My Opinion of the Ryan Plan

I personally find the Ryan plan disturbing because of what it says about the inability of even our conservative politicians to grasp the economic danger we are in. It should be obvious that we do not have decades to get our fiscal house in order. We may not have 20 months before our debt goes bad, let alone 20 years. Remember how long it took for CDOs to go from AAA to Junk? We are already financing current spending with the digital printing press. We can’t take any more debt. Debt service costs alone will probably soon take the lion’s share of the federal budget, given the inflation that is showing up in the markets and the implications it holds for interest rates. If any corporation were bleeding red the way our government is, they would not try to just slow the losses and tout that as success. They would dramatically cut to the bone, seeking positive cash flow and profits as the only outcome which would forestall insolvency. The bottom line is that we are in real danger of no longer being a going concern and must do what it takes to live within our means immediately, not in a decade or two. If this is the best we can dream of doing, it says loud and clear that DC will not contain itself unless forced by some major crisis.

Our total tax burden is beyond unsustainable, a reality that we haven’t had to face up to because we issue the world reserve currency and have the exclusive privilege of being able to expand the money supply worldwide without backing our dollars value with real wealth production. But some of the biggest economies in the world have taken steps toward doing trade without dollars. The BRIC countries (Brazil, Russia, India and China) are a case point, but are not the only countries trying to free themselves from the "stealth tax" that Quantitative Easing amounts to. Consistent with that is the unprecedented dollar weakness we are seeing currently when compared with other currencies. Commodities confirm the trend as well, and investors worldwide are looking for a more secure store of value as they turn to the traditional international currencies of gold and silver. Our debt chart looks like a classic blow-off phase of a financial bubble, and yet we try to correct just enough to keep the same scam going. The writing is all over the wall, yet we just keep pouring more drinks in a party-till-you-die mentality.

Gresham Bouma

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