Friday, May 7, 2010

Trying Times

The times that will try our souls is fast approaching. The Federal government continues its efforts to centralize and control all aspects of our finances, medical care, transportation, communication, etc. The dollar grows weaker and more exposed every day. Unemployment continues to climb even while the government talks about adding more than 200,000 non-farm jobs last month. How does this happen? More people are trying to look for work again. Unemployment benefits are running out and are forcing people back into the job hunt. Why not, the media continuously blasts the word "RECOVERY" at us. False hope and optimism.

The national debt and current deficits are issues that will not go away and we can not "Grow" our way out them. Not this time. Even at double digit GDP growth it will still take something like 50 years of compounded growth to pay down the principle debt let alone the annual interest on that debt, which is predicted to be 100% of GDP in the next 18 months. Read that last sentence over a few times and think about that. Throughout history few nations have ever been able to survive that ratio let alone remain unchanged and impotent. Our choices narrow with every passing week and month. I wrote on those choices some time ago. I had more to write about then. Now I see only two options left us. The first is that we default on the debt and deal with those consequences. The second is that we run into hyperinflation to wipe out the debt. Devalue the dollar until the debt becomes meaningless. Both options mean throwing away two centuries of sound financial planning.

Our civil liberties are under assault in ways not seen since Wilson or FDR. The Patriot Act, instead of being killed off as Obama promised has had its sunset clauses removed. This means that the Patriot Act is now the law of the land unless specifically repealed. How about that. Bush was Hitler's lost step child because of it. Obama gets a free pass and cover by the MSM. The Internet is in danger of becoming a "Public Utility". This means that the government will decide how it is used and what can be on it. There is virtually no public banks issuing mortgages anymore. Almost 97% of all new mortgages being issued are being underwritten by the Federal Government (that is you and me folks, just thought to remind you).

Businesses are not hiring and are siting the new Health Care 'Reform' act pushed up our noses. The cost to hire anyone just skyrocketed. This is why Europe runs a routine 20% unemployment rate. The cost of benefits will grow so high that a company will forsake growth for stability. Think about that last sentence again. If your population is growing yet your private sector is not hiring, then your unemployment rate will always be climbing, even in the good times. If you do not now have a college education, you likely will not be able to participate in the new economy. The cost of education is outrageous and now that the government has taken it all over, will only get more so. Even those of us with a college education and a graduate degree are under pressure. Businesses are consolidating and squeezing more productivity out of the available staff. This means fewer people 'managing the money' and fewer people 'making the money'. That means a glut of highly educated people who will either be under employed or unemployed.

I wish I could see farther ahead but all I see is 1933. When the economy really tanked back in 2008, the malls were still busy and people seemed to be busy going about their lives. I commented to my wife one day that it feels like January, 1930. The economic engine sputtered and died and coasted for a year or two before things really bit down on the country. Hoover deepened the problems with wasteful spending programs that only propped up the old system. Hoover = George W. Bush. Then along came FDR who said that it can only be fixed if the Feds step in and take everything over and manage it centrally. Things nosedived from there and it was another 12 years and a world war that pulled us out of the economic coma. FDR = Obama.

Who will come after this and pull us out of the deep coma our incompetent president and corrupt politicians have placed us in? Only a true American, rooted deep in the soil of our Founder's philosophy will pull us out of this. It will be painful, but if it is done right, will only last between one and three years. Eliminate the barriers to small businesses and get the government out of our way and "We the People" will fix this, and hopefully retain the long memory of what happens when you fail to hold your elected officials accountable.

-Zavost

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