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Friday, January 30, 2009

...but I'll know it when I see it

Everet Dirkson, Senator from Illinois, has been attributed to have said "A billion here and a billion there and pretty soon you're talking about real money!" (BTW, when I think "Senator" I think "Ev Dirkson!"). In the Spendapalooza (aka Wastepalooza) going on in Washington, I'm also reminded, in trying to imagine what a million million is, I'm reminded of a quote from Stalin:" A single death is a tragedy, a million deaths is a statistic." I'm afraid we've become dulled to to the scope of this Porkalooza tsunami.
Well, from Ed Morrissey at Hot Air, here is a link to a historical spending graphic, all in inflation adjusted dollars (aka constant dollars) (click on the image for a clearer view):

Now, what this graphic does not show is the Fannie and Freddie bailout, TARP, the auto bailout just to name three. Ed got this from a a site Suitably Flip . What also is not shown is all the economic damage from the New Deal which has crippled the American economy for over 75 years. This graphic does not include the $70,000,000,000,000+ unfunded liability for Social Security and Medicare. The Porkulus bill only spends about 12-14% on any real "stimulus". That plus most of the "money" won't be spent for years.
Liz Trotta on Fox News Sunday a few weeks back had five great questions to ask, even before this disaster (my answers follow each question):
  1. How much money does the Fed have?- None. It has to take it from you in one way, shape or form.
  2. Where does it come from?- Depends on what Liz Trotta refers to as the Fed: The federal government or the Federal Reserve. The Fed Reserve again prints it. The federal government gets it from only three places: taxes (you pay), borrowing (you pay again with higher interest rates and taxes as those debt instruments have to paid back) or they print it.
  3. Who decides what to do with the money?- Barney Frank ("Fannie Mae and Freddie Mac are solid and sound! No problem at all. Trust me."), Chris Dodd (How's that Countrywide mortgage going for you there Senator?), Charles Rangel (I'm too important to have to pay fines and penalties on those taxes I didn't pay), Tim Geitner (Oh, THOSE taxes! Horrible mistake, Turbo Tax's fault, etc...).
  4. Who has oversight? Checks/balances?- see answer to question 3.
  5. How much money does the government have left?- As it didn't start with any and has run up deficts (for us serfs, it called "overdrawn", aka "bounced check syndrome"), it's "created" money.
As I've sold high collectibles for over 17 years, mostly consisting of old American gold coins, I put together a Power Point presentation about buying and taking a defensive position in gold. One of the slides asks "What makes money, well, money?" I stop the slide and take comments: recognized method of trade, easy to transport, able to ascertain value... All true. However, there is one prime factor in making money money: It's accepted as money. If it's not trusted for any number of reasons and therefore not accepted, it no longer is money.
So, what happens when foreign governments no longer buy our debt?


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