?

The Back To The Future Car

OMG, so cool...the Back To The Future car.

It's the DeLorean sports car on display by Smithsonian Magazine in Washington, D.C.

I love the winged doors that go up, the cool muscle body, and of course being able to time travel. 

The past--I'd like to stroll through the Garden of Eden, witness the splitting of the Red Sea and the giving of Ten Commandments, see Samson bring down the pillars on the Philistines, meet King David and worship at the Holy temple, shake hands with Ben-Gurion, and talk with and hug my parents and grandparents again.

For the future...its got to include space travel to other worlds, the eradication of disease and hunger (and by the way the national debt too), and the coolest technology to do everything. ;-)

(Source Photo: Minna Blumenthal)

The Back To The Future Car

A Political Teddy Bear

Thought this was an awesome photograph.

Taken on the Washington, D.C. Mall...

You can see the Capitol of the United States in the background.

The gate is surrounding the construction being done.

On the fence is a Teddy Bear--representing so many of our national challenges--sort of just hanging there helpless.

This political bear looks like he's clutching for dear life, but unfortunately he is left hung out to dry as we just keep chugging away...but where is the real progress? 

- ISIS and radical Islam is still growing stronger.

- Iran continues building toward a nuclear WMD.

- China and Russia are "becoming [ever more] aggressive as they perceive U.S. pulling back."

- North Korea achieves capability for a "nuclear ICMB."

- Cyber insecurity is a "real and growing threat."

- There is a growing danger of a catastrophic EMP attack with a "staggering human cost."

- Immigration crisis remains in "limbo."

- Economic growth is "grinding to a halt."

- National deficit is "projected to skyrocket over next decade." 

- American economic competitiveness is in ongoing "slow decay."

- U.S. education "still lagging" significantly in science and mathematics. 

- Life expectancy in U.S. ranks 26th, "right behind Slovenia."

This doesn't mean that good things aren't continuing to happen especially with innovation despite all the gridlock...there is the Apple Watch (ok, the jury is still out on that one too).

Why don't we let the bear down gently please. ;-)

(Source Photo: Minna Blumenthal)

A Political Teddy Bear

Poli-trick-ians, No Way!

So periodically, I like to take a quick pulse of America.

So I find a way to ask someone(s) what they are seeing and experiencing, and what they think about what's going on in Washington, D.C.

So this time, I asked someone about whether they watched the State Of The Union this week. 

The answer?

No way!

Why not?

They said (as if they heard this little mnemonic from others before), "because, they are all 'POLI-TRICK-IANS!'"

I said, well that's cute, but what do you mean?

This is what they said (paraphrasing):

- They don't speak the truth.

- They just say what they think people want to hear. 

- It's all just fighting between the (political) parties. 

- It's not really about the people. 

- It's not about making a difference, anymore [just about being in and keeping power].

Wow, this was pretty powerful. 

I could sense the anger and frustration. 

Also, the disillusionment. 

Checking in on the ratings, this seemed to jive with CNN (and other news media) saying, "State of the Union was President's Lowest-Rated Yet."

According to Nielsen only 31.7 million people tuned in...that's out of a current U.S. population of 324 million!

On the positive side, the number of tweets was way up to 2.6 million during the hour-long address--how sweet those tweets.

Seriously though, we are here to serve the people...how do we get back their respect?

I suspect that the answer revolves around the following:

- We need to turn from fighting each other to fighting our real enemies like the threat from Islamist Terrorism and Weapons of Mass Destruction. 

- We need to break the gridlock and get something done (lot's of things done)!

- We need to stop the political cliches and talk from the heart to the heart. 

- We need to stop thinking about ourselves and focus on the people--all the people (not the middle-class versus the rich, not main street from wall street, not the color or race that you are or aren't)!

- We need to tackle the many big problems we are facing--the national debt, national defense (including cybersecurity), environmental sustainability, raising the level of housing, food, medical care, and education for all, and of course, everything technology and innovation!

We need to go from a perception of poli-trick-ians to genuine representatives and leaders of the people for the people. ;-)

(Source Photo: Andy Blumenthal)

Poli-trick-ians, No Way!

Superhero Socks

Thought these socks were pretty cool.

POW!
WHAM!
ZAAP!
KAPOW!
SPLAT!

We are living in an age with potential for great upheaval whether from terrorism and weapons of mass destruction, bigotry and social inequality, national debts and unpaid social entitlements, poverty and pandemics, global warming and environmentally unsustainable practices, and the clash of Western and Eastern civilizations. 

Thank G-d for advances in technology and innovation to help address these huge challenges of our time. 

However, whoever is portraying everything as all rosy or telling you to just be optimistic and all will be well--they're feeding you a bunch of you know what!

We need a superhero/Messiah leader to come help us save the day and these socks would be perfect for their arrival. ;-)

(Source Photo: Andy Blumenthal)

Superhero Socks

Mars On A Dime

So no one can seem to believe that India made it into orbit around Mars for just $74M.  

According to the Wall Street Journal that compares with $671M that it cost NASA (which arrived just 3 days earlier than India's) and the European Space Agency's mission that cost $386M in 2003,

But aside from the Indian's being able to achieve a Mars mission at a tenth the cost of what we did, BBC reported that they also did it $26M cheaper than even the cost of the science fiction movie Gravity with Sandra Bullock about the International Space Station. 

While we clearly go the extra mile and are able to do great things--why does it always cost us so much to get there?

Perhaps, you can say that we are somehow more diligent or careful in our work (i.e. putting a premium on safety) or that it's just the higher cost of labor in this country or that we are early innovators and incur the costs of research and development that others than leverage. 

However, even though we are considered a very wealthy nation, it is fair to ask whether we are managing our wealth with discretion and an eye to the future or do we just take it for granted and are wasteful with it?

With a $3.9 trillion federal government budget (note, this is a full 21% of the entire U.S. economy/GDP), we are talking about some serious money, and we should be getting the most for it.

Unfortunately, the gravy train extends from certain "Beltway Bandit" contractors--e.g. remember the $640 toilet seats, $7,600 coffee makers, and $436 hammers uncovered by the Project on Government Oversight--and apparently all the way to mission Mars. ;-)

(Source Photo: Andy Blumenthal)

Mars On A Dime

Big Bike, Little Bell

This photo that I took stuck in my mind for Independence Day tomorrow. 

We are a great nation of 50 states founded in freedom, ruled by democracy, and driven by human rights for everyone. 

Yet in many ways, we have been squandering our national strengths:

- Spending it forward (living as a nation in debt) and creating yet another bubble economy driven by low interest rates (hence another Dow record today of over 17000) with still the lowest workforce participation in over 36 years and 92 million Americans not working!

- Stretching our military muscle in over 10 years of hapless wars in Iraq and Afghanistan, and now we are war weary and in proverbial retreat across the Middle East, in Crimea and eastern Ukraine, and with Iran and North Korea).

- Partisan politics freezing our government with the Executive Branch saying they will go it alone on everything from immigration reform to fixing highways and Congress threatening to sue for various claims of abuse of power.

Like this Photo, this country is in danger of becoming a big bicycle with a lot of potential to move things forward, but with a very small bell barely audible with anything of significance to our citizens at home, let alone everyone else in the world. 

We have the ability to continue our path of greatness in building our country's economy, military, and social systems, as well as steering the world toward peace, prosperity, and freedom. However, to do this, we must be able to ring the bell of Independence loudly, with leadership, confidence, and a determination for genuine progress for a union greater than ever before. 

(Source Photo: Andy Blumenthal)

Big Bike, Little Bell

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)

Money, It's Something

Nation's Homeless Capital

I took this photo yesterday of a homeless person completey huddled under a makeshift blanket "shelter"and tucked into a corner on the freezing streets of Washington. D.C.  

The person is in front of Starbucks, and they seem to have been provided some hot coffee to help-- a nice thing by the coffee chain. 

It has been particularly freezing this last week and seeing the number of homeless people suffering is unbelievable. 

Just being out for a few minutes bundled up in layers, I was still cold, so I can hardly imagine what it is like to be out on the streets, living like this for prolonged, indefinite, periods of time. 

When you see others' suffering in such a pronounced way, it is hard to take life's often silly daily problems as seriously, and we shouldn't.

When I juxatopse this scene, multipled thousands or perhaps millions of times over across the nation, it is also hard to understand a nation such as ours with $17.2 trillion dollars in debt.

Where the heck did all that money go? 

(Source Photo: Andy Blumenthal)

Nation's Homeless Capital

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)

Debt Default--Now Or Later

Government Shutdown - On The Street

Day #3 of the Federal Government Shutdown.

I am reminded on the streets of D.C. that there are many others hurting and in need. 

Pictured here are some hardworking folks striking against "unfair labor" practices.

They're up early and are standing there ready, presumably willing, and able to work. 

At the bottom it says, "Employer refuses to bargain in good faith."

With news coming again this morning about continued failure in talks on the government budget (and debt ceiling not far behind), we are left wondering when good faith and compromise will bring 800,000 federal workers back to their jobs. 

All these people have bills to pay, mouths to feed, and jobs to perform.

I read this morning how the Federal workers are feeling like "pawns" and "marginalized" like never before.

Perhaps, we can get more done by helping people feel a level of control, valued, and with purpose?

The world is still a big and scary place with lots of dangerous actors and challenging problems.

Rather then political polarlization and indecision, we need to stand firm by a definite set of sacred national values (while compromising on the implementation details), project the strength to defend them both domestically and abroad, and stay fair, faithful, and unwaveringly united to perform our vital role in this world. 

To solve large global problems, we need to be able to show that we can manage our own house in order first. ;-)

(Source Photo: Andy Blumenthal)

Government Shutdown - On The Street

Government Shutdown - Starbucks

So today is Day #2 of the Federal Government Shutdown. 

This is a picture from the local Starbucks that is typically billowing at lunch time--as you can see it's basically a morgue. 

Unfortunately, hard-working Federal employees, contractors, and local business are feeling the impact!

Even from those that are still working, there is word of "survivor's guilt"--like with a plane crash or other calamity, when those who survive the catastrophe question why they were so fortunate when the others weren't so lucky and perished. 

With both the budget shutdown and the impending debt ceiling showdown--we are facing the perfect storm, with real negotiation and compromise yet to emerge.

With this all, our significant national problems aren't going away--to the contrary, Iran and North Korea are still global nuclear threats, Syria still has chemical weapons, the economy remains on shaky ground (in the paper today, the once high-flying pharmaceutical company Merck is planning to lay off 20%!), the national debt continues to spiral out of control (albeit at a "slower pace"), cybersecurity remains a major national security risk (although Cyber Command continues to stand up its new headquarters and firepower), and so much more. 

Bubble stocks rose again yesterday after an almost 20% one-year return. Not only that, but the safety of gold took a beating again after an almost 40% one-year decline (full disclosure, I am a recent investor in the latter). One has to wonder how long it will take for sanity to prevail once again. 

(Source Photo: Andy Blumenthal)  

Government Shutdown - Starbucks

Government Shutdown - Rush Hour

Today was Day #1 of the Federal Government Shutdown.

Pictured here is rush hour in Washington, D.C. 

In terms of raising revenue to pay down our national debt, solve challenging problems facing our nation, or increase our global competitiveness--I am not sure how this gets us there. 

With around 800,000 people sitting at home or in Starbucks waiting to be recalled to work, about the only good thing you can say about the furlough is that it was easy to get a seat on the Metro. 

Sad, but true. ;-)

(Source Photo: Andy Blumenthal)

Government Shutdown - Rush Hour

Is This The Way It's Supposed To Work?

As talk and warnings escalate about a potential government shutdown next week (not that long since the last time this happened a couple of years ago), one cannot help wonder is this the way government is supposed to work?

The partisanship and fighting has gotten so that either nothing significant gets done or get's done by just one party leaving the other fuming.

The fight over healthcare reform pushed through for better or for worse has come back to haunt the Hill. Aside from a lot of talk about exchanges, I haven't found many people that even really understand the changes or whether it actually benefits them or not. 

The continuing Fed stimulus that many anticipated was going to start tapering off, but hasn't, has left many concerned whether there is another huge economic bubble building and what will happen to stocks, housing, and jobs when the Fed finally does pull back. 

The Sequestration which was never supposed to actually take effect, but was to replaced with more surgical budget cuts, continues to leave the nation vulnerable in terms of potential budget shortfalls for areas of national priority (e.g. defense and so on) and still leaves a mounting national debt (albeit growing at a slower pace). 

The seesaw between the threat of military intervention and the potential for diplomatic solutions with Syria and Iran on no less than weapons of mass destruction have us asking whether these countries are serious, stalling, and really willing to give them all up or just buy time in their efforts to get over the finish line of proliferation, hiding, and burying the stockpiles.

Somehow we seem to be fighting each other more than we are tackling the issues. 

Are we really talking with each other, listening with intent to understand, and seeing what is at stake?

We are playing brinkmanship on critical issues of national security that may leave us holding the toilet paper and plunger as we swirl around the bowl ready for the royal flush. ;-)

(Source Photo: Andy Blumenthal)

Is This The Way It's Supposed To Work?

Economics, Pendulum Style

To combat the recession of 2007, the Federal Reserve initiated an aggressive policy of Quantitative Easing--purchasing federal debt en masse to flood demand for Treasuries and lower interest rates to near zero to stimulate the economy. 

As of June 2013 the Feds balance sheet has swelled to over $3.4 trillion in assets of treasury debt. What happens when the Treasury has to repay those trillions? 

Who is the Treasury going to borrow that money from and at what interest rate? 

Just like raising demand for Treasuries lowered interest rates, increasing the supply of Treasury debt to pay back the Federal Reserve will make interest rates go way up the other way. 

Rising interest rates makes borrowing more expensive--e.g. buying a car with an auto loan is more expensive, buying a home with a mortgage is more expensive--and inflation can skyrocket. 

But what is worse is that despite the recent slowing of the growth of the national debt, many economists calculate the total US debt at a whopping $70 trillion when you include the host of unfunded liabilities including social entitlements such as Social Security, Medicare, Medicaid, as well as government loan guarantees (mortgage, student loan, etc,), deposit insurance (i.e. FDIC(, and the money owed to the Federal Reserve. 

What is really sad about this is that the entire wealth of American families in this country is guess what--also $70 trillion--which means that we are essentially a bankrupt nation:

Family assets of $70 trillion - Family liabilities of $70 trillion = a big fat 0 in the kitty!

To pay back the $70 trillion, it is not realistic that we will simply "grow our way out" of this fiscal mess with a GDP growth rate over the last 20 years of a mere 2.6%.  

Also, we will likely not confiscate people's assets to pay off the debt, rather we will print money--lots of it--so that we end up paying back the trillions of past debt in much devalued future money. 

Head we win, tails you lose!

The problem is that devaluing the dollar will mean that American family savings will become worth less as well--with the risk, at the extreme, of wiping out mass amounts of savings altogether. 

Despite sequestration reducing the rate of our debt growth, the aging baby boomers with the resulting liabilities for their care will soon escalate the debt problem once again. 

David Walker, a former U.S. Comptroller has warned about our national debt problem as well as many prominent economists. 

Like a pendulum swinging from one extreme to the other, the spendthrift ways of the past will by necessity lead to penny-pinching in the future, and inflation rates of near zero since 2007 will lead to hyperinflation after 2014.  

It reminds me of the story of Joseph in the Bible, with the 7 lean years follow the 7 fat years (in Egypt that time)--this is not just providence, but common sense economics. 

Good times will come again when there is a return to the mean and the pendulum hovers near center, but the swings until then can be wide and scary.

Of course, like taking your medicine, the earlier we start to course-correct our nation's finances, the sooner we get healthy again. ;-)

(Source Photo: here with attribution to zzz zzz)

Economics, Pendulum Style