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Just who will pay the debt?

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Debt is the worst poverty.
Thomas Fuller

Just who will pay the debt?

Up Up and Away
To be paid by fewer and fewer

Governments are experts on running up public debts. They are unmatched in spending of every sort and ignoring how to pay for those expenditures. Since they make up the legal tender laws, citizens are required to carry on financial transactions, bound to whatever currency has the official seal. That means that civic obligations are subject to the demands and charges of servicing publicly-financed debts that keep the game of incessant liabilities and an endless cycle for enslavement.

The essence of this scheme is that individuals must bear the cost of these debts. That means that the interest to carry the borrowing must be raised, usually by taxes, fees and every other creative way of robbery that the most ingenious criminals on earth - politicians - can devise. All this should be well known to the ordinary taxpayer. Nevertheless, most concern themselves with their own personal plight and seldom attempt to focus on the larger trends. Few empirical facts are more powerful that the statistics of momentum demographics. Consider the enormous significance of the following: “The U.S. birth rate fell to the lowest level since national data have been available, reports the latest Centers for Disease Control and Prevention (CDC) birth statistics released today by HHS Secretary Tommy G. Thompson.”

This is a no brainer! Less people means fewer taxpayers to pay an expanding public debt.

In an era where governmental debt on all levels rises continually and out strips growth in population, the percentage of each citizen’s accrued share to sustain that debt, inevitably must increase. With the incurable appetite of ‘public servants’ to invent new programs, entitlements and agencies, the concept of limited government has long passed into memory. The aftereffect of unfair international trade has shackled the economy with permanent balance of payment shortfalls. The expansion of state and federal bureaucracies of all kinds, coupled with additions to local municipalities, has produced the only growth occupations, virtually immune to layoffs. Contrary to public myth and distortions, inflation in essential necessities has not departed, as the purchasing power of your money buys less.

The private sector is the only producer of real wealth, and therefore; bears the burden of paying the freight. Government employees are not producers of affluence, they are retainers of reprobate patrons that devise and manage a bureaucratic system, designed to steal from the builders of enterprise. Advances in productivity, innovation and technology has provided temporary relief in the past; however, those engines of commerce still retain the costs of ever increasing public obligations.

Forget partisan politics on this subject, it is a systemic flaw that every politico shares. Each officeholder seeks power, not as they advertise - to better society - but to benefit from an orderly bondage that they oversee, amplify and protect. The essential equation is: Total public debt, divided and pro rated (progressive income) by population, assigns tax liability to every taxpayer.

With the decrease in the American birth rate, that individual burden will rise in conformity to the laws of common interests. The ephemeral comfort of the current lower interest rates, is but a temporary remission of a perishing patient. Often overlooked is that the federal government is rolling over national debts with short term loans, better know as “HOT” money. Stable and long term debt, able to be serviced, promotes confidence. Short term variable and adjustable debt is usually volatile. If a substantial panic causes a run on the US Dollar, those bogus Federal Reserve Notes, will fall like a rock.

Alan Greenspan has signaled that deflationary pressures will be tamed with wheelbarrows full of fresh debt created money. Explosive increases in national debt causes additional obligations that demands a higher percentage in personal taxes. Don’t believe for a minute that tax cuts are the problem or that added taxes are necessary. The key to understand the fallacy that bigger government is a benefit to the population, is to focus on the percentage of economic drain that the state sucks from the economy.

Not all your financial woes can be solved with a remortgage of an equity loan. When interests rates rise, that ‘so called’ free lunch will give a nasty indigestion. Keeping rates at where they are or lowering them to zero, will cause your money market account to charge you a fee to keep your money. Fixed income retirees will panic and file for earned income subsidies as they practice smiling in the mirror to get those few greeter jobs . . .

Families will rethink about having their one of two kids, and only the ninny would procreate large broods, thus multiplying the decline in the birth rate. All those single parent mothers will have to work overtime to pick up the slack.

Again the percentage of your income that goes to pay government, in all its forms and methods of collection, is the criteria that really matters. Just because abundance is wide spread and your basic needs are affordable for most, does not exonerate the robber to mug you for what you have left over! That is exactly what happens when the State swells into a Leviathan, especially financed through deficits.

A shrinking birth rate, coupled with an aging population, spells doom for a social welfare society. A tide of more immigration is a deluge of further deficits. You can’t tax your way out of oblivion. Growing the economy in order to retire the debit works, as long as you don’t mushroom new borrowing. No economic model can defeat fractional reserve banking, when the government goes on a spending binge, financed at interest. How much of your money are you willing to pay the government? 50, 60, 70 or maybe 80% . . . You think that isn’t possible!

If you are lucky to have a grandchild, just thank him or her - guess who will be paying your Social Security, as they apply for food stamps for themselves.

SARTRE - June 29, 2003

The 1980s are to debt what the 1960s were to sex. The 1960s left a hangover. So will the 1980s.
James Grant

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