The violent usurpers you call the federal congress have decided to reduce the amount of resources they steal from the American public by a paltry 111 billion dollars next year. The 2011 annual budget for the United States is 3.82 trillion in expenditures. The annual amount of money stolen from the public through taxes is 2.17 trillion. This leaves a budget deficit of 1.65 trillion. 111 billion amounts to around a 3% cut in spending.
KC InfoZine reports:
H.R. 2560, the Cut, Cap and Balance Act would cut federal spending by $111 billion by next year, cap spending at 19.9 percent of gross domestic product by 2021 and require a balanced budget amendment. Spending has been below that mark, but recently has been above 20 percent of GDP.
The House debated the bill most of the day and voted after 8 p.m. Tuesday, passing it on a vote of 234 to 190.
So in other words, congress feels that with a budget deficit of around 1.5 trillion, a spending cut of 111 billion is good enough. Of course, the only thing that matters is if our creditors think such cuts are “enough” to keep us solvent. For some reason I highly doubt this is the case. I also highly doubt that when 2012 finally rolls around that they will actually manage to cut spending by the 111 billion promised.
They can’t do it. Asking congress to cut spending is like asking a drunk crack addict to stop drinking and smoking crack. The odds of winning the lotto are better.
Of course, talking about deficit reductions downplays the total spending that is going on. Politicians like to talk about deficits as if having no deficit means the country is perfectly fine. Consider that if a criminal government confiscates 40% of the public’s income and then spends all of that money, the country would have a budget deficit of zero, but their economy would still be a complete basket case. This is precisely the situation we have today.
The government must stop spending in faaaaaaaaaaar greater amounts than 111 billion in order for an economic recovery to take place. If the congress does not cut spending by trillions, the tax revenues they keep trying to collect will decline over time, thereby making the deficits even wider in the future.
Resources must be freed up so that the private sector can put them to productive use. When the government builds an aircraft carrier, all the steel that it used to produce that carrier is taken off the market. This means the steel that remains for the private sector to use will cost far more because there will be less of it available.
Government spending is just as economically destructive as taxation is. Spending removes real resources from the private sector economy and taxation removes the monetary capital that represents those resources. Only when resources are left in private hands, and put to use making things that people want to voluntarily purchase on their own, can society be made wealthier.
Zero Hedge recently ran an article entitled The Head Of The World’s Biggest Hedge Fund Sees “Economic Collapse” Due To Money Printing By Early 2013, in which Bridgewater manager Ray Dalio openly states:
Dalio believes that future inevitable money printing will “lead to a collapse in currencies and bond markets.” Dalio is even kind enough to give a time frame. “I think late 2012 or early 2013 is going to be another very difficult period.“
One to two years out.
I have been saying that a collapse of the currency would happen around the 2012 time frame for several years now. I completely agree with Dalio’s assessment of the situation. The paltry cuts by congress are no where near enough to stop our creditors from running.
China has already dumped 97% of its US Treasury Bills. This dumping of US bonds by foreign governments will accelerate as they come to realize that the criminal US congress has no intentions of actually paying its debt back with legitimate money. China’s total holdings of US debt have not changed from their December 2010 levels. I am certain that China will not take on more US debt at the levels necessary for the US to continue spending at current levels.
Looking across the board we can see that the total amount of Treasury Bills held by foreign governments has declined from 466 billion in May of 2010 to 422 billion in May of 2011. Total bond holdings by foreign governments have gone from 2224 billion to 2817 billion during the same period, an increase of only 593 billion, which is a trillion short of covering the deficit shortfall.
If all of the US’s creditors were to stop buying the US’s debt, the Federal Reserve would be forced to print all of the money necessary to keep the government operating at its current levels of spending. This would lead to nearly instantaneous destruction of the dollar’s value.
It is worth noting that the monetary base has jumped by nearly 800 billion during the same period of time. Clearly we can see the Fed is already engaged in mass money printing to keep the criminal government operating. People need to realize that at this point an increase in the debt ceiling no longer represents an increase in the amount of money we owe other nations, but the amount of money we will authorize the Federal Reserve to print.
Buy Bitcoins, gold, silver, guns, ammunition, bulk food, water purifiers, medical gear, etc.. etc.. etc.. and prepare for the final implosion of the greatest ponzi scheme ever created in the history of mankind.
The US dollar.