I am seeing very ominous signs that our nation is heading toward a period of stagflation quite similar to what we experienced during the administration of Jimmy Carter.
Our government has opened up the money spigot to help avoid a global financial collapse. This, in itself, will be inflationary. Flooding the markets with excess cash causes inflation. Simple math.
Much of last year’s monetary action had to be implemented, particularly the actions by the Fed, in order to avert a true global meltdown, not the hiccup we actually encountered.
At the same time, the current administration is creating spending plans that go far beyond our means to pay. We are talking $1 trillion – $2 trillion deficits for as far as the pencil can see. This will force our government to go to the capital markets to borrow huge sums of money. In order to attract capital, we will have to pay higher and higher interest to entice investors to risk owning our capital.
In order to maintain workable interest rates, the Fed will find itself “forced” to print more money. This will add to inflation and worsen the problem.
Our administration’s solution to our growing budget deficits is “health care reform.” This is code for higher taxes and greater expenses. Obama plans to (attempt to) tax medical benefits that are provided by employers to their employees. Such a tax might raise between $100 billion and $200 billion per year.
At the same time, Obama will seek to nationalize health care, by promising a more streamlined, less-costly delivery system. Anyone who spends ten minutes examining the health care systems of such countries as Britain, Canada and you-name-it, will find that government bureaucracy only bloats costs and creates inefficiencies. To manage spiraling costs, governments are forced to ration care. It will take years to get a hip transplant, provided you are young enough for the government to pay for it. Cancer treatments with low probabilities of success won’t get funded. And doctors who order the least amount of testing, the ones who send you home with a brain tumor telling you it is just a headache, will become the government’s preferred providers. Our health care will go from being the best in the world to among the worst.
Increasing taxes on companies and our nation’s citizens has never been an effective way to increase long-term revenues. Lowering tax rates is far more efficient in creating greater long-term government revenues. If you leave a dollar in the hands of someone who invests their money rather than spend it, the money creates wealth, jobs and (ultimately) greater taxes to the government.
I believe that a government must have compassion for its people. I believe in a safety net for all citizens. But I don’t believe that politicians in Washington are better at managing money than the average U.S. citizen. The free markets are far more efficient at providing essential services than the government could ever be.
Obama is seeking to grow our government at an unprecedented rate. He is doing this deceptively, and few citizens actually realize how massive this undertaking has become. Much of this is being done with excessive deficit spending that will drive interest rates higher and higher, at the same time that his taxes stifle growth.
Tim Geitner has warned our Congress that the proposed budget deficits are dangerous for our economy. As projected, it will take less than ten years for the U.S. to lose its AAA bond rating. When this happens, we will be forced to pay hundreds of billions more annually to service our national debt. This may put us over the point of no return, from where we can never recover.
If we don’t do something about government spending today, our children and grandchildren will live in an America that is far different than the one we enjoy. Our dollar will buy little. Goods will be increasingly expensive. Tax rates will exceed 80% at the highest levels. Good jobs will grow scarcer. The American Dream will have become more like the American Nightmare.
The United States is the most productive society in the history of the planet. We enjoy the highest standard of living that the world has ever seen. We became that way with freedom of choice and a low tax base.
Our government’s current policies are rapidly taking away our freedom and putting in place fiscal policies that will demand higher and higher taxes.
I assure you, this is not a reactionary tirade by a right-wing ideologue.
I have been both a republican and a democrat during my life. I vote for both parties. Because of my own personal experiences, I believe in a number of so-called “liberal” policies. I know what it is like to face oppressive roadblocks in life, to suffer at the hands of others with no way out. I have broken my back and my neck. I know what things outside of our control can do our lives. I have been the beneficiary of the kindness of others, and I know how important this can be. Unless you have been there, you simply don’t know.
Many “conservatives” preach about self-sufficiency. They don’t want government subsidies or preferences. On its face, this sounds fair. But life isn’t fair. Sometimes support from others, even the government, is needed to overcome disadvantages, to allow for equality. I do agree, that all too often, government does this inefficiently, but it must be done by any moral society.
Sometimes, the government can do things that the private sector will not do on its own. We must provide the capital to develop technologies that are too far in the future for smart companies to invest in. Why would Exxon invest billions in a technology that might provide energy thirty years from now? Personally, I would like to see our government sponsor an alternative energy program (including nuclear) similar to the Manhattan Project. We are headed toward $4 gas, far sooner than anyone realizes today.
Having some “liberal” needs and tendencies does not mean that our nation should act irresponsibly, and create problems that cannot be reversed without draconian pain. This is where our nation is heading at the moment.
If Congress does not step up and curb spending…if the Obama administration doesn’t get their head out of the clouds by thinking that a new government bureaucracy will create spending efficiencies…if Congress continues to think that higher taxes will solve these problems…we are in for a whole lot of pain. Big-time pain. Something that will make the current “global meltdown” look like the good ol’ days.
The Obama administration has taken a “financial crisis” and used it to help grow the size and power of the government. Our dominant media is doing little to educate the public on how serious the ramifications of our current government policies will be. Personally, I don’t think they understand it one bit. Everyone is being blinded by how “good” we can be, how “compassionate” we are and how “peaceful” we can be with our enemies. While all this is going on, our nation is heading toward Niagara Falls in a barrel.
Like a magician using sleight of hand, our government is rapidly taking away the nation we grew up in and replacing it with third-world socialism.
Unless we realize this soon, and take action, we will all get to experience the stagflation we faced during the Carter administration. Unfortunately, our nation’s finances will have eroded so far by then, that we may not be able to recover and get our nation back. Would you like to live in Russia today? I wouldn’t. But that’s the direction that our nation’s captain is trying to steer our national ship.
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