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Really Expensive WheelbarrowsBy JGillman, Section News
Debt.
Think not? Its happened before. If it weren't for modernization and efficiency hiding the termites which are eroding our financial base, the "come to Jesus moment" would have happened already. Farming efficiency has kept us fed (and it has also been subsidized), and mechanical improvements have allowed more product to be built with less labor cost. Energy as well has played into it, as it has been cheap and plentiful. These things would under ideal conditions, make us ALL wealthy in consumables and lifestyle, yet because of the inflationary effect of increasing debt and fewer actual PRODUCERS of wealth they remain subdued as merely a balancing agent. The neutralization of poor fiscal policy cannot go on forever though. Adding to this, the absence of energy policy that would help this country remain a wealth producer. For my current argument, there are two types of debt; 1. Stated, and 2. Liability. Michigan for example, cannot spend more than it takes in. Its the law. It cannot borrow money that is not immediately payable through the budget cycle. If it did, then Michiganders would be stuck with interest payments, yada. There are tricks used to get around this, but unlike the Fed it cannot hold a negative balance year after year. More Below ~
The dirty secret however, is that Michigan "owes" (roughly) $60 Billion dollars. The debt however comes in the form of pension liabilities (about $50 billion of this) , committed infrastructure replacements ($6 billion), and some miscellaneous ongoing contracts for contracted services to bring up the remainder. I may have missed a thing or two, but I am in the right neighborhood.
And like Michigan, the United States government has similar, yet off the book obligations that cannot be ignored. Promises to its own citizens, treaties, and well intentioned plans to save us from ourselves and the impending failures we will be if allowed to happen. The total liabilities (funded and unfunded promises) of the US government are (again roughly) $120 trillion. Total Liabilities: Each individual's share of total government liabilities is $364,000. Each household owes $800,000. A family of four, $1,456,000. This is a pretty tough situation with little hope any of us (especially the poor) can pay this as it is already. The country may be able to grow its way out of this, but time is running short on that particular option. Investors looking to create wealth in this country have been looking at the propensity of our congress to without fail, kick the problem into the next generation. Its hard to plan for hyperinflation, so movement of dollars remains stagnant. The ongoing shift forward has been into a headwind however, and the "next generation" I refer to might mean that of a common house fly. The debt must be dealt with. Its growth must be stopped cold or we will not be able to get in front of it any longer.
This is a problem. A problem that will likely end up with the printing of more currency. Ultimately devaluing the currency with a plan to pay old obligations, is likely the only way out some future leadership will see. Even if increasing the debt any further, means we will have to have bigger wheelbarrows to buy a loaf of bread. And THEN the question is if the poor can afford the wheelbarrows.
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Really Expensive Wheelbarrows | 2 comments (2 topical, 0 hidden)
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