Q. Why are our president and his Democrat allies not interested in cutting spending and fixing our federal debt problem?
A. They have already solved the debt problem. And most folks should not like their solution.
The Federal Reserve and Ben Bernanke are printing money to buy Treasuries and mortgage backed securities to give Obama and company a temporary exemption from the laws of economics. Democrats can spend as they please and Bernanke will print all of the money needed to do it. This debasing of the currency is called monetization and if it continues the wealth of the nation and the middle class will be destroyed by inflation.
Want redistribution? Wanted or not, it is happening now.
Worried about a federal default on its debt? They are defaulting now.
In December the Fed expanded a fourth round of quantitative easing which began in September. The Fed policy is to each month print $85 billion to buy US debt obligations that no one else will buy. This keeps interest rates low and politically acceptable and it assures that all the debt which the US needs to sell will be bought. The Federal Reserve has been called the buyer of last resort, and now it really is.
This is different than earlier policy because it is open ended and the announced policy will continue until unemployment gets to 6.5 percent or inflation reaches 2.5 percent. ObamaNomics will never get us to the former and we may already have reached the latter, but the Fed will keep printing money anyway. And of course, the unelected and politically “independent” Fed can change its policy whenever it wishes.
This means we no longer really have a debt problem. Obama and Bernanke are monetizing the debt. It is being erased at the rate of $85 billion per month, or $1.020 trillion per year. If this policy continues, our progeny will not have a debt problem.
In the meantime we are now being taxed at a rate of $85 billion per month, or $1.020 trillion per year.
To me it is inexplicable why GOP are not railing about this in public and not doing something to stop it.
You should no longer think of deficit spending as a debt problem. Deficit spending is now a tax.
Every member of Congress that votes for deficit spending is voting to tax. And every member of Congress that votes to increase spending is voting to increase taxes.
If GOP cared, they would not have voted this month to appropriate $60 billion for Hurricane Sandy relief without also making spending offsets elsewhere in the budget. GOP are now nothing more than codependent spendaholics.
There really was no fiscal cliff. It’s a ski jump. We are on it and moving forward. The best time to stop is now. Here is a reference which suggests what might happen otherwise.
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