THE CHINESE ARE COMING II
For what I am intending to do, it is necessary to understand what a TRILLION is. In this world we are living in, we hear the word trillion almost every day, and we never pay attention; I am almost certain that most people simply do not have the slightest idea what a trillion dollars is.
We have 60 sec in one minute,
60 minutes in one hour, therefore we have 3,600 sec in one hour.
24 hours in one day, therefore we have 3,600 x 24 = 86,400 sec in one day.
365 days in one year, therefore we have 86,400 x 365 = 31.536,000 sec in one year.
In 10,000 years we have 315,360,000,000 sec; in 30,000 years we have 0.94608 trillion sec. If we will be able to spend or count $1 every second, it will take more than 30,000 years to spend (or count) one trillion dollars.
Since we do not know what one trillion dollars is, we don’t care what 15.5 trillion dollars are. I can tell you: 15.5 trillion dollars is a BIG BIG PROBLEM. It is so big, that it does not have any solution right now. As a matter of fact, the problem is growing at a pace of many millions per minute.
The national debt, the debt that the federal government of the USA has as of March 3, 2012, is15.5 trillion dollars and growing; it is estimated that the entire US economy is going to grow as of December 2012 to 15.3 Trillion, and the debt is already 15.5 trillion and growing. These are real figures, and we have to face it.
What is happening as we talk is that the federal spending is 3.6 trillion, while the US federal tax revenue is 2.3 trillion with a federal budget deficit of 1.25 trillion for this year. The interest to pay the debt accounts for 46% of what the government receives. What I can see and is so obvious is that we have to stop spending what we do not have. Unfortunately there are two other awful facts, one is that the politicians do not want to stop the spending, and second, it is impossible for us to pay what we owe just to the Chinese: 5 trillion of the debt is in the hands of foreign countries and more than 1.5 of these 5 trillions are in the hands of China. We cannot pay to them and the Chinese know that. Both Countries are trapped in this debt, we cannot pay and they cannot get their money back.
What are the Chinese going to do? Let’s see what France did in the 1960s. Back then, we the United States insisted in maintaining an overvalued dollar at $35/ gold ounce. For many decades the country accumulated a lot of gold that was used to support the dollar as the hard currency and standard currency of the world. Mr. DeGaulle decided that France was not going to accept this anymore and claimed the gold for 150 million dollars they had as foreign currency reserves. They took the gold and we got the dollars, that gold value is now 12 billion dollars. Many other countries did the same and 2/3 of the gold that cost too many decades to accumulate by the USA was gone. President Nixon in the 1970s decided to abandon the gold as the support for the Dollar. The dollar continued and still continues to be the standard currency for the world with all the advantages that this brings to the country. Now we support the dollar with a printing machine by the Federal Reserve, and in order to maintain our spending we are incurring in more and more debt dumping more and more dollars on those who (still) want to give us credit. This is based mainly in the fact that as we stated above the entire USA economy produces more than 15 trillion dollars per year the highest in the world, but this is under very difficult conditions and the economy is suffering to maintain this leadership. Now is different than the 1960s when the economy was very strong and we were able to overcome the currency war we faced then. This new war is compound by the horrendous federal debt in the hands of the Chinese. What are they going to do, or what are they doing? And worse what are we doing other than spending and printing even more?
For one thing the Chinese are exporting by far more than what they are importing. Their foreign currency reserves in 1980 were 2.5 billion dollars now are 3.2 TRILLION dollars. With all that money they can do whatever they want, and they bought US debt, and they invested in the USA, but more important they are buying a lot of gold, because they want to have their currency the Yuan to be the standard currency of the world displacing the dollar. I can tell you this is not to be good for the USA. Besides of buying a lot of gold, they are the first producer of the metal in the world (300 tons/year), and although any company can go there and mine it, by law they have to sell all the gold to the Chinese government at the market price. In other words nothing leaves the country, and although they permit the Chinese people to buy gold, (even encourage them to do) not an ounce of gold leaves the country. In no time they are going to displace the dollar and we (all of us) are going to suffer deeply in our living standards.
To paraphrase a noted economist, "If Obama wins a second term, consider leaving the country.
ReplyDeleteAnother David Stockman, Reagan's former budget director, "I wouldn't touch the stock market with a 100ft pole, maybe buy Gold" and when asked if he was hopeful for the future of the USA he gave a blunt one word answer
NO
I'm not going to move if Obama wins again. I also don't think a new president is going to make THAT big of a difference on how things are.
ReplyDeleteAs you once put it--- Politicians have very little power to make things better but they do have considerable power to make things worse.
Even so, I don't see Obama making the sky fall--eroding the economy and making things worse, yes but I don't believe he wants to destroy the country like so many extreme right wingers think. He is damaging the country with his policies but he is not going to finish the country off.
In only 2 years Obama increase the debt in 1.9 Trillion Dollars, at the end of his term (hopefully the only one) it wiill be an increase in 5 Trillion; the deficit as we saw will increase just in one year i.25 trillion. Obamacare will increase almost 2 trillion. If this will not bring the sky down, nothing will do. On top of that, and just for starters, if the dollar loses its currency standard place, the interest on the debt will go up, and instead of 46% of the tax revenue going to pay its interest much bigger percentage will come. What about the lack of vision to produce oil in here to fight our dependence on the middle east whose inhabitants do not like us? Spending in non-productive programs with a complete disregard for the debt, is not only stupid but almost criminal. I agree and I said so, that I only hope that new politicians would do better, because almost anybody will, and although I agree that you never should trust politicians, I cannot see anyone doing worse than the current incumbent.
ReplyDeleteI think Obama's policies are THAT BAD. The problem is that we are reaching a tipping point. If he gets re-elected he is going to have free reign to implement his anti-free market idiotic policies, there will be no fear of another election, no accountability whatsoever.
ReplyDeleteWhat is at stake here is FREEDOM, freedom to move, to get in your car and go wherever you want to go. He is not upset that the gas prices are so high, he is upset that they got there too fast. HIs policies are IDEOLOGICAL and DANGEROUS, he want to take control of what kind of car you drive (by controlling the production and distribution of oil), he wants to control when and which doctors you see and what procedures you can have (by controlling healthcare through ObamaCare), he wants to control what you eat (just look at the stories that are coming out that children are being told that their lunches are not healthy, or that at some universities in Biochemistry classes they are discussing the evils of fructose and how the government should control the use and distribution of it instead of teaching chemistry), etc. etc.
So I think that we have reached a fork in the road, if we take the wrong way it will be increasingly difficult to get back to the ways of freedom, they will have taken away too many freedoms and become too powerful because of it.
I think this is a little more serious than some people think it is…