If It Ain’t Fixed, Broke It
Wasn’t all that Greek fiscal stuff fixed? No. Better question: Can it be fixed? Same answer: no.
Every nation on the face of the earth prints “fiat currency”. The underlying strength of global fiat currencies is performing debt. It’s fractional banking on steroids. Do you understand?
None of the member nations in the E.U. want Greece to go bust, bankrupt, broke. Yet, it’s inevitable. How so? E.U. member banks demanded Greece cut government spending and raise taxes. Rising taxes inherently stifle economic growth, so gross domestic productivity continues to decline. With the decline in GDP, tax revenue likewise declines. Declining tax revenue means less ability to service debt. What do we call it when you can’t pay your bills and the lenders lose patience? Yep, we call it national bankruptcy.
Greece isn’t alone. Portugal is broke and when Greece finally declares defeat, the whole of the Iberian Peninsula will teeter like dominoes, one knocking down the next.
How will Greek financial collapse affect European banks? Well, the European Central Bank (equivalent to U.S. Federal Reserve System) declared itself immune to Greek default, thereby just “passing the buck” to bond holders – real people. As it was said of big banks here, the European Central Bank is “too big to fail”.
Meanwhile, back in Greece, the Greek Parliament simply changed the rules. Now, you can imagine how well that will play out with bond holders. Honorable contracts are foundational to a capitalist market. Changing the rules ex post facto will further damage what little Greek fiscal strength that remained. By the way, did I mention Greece’s debt-to-GDP? It stands at 120%!
It appears the Spanish “domino” now appears to be wobbling noticeably. Funny thing, though. Spain’s national debt is only 66% of GDP.
So, how does all this European bankruptcy stuff affect us here in the good ‘ole USA? Well, my friend, I am glad you asked.
Banking on Banking
You see, those European banks have offices on our soil and lend billion$ to us. In turn, those Europeans over there purchase goods from us worth billion$. When European banks fail, the flow of goods slows to a stop, U.S. manufacturers lay off workers, and so on.
Every nation on the face of the earth is inextricably financially interconnected with all other nations through international banking and global trading.
At present, our U.S. national debt exceeds gross domestic product. Under the Obama administration, we have accrued more national debt than all the debt accrued under all previous administrations from George Washington to George Bush.
How Big Is a Trillion?
It’s almost impossible for any human to comprehend millions, billions or trillions. I wanted some means to scale national debt so I could understand the magnitude of the problem, so I relate dollars to time: $1:1 second. Here’s a chart I put together last month.
If $1= 1 second,
then $1 million = 11.57 days
and $1 billion = 31.7 years
therefore, $1 trillion = 485,159.81 YEARS
Cut spending dramatically and cut taxes dramatically. But, if we cut taxes, how will we pay off debt? Good question. We must put more money into the treasury to pay the debt. To get more money into the treasury, we need more tax dollars. To get more tax dollars, we need more productivity. To get more productivity, we cut the cost of doing business. Taxes are a cost of doing business. Avete capito? ¿Entiendes? Do you understand?What’s my solution?
Most of our national debt is held by us, the people of the U.S.A. Here’s a chart showing national debt proportionally with respect to domestic, China and all other nations.
As I said before, in order to spur domestic productivity we must cut costs to do business. Well, the thing that underpins all American productivity is energy. The more it costs, the less we produce. The less we produce, the fewer people we employ to produce those goods.
Fuel for Progress
President Obama said just this week oil is “the fuel of the past”. It seems this man lives in a special place where you can power industry, homes, schools, businesses and transportation with so-called “renewable” energy sources like solar cells, windmills and bio-fuels. Will there be alternative energy soruces? To be sure, alternative energy sources are coming forth by the hour: fuel cell technologies using Hydrogen and Methane gasses, new battery products and windmills. But, how do we obtain these miracle products?
Authoritative studies reveal that it takes about 12.5 years just to recover the energy required to manufacture solar cells. [Australian and New Zealand Solar Energy Society]
How about windmills, what about the energy payback on these marvelous machines? Payback is far better than solar cells, about eight months, according to RenewableUK. Are you prepared to live with an unpleasant byproduct of windmills, the noise? Scientists have coined the phrase “wind turbine syndrome” to describe the effect of turbine noise on humans. Is this what you want, hmmmmmmmmm?
Back to Basics
Look around you. All that plastic, synthetic rubber and vinyl are petroleum products. 41% of all electricity produced in our country comes from coal-fired power plants. Carbon is not just the “building block of life” it is the means to sustain life.
The progressives like Mr. Obama and Mr. Steven Chu ardently believe in anthropogenic global warming. Their imaginary “solution” to a non-existent problem is a non-existent solution.
I suggest you frequently and steadfastly demand energy independence for America. Drill baby, drill. Let my Keystone Pipeline go. Stop the slaughter of innocent coal-fired power plants. Say whatever and do whatever it takes to restore sanity to American energy policies.
- CUT TAXES
- REDUCE SPENDING
- LIBERATE DOMESTIC ENERGY
- PUT PEOPLE BACK TO WORK