Thursday, May 6, 2010

Deficits are illeagal, immoral, and unethical

I read this question (the actual question is the last sentence):

"History is unfolding right in front of our eyes, in excruciating slow motion. Economic and financial records are being broken every day, it seems. Consumer prices plummeting. An unprecedented housing market collapse. Huge companies going out of business overnight. Dizzying price movements in the stock markets. The old saying "Who'da thunk it"

In case the previous question was not hypothetical:
Two answers are Ron Paul - as far back as 2002, and Peter Schiff - as far back as 2006 (find the videos on YouTube). Paul was laughed off the Presidential debate stages and Peter Schiff was laughed off the Financial shows (before the tanking economy).
I appreciate this person's discussion of the causes of economic calamity and the result of money printing (not shown), but this is not an 'iced tea on the porch' conversation; in the words of Joe, "This is a big f*$^@ing deal"! Think of it like this. For all intents and purposes, this started in earnest with Reagan, enabled by Nixon:
* Nixon removed the last vestiges of the gold standard from our currency ("We are all Keynesians now"). He installed the air pump on the giant jumping balloon for the kids to play in, but he did not turn it on.
* Reagan turned on the air pump by borrowing gobs of money (by '80s standards)
* Bush Sr. cranked up the voltage
* Clinton left it alone (He had a negative deficit, but not from spending cuts. That was the boom)
* Bush Jr. cranked up the air some more. That helped for years, but then we started running out of source air, so he added another pump then said Bye Bye
* Obama said Hi Hi and added another pump, two capacitors and a turbo-charger. The atmospheric pressure on the outside of the tent/balloon went to 0.1; which is not a vaccuum. So if matter exists in the source, it can be extracted but it takes a lot of pumping to extract that last bit of air out of the fed.

So now the balloon is aired up, even if precariously so, and the economy is functional for most. But what happens when the tent starts to deflate again and there aren't enough pumps to keep it pumped up? That's when the inflation will really kick in because their solution is to print money (pump air). A teaspoon of sugar in a cup of coffee makes the coffee taste sweet. A teaspoon of sugar in Lake Superior makes an empty teaspoon. Dilution will happen for dollars, and when that happens, the tent is coming down on the heads of the cute little children and they won't be nuthin nobody cin do bout it. (What to do about it on request...)

Will it happen this year? Not before December at least. Turns out, President Obama has an extra pump hidden in his trunk! Come September, he's going to pull it out and hook it to the tent, then it's pedal-to-the-metal! The extra pump I speak of is the rest of the $787B stimulus. Elections hinge a lot on the economy, so I expect the economy to get one last boost in September. Then our source air will be completely extracted and the dollar will fail next year.

Deficits are illeagal, immoral, and unethical, and those who don't understand that are deficient in basic arithmetic. Or corrupt. Someday I may break down a transaction to its simplest terms and explain it; but not today.


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