The US debt right now is 14.3 trillion, or about 98% of GDP. The proposed deal raises the debt limit to something like 17 trillion, or 117% of GDP, a figure we will reach by early 2013 even if the so-called “debt reduction” deal is passed.

We will default — either by refusing to pay our debts outright or inflating our debt away. Anyone who tells you otherwise is kidding themselves.

Federal debt / deficit: 14 475 billion / 1389 billion dollars

Total government debt:  17 407 billion dollars

Inflow / outflow (federal): 2196 billion / 3585 billion

Debt-to-GDP ratio: 97.9%

Money Supply / Inflation

Fed monetary base: 2684 billion dollars, M2 8986 billion

MIT inflation / govt. figs: 3.5% / 3.5%

Oil price per barrel / gas price at pump: $113.75 / $3.57

Currency Alternatives

Gold: $1514.40/oz. Down 3.08% for the month, up 16% for the year.

Silver: $35.53/oz. Down a few bucks over the month, up almost 100% for the year.

Price of bitcoins: $11.19. Down about 30% for the month, up about 20,000% for the year.

It is true that oil dependency is a vise-like grip of death, but it’s not the US that’s trapped by it. It’s Saudi Arabia. You see, Saudi Arabia has a GDP of about $15,000 per person. About $8,000 of that is oil revenues. All it takes is a switch to domestic or nearby energy sources of some kind, and the Saudi Arabian standard of living drops by more than 50%. If Saudi Arabia cuts of oil production, most of its wealth is gone overnight. Meanwhile, the US finds other suppliers, explores natural gas, buy more efficient cars, and sees perhaps a modest rise in cost of living.

Saudi Arabian oil makes up 55% of Saudi Arabia’s GDP. Saudi Arabian oil makes up about 0.3% of US GDP. Saudi Arabia doesn’t have the US by the throat. The US has Saudi Arabia by the throat.

Debt / Government Spending

Federal debt / deficit: 14 390 billion / 1366 billion dollars.

Total governmental debt (state, local, federal): 17 252 billion dollars.

Inflow/outflow (federal): 2188 billion in revenue / 3553 in spending. That means the US government is spending 162% of revenue.

Debt-to-GDP ratio: 97.8%.

Distance from the debt default ceiling: We’re above it and playing with accounting to keep it legal.

1-year-treasury yield: 0.22%. That’s below our inflation rate (see below) so that can’t last.
Money Supply / Inflation

Basic Money Supply Measures: Fed Monetary base 2430 billion, M2 9071 billion.

MIT inflation / Govt. figs: 3.6% / 1.7% over the past twelve months.

Price of oil per barrel / at pump: $99.91 / $3.87.

Currency Alternatives (Gold, Silver, BitCoin)

Price of Gold: $1511.55, down .4% for the month, up 25.6% for the year.

Price of Silver: $35.04, down 21.4% for the month, up 97.4% for the year.

Price of BitCoins: $6.10, up from about $1.70 a month ago.
Stock Market

Dow Jones Industrial Average: 12512, up 6 points over the last month.

Meanwhile, the army is trying to clean up the bodies. That costs a lot of money, and rebuilding all these cities will cost a lot of money. If things get real back, a crisis of confidence in the Japanese banking system could rapidly result in the vaporization of savings worth 27 months of labor for every Japanese man, woman, and child. Pensions for the elderly go.

Things are bad in Japan. May God be with them.

“Like the confusion in the eurozone triggered by Greece, there is a risk of collapse if we leave the increase of the public debt untouched and then lose the trust of the bond markets,” he said.

Living off other people’s savings doesn’t work long term.  Period.

For the last four decades, the United States has shown itself quite unable to pay its bills, and so we’ve borrowed shockingly large amounts of money.  Our debt has climbed to 89% of our GDP, but because of the historical strength of the US, people trust us enough that we’re only being charged about 3.3% per year on our debt.  So what, you ask?  We’re clearly better off than Greece.

Well, yes, for the moment.  The problem is that we borrow more and more each year, at this point borrowing almost 10% of our GDP per year.  That means our debt-to-GDP ratio will rise.  If present trends continue, we’ll owe 99% of our GDP in a year from now, 109% of our debt two years from now, and a shocking 119% percent of our GDP by 2013.  That’s a worse debt than held by Greece currently, and at some point confidence in our ability to repay must begin to erode.

Indeed, it’s eroding even now.  As I reported to you before, the confidence of the market has eroded to the point that Warren Buffet is considered a safer bet, and therefore pays a lower interest rate than, the US govt when borrowing. This is a ridiculous situation, and shows that the business world is increasingly awakening to the impossibility of repaying a national debt the size of ours. If the markets current fear of US debt continues to climb proportionally as our debt climbs to Greece’s levels, it’s very likely that our interest rate will rise. In fact, Greece’s interest rate now may be lower than what we’ll be paying three years from now, because in the case of Greece there’s at least possibility that the European Union will bail Greece out, while there’s no country big enough or willing enough to bail the US out.

But let’s suppose that our interest rate only climbs to 7.48% in the next three years. Currently, it’s at about 3.3%, so our speculative projection shows the interest rate more than doubling while the debt climbs by 30%, causing our annual debt payments to swell from 400 billion to about 1215 billion, or just over 57% of our current tax revenues.

Can we devote 57% of our tax revenues to treading water with the national debt and limp along of the remaining 43%. Since we’re currently spending 167% of our annual revenues, that would mean we’d need to cut out 74% of our current level of spending just to break even at that point.  And that’s just plain unrealistic to think our government can cut spending that drastically.  Instead, what’s more likely is that we’ll feel compelled to keep racking up debt until we suddenly can’t find any more lenders, at which point we go bankrupt.  And if these numbers are correct, that could happen as little as three years from now.

Ronald Reagan, who was so famous for being a model conservative, himself once famously said that the deficits were “big enough to take care of themselves.”

Now, the numbers tossed around were, of course, only a possibility, based on present trends.  There’s all sorts of different ways it could play out.  But one thing is clear:  if we allow present trends of unlimited spending to continue–if we continue our 40-year old habit of letting deficits take care of themselves–we are headed for a national government debt meltdown the outcome of which is rather difficult to predict.

It’s about time we wake up about our spending habits, before the market awakens us to the unpleasant truth at a time we’re unprepared for.

Hurray, the United States government just declared the Church is officially off the hook in regards to the care of the sick and infirm. Now all we need is some social action to clear out that pesky widows and orphans problem and we can get back to the real job of speculative theology and anathamatizing each other.

Of course, he was speaking in jest but I will say this plainly–regardless of what effect the bill has on medical bills, the Church worldwide needs to know that we are most definitely not off the hook on the matter of helping the poor.  It is and always has been a mission of the church and the growth of the welfare state gives us no excuse to turn away from those in need.

Many extreme things are being said on both sides of the aisle, so I thought I would try to, if not persuade any of you, at least give you a glimpse of what’s happening in the minds of folks like myself regarding this bill.  Many on the right have hurled about accusations of fascism, Nazism, and communism against the supporters of this bill.  Naturally, those supporters who support the bill out of a love for the poor and hurting see such accusations as ridiculous.  On the other hand, there are those on the left who are shocked that the Republicans and libertarians of this country are almost unanimously against this bill.  Do they hate the poor?  Do they deliberately wish to prolong suffering?

And so, as someone against this bill, I will explain what I think.  The goal is not so much to persuade any of you but to show that opposition to this bill is not simply grounded in hatred for the poor and opposition to the principles of Christianity.  Because there are a number of points I want to bring up, I’ll only address each one briefly.  If you want more information on any of them, feel free to ask.  So here are some of my objections to the bill:

1)  Abortion.  As someone who believes that human life exists in the womb, I am against abortion.  Let’s leave aside for a moment the difficult problem of pregnancies which threaten to an unusual extent the life of the mother, which I won’t argue one way or the other at present.  As opposed as I am to even the toleration of elective abortion, it is even worse in my mind if the federal government were to pass a health bill granting my forcibly taken tax dollars to pay for elective abortions.  There has been debate over whether this bill includes such funding, but what is most telling for me is that the bill was forced through without Stupak’s amendment to forbid abortion coverage.  Instead, the bill was sent through with the promise of an “executive order” by President Obama to stop money from being used on abortions.  However, the President does not have the power to use an executive order to stop funding, so the order is not worth the paper it’s printed on.  See here and here.

2)  Personal choice.  There are, in my mind, two general tendencies any government can follow.  It can provide a minimum framework of law and order, and then allow individials to make choices about their own personal lives.  Or it can set about with the goal of planning out people’s lives for them, with the government given the power to make people make choices that the government thinks is right.  This bill, which severely limits the choice of the individual as to whether to get insurance and what kind to get, is a clearly coercive action by a government which thinks it can decide what is best for people–an action which is contrary to the principle of liberty which is the foundation for all prosperous societies.

3)  Socialism.  This bill is socialist in that it gives the central government the power to the healthcare industry–to regulate prices, what sort of health products are sold, who gets healthcare, how much healthcare they get, what treatments they get, etc.  It forces doctors and insurance companies to form policies not by competing to provide the best value to paying customers, but instead to try to keep up with a myriad of regulations imposed by the existing overgrown bureaucracy and 159 new agencies created by this bill.  To my mind it is about as sensible to say that this will result in better healthcare as it would be to say that North Korea’s Kim Jung Il has hatched a communist utopia in his nation.

4) Spending.  The United States government spending is currently equal to just under 50% of the nation’s total domestic product.  Amazingly, this massive spending by government, including incredible amounts of wealth redistribution, has not removed poverty from the U.S.  And yet rather than say that government spending is creating problems, our nation repeatedly resorts to simply spending and borrowing more each year to try even larger projects.  This new healthcare bill already requires a tax hike of 400 billion over the next decade to help pay for it, and that’s just the beginning, even according to our federal government’s ridiculously optimistic estimates.

5)  The national debt.  This point is of course closely related to the previous one.  We have a national debt greater than $12,600,000,000,000.00, (12.6 trillion dollars), we are borrowing about $1.5 trillion ($1,500,000,000,000.00) annually at our present rate of spending, and we spend 18.2% of our national income just keeping up with our interest payments.  Our interest payments will grab more and more of our federal revenues as we continue to increase our debt and as interest rates on our debt go up as the world begins to distrust our ability to pay back money.  If you doubt that the world would mistrust our ability to pay the debt, know that it is no coincidence that on the same day our already-broke government passed this massive socialist bill, it was announced that the market now finds more security in loaning to an individual (Warren Buffet) than to the U.S. Federal Government, and that we are in the process of losing our stellar national credit score.

So there it is, my friends.  Whether you agree with me or not, I hope I’ve made clear that the reason me and others like me oppose the stimilus bill is because of our concern for our nation’s stability and well-being, and not because we want the poor to suffer.

It’s a review of something that happened over 50 years ago, but it’s vitally relevant to us today, especially in light of what is going on with U.S. spending right now.  The basic issue has to do with the question of whether the U.S. needs government spending to keep the economy out of trouble.

This is especially relevant because right now our government is spending $5 for every $3 we take in.  It would appear logically that we need to immediately cut our spending to $3 for every $3 we take in, so we can at least quit adding to the debt.  Then we’d need even further cuts to allow us to pay down some of the debt.

But politicians are worried that cutting government spending in a time of hardship will send the economy into a tailspin, because there is a school of thought which teaches that government spending causes economic prosperity, while reducing spending causes economic hardship.  And there’s all sorts of theoretical numbers and letters and terms that can support this view, that a war where massive amounts of resources go into killing people enriches us all.

But it looks to me like history teaches the opposite:  government spending increases take away money from people, while government spending cuts leave people with more money, stimulating the economy.

Earlier I talked about the need to cut government spending by at least 40%.  Rather than going to theories for what effect this will produce, I suggest we take a look at U.S. history, where there is one notable example of such a spending cut.  The following is a year-by-year chronicle of what happened.

In 1945, the US government spent $118 B (billion), and the country’s total income was $223 billion.

In 1946, the US government reduced its spending 32%, to $80 B, and the country’s total income remained almost entirely untouched dropping just $1 B, to $222 B.

In 1947, the US government continued reducing its spending, this time another 28%, to $58 B, less than half of what was being spent two years earlier.  And far from collapsing without governmental intervention, the country’s income grew 10%, to 244 B.

In 1948, the U.S. continued cutting spending, now down to $55 B.  And the economy grew again, by 10%, to $ 269 B.

Conclusion:  if history is any indicator, it appears that massive government spending cuts are not only healthy for government finances, but also provide a massive stimulus to the economy.  So I would propose that rather than talking about possible spending caps in the future, we institute significant spending cuts now if what we want is economic recovery.

A more detailed proposal along these lines is by Richard Ebeling, and is entitled, “The Address Obama should have given.”

(Data source for this post:  here)