Running On Empty


Posted: 03/10/2016 3:08 pm
image

Running On Empty

 

With so many promises to pay people from a Treasury that’s so deeply in debt, why do they keep spending money?

The simple, easy answer to the question of why spending continues is that no one has figured out how to stop them.

 The American people have become addicted to free money.  It isn’t just free lunch anymore, it’s free everything.  And the Federal Reserve has led the way with its printing of $4 Trillion dollars they called “Quantitative Easing.”  That’s Washington Newspeak for “Free Money.”

(Continued from front page)

That “funny money” has no real, intrinsic value.  But, in the case of the first four rounds of “QE,” the Fed sent the money through their distribution sources who then passed it on to the money center banks.  Those characters loaned the “Free Money” to their best customers, many of whom used it as the 50% cash necessary to buy stocks on margin.  Many publicly traded companies used the “free money” to buy back their stocks, increasing the value of individual stocks by reducing the number of outstanding shares, and gaining the executives and board members huge bonuses for having created so much “value.”

Magically, the prices of stocks rose to consume the money available, and, Voila’,  we have a $17,500 Dow for no good economic reason.  The stock market now resembles a helium balloon the day after the big party.  When it finally loses its lift, everyone will realize it never had any reason to be so high in the first place, and we will see an adjustment that may be very painful.

This “free money” program has created the environment in which politicians actually believed there was a free lunch, breakfast, dinner and snacks.  This same atmosphere has led college students to accept federal guarantees on student loans that are now exceeding $1.2 Trillion.  

Approximately 40% of those guaranteed loans are in default because students can’t find jobs.  The reason they can’t find jobs is that 25 or 30 million American jobs have been sent overseas.  (See the list of who has taken those jobs from America under the tab marked “Trade Deficit” on the Independent Voters.com home page).

In this circle of debt and extraordinary economic ignorance, we have now returned to the Budget Deficit.  (see the tab “Budget Deficit” on our home page).  As students default, the U.S. Treasury must borrow the funds to reimburse the banks and private lenders that loaned the money with the federal guarantee.

In the 2014-15 Federal Budget, the deficit was almost $500 Billion.  That’s how much more the Federal Government spent than it received in income.  In November of 2015, the Treasury borrowed another $600 Billion to cover the new fiscal year shortfall, and that has now been added to our total National Debt.  (Please see the National Debt” totals at the top of our home page).

The demands for federal spending never stop.  Everyone has a pet project.  Everyone thinks the party will never end.  That’s why we are Running On Empty with no end in sight.

More:

No comments yet