Sunday, November 20, 2011

Fiddling While Rome Burns

Remember the good old days when the enemies were foreign and not domestic?  Sigh...

I'm sure you've seen that the news media has been abuzz this weekend about the Super Committee not being able to reach a deal.  The Super Congress is supposed to reach a deal to decrease the deficit by $1.2 trillion dollars over the next decade.  I'm sure you've heard the dire talk that if they don't make this meager change, the cuts will automatically come from defense and social programs.  Predictably the two parties are blaming each other for the inability to cut this trivial amount out of the budget.  Meager?  Trivial?  $1.2 Trillion?  Sure: with no growth, just divided over 10 years that's $120 billion this year.  Our revenue is about 2.2 Trillion so it's 5.5% of the revenue; but less than 3% of spending!  Most people could handle a 3% cut in their spending if they had to, by tightening their belts enough, and probably have in the last year.  The fed.gov probably looses that much without even noticing it. 

The problem with this whole argument is that we need to cut spending by $1.2 trillion dollars this year, or over the next year or two at the most, not over the next decade.  With the Federal Reserve making up money from nothing and buying our own debt, how much time do you think we have?  Furthermore, I'll bet you almost anything that any deal they come up with will be back end loaded and cuts this year will be minimal to non-existent. All they ever do is kick the can down the road.

I would bet that if they don't come up with a way to cut this meager 3% of spending, that our credit ratings will be (deservedly) downgraded again.  I bet that not making this cut will cause more harm than good as the world has it hammered home that the US is irresponsible and not credit-worthy.  

I said fairly recently that I've seen Robert Kiyosaki talk about this a few times, and the most recent time I saw him (last week) he said he believes the dollar is going to collapse by next summer, with a fairly high degree of confidence.  I don't know when this video was made but he's advocating the things I reported on in that first link. 
  • Grub  - you need food.  Lots of food.  It might take years for production to return.  Think preparations that would put Mormons (1 year) to shame. 
  • Ground - you need shelter, or someplace to go, especially if you're in a city or a place that's likely to descend into chaos. 
  • Gold - for barter.  Silver is just as valid.  So are liquor, chocolate, cigarettes, and all the other things we've talked about. 
  • Gas - fuel.  Energy is life, whether it's for cooking or boiling rain water to drink.
  • Guns - and I'm really sure I don't need to explain this one!
I don't want to seem that I'm arguing by appeal to authority - but when someone as demonstrably optimistic as Kiyosaki is saying to prepare for bad times, that should be a wake up call.  Look - the math is undeniable.  Spending simply can't go on at the current rates. 

3 comments:

GardenSERF said...

Don't forget the razor blades:

http://gardenserf.wordpress.com/2010/04/25/razor-blades-and-chocolate/

Graybeard said...

Good post, apparently from before I first discovered your place because I don't remember reading it before.

RegT said...

Don't forget spices (http://www.penzeys.com/). Rice and beans can get pretty boring, but use a variety of spices and it goes down a lot easier. Salt is so common that folks forget to stock it. For those who don't live near the ocean, you may want to lay in a good supply for seasoning and for food storage (salting meat, etc.)