The Federal Government's Ponzi Scheme

This forum is about local issues, but the current federal government mess is inexorably linked to our local economy. If the average person can't use commerce to their advantage, when we have done nothing wrong, then our standard of living will surely decrease. When this happens, through no fault of our own, then we become thoroughly frustrated by the lack of leadership; especially, when the decision makers have been insulated from the discomfort.

Most people are scared to death with what we are witnessing from our government on the federal level. We have rightfully lost confidence in the so called experts that have gotten us into this mess. Most of us have been in a recession for years, while the government has continually told us that our eyes deceive us.

I really don't think that this $700 billion plan to infuse the credit markets will work. The problem is that personal income levels are not keeping up with debt levels. We cannot, as individuals, afford to keep borrowing money; when we are leveraged to the hilt and our personal income levels aren't rising. That will eventually lead to personal bankruptcy.

Paulson's scheme wreaks of a huge Ponzi scheme. No one is telling us that this will fix the problem. They are telling you that they need this money, but they can't tell you how they arrived at the $700 billion dollar number. My gut feeling is that they feel that $500 billion won't be a drop in the bucket (in their estimation) and $1 trillion isn't saleable. So they came up with this $700 billion figure arbitrarilly.

No one is seeing this the way that I do. This is a gigantic Ponzi scheme. The Feds want to hand over this $700 billion in exchange for what are currently worthless assets. The banks would then supposedly have money to lend out. Well, if people not borrowing money now (at historically low interest rates) is a problem, then injecting money into the system isn't going to facilitate commerce.

As a matter of fact, injecting money into the system is going to stir up inflation, because our dollar is going to continue to fall in value as we create more money supply. If we have more inflation, then interest rates are going to rise, because inflation is a factor in the lending rate. People are going to lose real income, because the money that they earn is going to be worth less. Goods and services are going to become more expensive, because of the growing rate of inflation.

We just can't afford to let our government continue spending money like drunken sailors. At some point in time those bills are going to come due. We have got to cut back on spending. Last year our federal government spent $2.8 trillion, we took in $2.3 trillion in revenue, and that left us with a $500 billion deficit. That in and of itself is ridiculous, and now they want 25% of the budgetary amount, that they corruptly spent, on this scheme. Our real annual deficit will be well above $1 trillion.

If they get this money, it won't be the end. They will be back and they will want more. This debt will continue to grow. Our country already has a $10 trillion national debt. Now they are pushing money out the door like it is monopoly money. We are growing this deficit to the point that it will take generations of reduced standard of living to get it back to a manageable level.

How do we solve this problem? The country is going to have to tighten its belt. The government is going to have to quit borrowing money to grow social programs and discretionary spending. The government is going to have to let the private sector work. We are already spending nearly 10% of our annual national budget toward servicing the national debt. That is money that can't go towards real issues. A good part of that money is leaving our country.

This problem was not caused by a lack of regulation. This problem was caused by fraud. The central focal points of this debacle are Fannie Mae, political corruption, and cronyism. If we are going to arbitrarily enforce laws, then we are not going to solve this problem. We have to bring the people that committed this fraud to justice.

Things are going to be tough for a while no matter what we do. Let's not exacerbate the problem by letting the so-called experts keep us on the same track we have been on. Call your elected officials and tell them what you think. Make them pay at election time. The sooner we start working on real solutions; the sooner we will emerge in a better and wiser world.

How much is $700 Billion
http://wizbangblog.com/content/2008/09/30/understanding-70000000000000.php

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