Saturday, January 19, 2008

Our Countries Finances Are In Deep Kimche

In regards to my writings I have begun to receive responses from some that I am becoming quite a Constitutional scholar, and even the ultimate authority on Constitutional issues. While I appreciate the comments, I feel I am far from an expert on these issues. I do however try to do my best to research the information needed to make my articles as informative as possible. However in this instance I am wading in without the protection of a drop of knowledge. I can unequivocally state that I am not an economist. The comments I am about to make are only my own and not any proven theories which are backed up by a PhD from some fancy university. I only know that in my 18 years of being married I have managed to pay off my house in its entirety, I have never bounced a check, I have no outstanding credit, and both my wife’s car and my truck are paid in full. The only bills I have are the routine utilities that everyone has. So although I may not be an economist, I have learned to live within my means and put my money to good use.

Now on the other hand, those whom we have elected to sit in office, to manage our cities, our states and our national governments have done a miserable job of managing our money, and it is our money taken from us in the form of taxes. People seem to forget that, they think it is just the governments money, and it isn’t. Did they go out and work their butts off to earn it? Did they sweat, bleed and come home with aching backs and blistered hands for it? I don’t think so. So the next time you hear your elected official talk about how much they need to raise taxes, or spend tax dollars on some idiotic project, remember one thing, it is your money they are talking about spending!

I consider Thomas Jefferson the ultimate economist. In all the writings of all the presidents, I have found that he most clearly understood the principles upon which I myself live my live, frugality and the elimination, or at least the minimalization of debt.

Jefferson once said, "I own it to be my opinion, that good will arise from the destruction of our credit. I see nothing else which can restrain our disposition to luxury, and to the change of those manners which alone can preserve republican government. As it is impossible to prevent credit, the best way would be to cure its ill effects by giving an instantaneous recovery to the creditor. This would be reducing purchases on credit to purchases for ready money. A man would then see a prison painted on everything he wished, but had not ready money to pay for."

Jefferson also said that “We must not let our rulers load us with perpetual debt.” Yet that is exactly what they have done. Article 1, Section 8 of the Constitution gives Congress the power to lay and collect taxes to pay debts and provide for the common defense and general welfare of the United States. It also says that they can borrow money on the credit of the United States as well.

Our government today, and for more years than I can recall, has not operated in accordance with the philosophy of Jefferson by eliminating credit and loading us with perpetual debt. At this very moment this country is saddled with a $9 trillion national debt, that is a 9 with twelve zeroes after it! The War in Iraq alone has run up a debt of $487 billion.

If you had a credit card and went wild buying everything you wanted with it until you found yourself buried in credit, you would have only three options. First you could declare bankruptcy. Second, you could ask your boss for a raise to help pay off your debts. Finally you could stop buying on credit and begin working towards paying off that bill. Those are your only options.

In the case of our government, they could declare bankruptcy, but that is not going to happen if they want to retain their credit rating so that they can continue to borrow money to operate. They could ask their employers, us, for a raise, which would mean much higher taxes to pay off this debt. That won’t work unless they stop the spending at insane levels that got us into this mess to begin with.

It is fast approaching tax time again so it is timely that I make you aware of something. Every cent you pay in taxes does not go towards the funding of the day to day operation of your federal government. It only goes towards paying the interest on the money they have already borrowed to run, and even then it is not enough to make the interest payments, so they have to borrow more to make up the difference plus finance their daily operations. If the federal government were a business the CEO would have been fired by the board of directors and the stockholders would have divested themselves of all their holdings in that company a long time ago.

Unfortunately I am not done. There are an estimated 75 million baby boomers in this country that are preparing to retire. Twenty-nine percent of the United States, over one in four Americans are baby boomers. They will begin to collect Social Security benefits, or will they?

While there are currently no plans to reduce or eliminate Social Security payments to those entitled them, the Social Security Administration itself has stated that if you are 35 years of age right now that, “Unless changes are made, at age 69 in 2040 your scheduled benefits could be reduced by 26 percent and could continue to be reduced every year thereafter from presently scheduled levels.” I would recommend that everyone read the Q and A page the Social Security Administration has put up at

So if you are just entering the workforce, or have been there only a short while, you are most likely paying into a program that will not be there when you retire.

On June 29, 2004 the Commissioner of the Social Security Administration signed an agreement with the Director General of the Mexican Social Security Institute to come to a totalization agreement. While it has not been passed, the basic idea is that workers from another country would not be required to pay into both countries Social Security programs, and that they could apply their quarters of coverage to the required 40 hours of coverage and be eligible to receive U.S. Social Security benefits.

According to the Social Security Administration, “Whether or not a totalization agreement exists, unauthorized immigrants may receive credit toward Social Security for their work, but they cannot collect benefits while living in the United States until they obtain legal resident or U.S. citizen status.”
Yet the minute these workers are naturalized, or granted amnesty, they would be eligible to receive Social Security benefits. These benefits come at a five year cost to the U.S. Social Security system of roughly $525 million due to additional benefits and reduced Social Security tax contributions from foreign companies and their employers.

It is not just Social Security that should be of concern to the people of this country. With the current political campaign for president in full swing, we have the Republicans who all, except for Ron Paul, favor a continuance of the War in Iraq that is open sewer upon which our government is borrowing us into insolvency to fund. We also have the Democrats with their talk of Universal Health Care. This would create another huge bureaucracy on the scale of Social Security or Homeland Security, (notice the term security in both those organizations), which would mean higher taxes and more government involvement in our health care decisions. Anyone who thinks this is such a great idea needs to watch this video on You Tube,

However, it is not just the federal government that is in bad shape, the civilian sector is in bad shape as well. On January 18, 2008, yesterday, the White House Office of the Press Secretary issued a news release saying that “President Bush Asks Congress To Work With Him To Enact An Economic Growth Package That Bolsters Business Investment And Consumer Spending”

As I stated at the very beginning of this article, I am not an economist, but let me explain how I see things. In a basic economy you have people who produce things and people who purchase things. For a company to make a profit they have to be able to sell items at a high enough price to offset the cost of manufacturing it. If they price it too high people won’t buy it and they lose money. If they price it too low they won’t make a profit.

At the same time you have the consumer. Often the consumer also works in the places where products are produced. For them to be able to buy these goods they have to earn a wage that allows them to first, pay their routine bills, then secondly gives them enough extra money to buy non essential items. If their wages stagnate, or worse go down, they will not be able to purchase those items.

Enter into the picture plastic, or credit, that magical invention that allows you to get those things you desire and pay for them later. Now you can get that wide screen TV, that SUV, or that vacation in the Bahamas. However credit, at least for us civilians, has a limit. We must pay it eventually or pay the consequences of repossession and a loss of our credit rating.

Also, credit depends upon your having a job that allows you to make those monthly credit card or loan payments. What happens if you lose your job? Remember in our economy we have the producers and the consumers. What happens when the producers decide that the cost of paying the wages of consumers to produce their goods has gone too high? What if the producers decide to move their operations to another locale where they can pay lower wages or they decide to import laborers who will work for substantially lower wages and benefits?

Like I said, I am no economist, but it would seem to me that this is a bad idea. If you take away the jobs from the people who buy your goods, how are they going to continue to do so? Wouldn’t that eventually hurt your business because people would stop buying those goods?

While it might seem that way, it obviously hasn’t been the case, at least not to the extent to which you would think. Americans are a greedy lot and we have to have our niceties, which leads us to this housing crisis our country is facing.

The American Dream was a house with a white picket fence with 2-1/2 kids blah, blah, blah. However the ability to pay for that dream seemed to lose its importance and people overextended themselves to own that dream. With the greed comes those who would prey upon it as well. Unscrupulous lenders and financial institutions were lying in wait to take advantage of those who just could not wait to own a home. This created an artificial boom in the housing market which is now bursting.

We have friends who told us at the beginning of the housing boom that we should sell our house and move up to a nicer home. Why should I? First off why should I take upon myself the burden of another mortgage when I don’t need to. Secondly I have seen these new, ‘nicer’ homes. They are prefabricated structures with no personality of their own. You can’t tell one home from another as they all look the same. They all have small yards that you could barely plant two tomato plants in. I have a back yard large enough where we had a 45’ x 25’ vegetable garden and could easily have double it in size. Why should I give that up for a tract house?

One of our friends did. She upgraded to a larger house, not once, but twice. Each time their mortgage payment went up and now they are in trouble as they are having difficulty making the payments. Stupid, absolutely stupid!

So now our economy is in deep trouble. The housing market is having a trickle down effect upon everything. Add to that the rising cost of gas which in turn raises the price of everything else, we are in troubled waters. On top of that there is the unmentioned inflationary tax, unmentioned except by Ron Paul, that is caused by our governments continued printing of currency which devalues the dollar. This country is in serious trouble financially and nobody seems to be aware of the seriousness of it.

Yet me, a lowly high school student with no college education seem to understand. I realize that the proverbial crap is going to hit the fan soon, and then all hell is going to break loose. I have read reports from some economists, who do have an education, who are warning of a financial catastrophe of almost Biblical proportions.

Aside from bringing about widespread financial ruin to most families who are extremely unprepared for what is coming, it will most likely give the president the authorization to utilize all those laws that have been passed to declare martial law, declare the Constitution null and void, and put an end to this country as we know it.

This country has one last desperate chance to save us from this impending disaster, and that is to ensure that Ron Paul makes it into the White House. Anything other than a Ron Paul presidency would mean that we have a president who does not understand the seriousness of the mess we are in and would also mean that the end of the United States of America, and all those American Dreams, is all but a done deal.

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