Trillions of new spending + Trillions added to the deficit over the coming years
Face it America is on its back and largely impotent to change our economic woes anytime soon. All the stimulus packages being flaunted around DC may have a near term jobs increase which is much needed but at what price. First the Fed, economists and our leaders all are now predicting the US economy is going to be terrible for the next few years if not more. I hate to be the one to tell you the writing was on the wall a year ago when I started to RANT about this doomsday. Second, the solution being offered is to print money 24-7, borrow huge sums of money from around the world and spend the borrowed money like crazy to stay afloat. Well wasn’t that what got our financial industry into trouble in the first place.
With certainty our politicians are telling us that we will be racking up trillion dollar deficits annually for the coming years. Also, the US is printing so much money now that I predict inflation will be a huge factor in perpetual stagnation of the economy. Add in unemployment, underemployment, bankruptcy, foreclosure, bad credit and so on. With that and not going into detail America on the whole and our states, municipalities’ and industry after industry are bankrupt. If they haven’t declared it yet – they will. How does that look for future bond offering or raising capital or working with the already risk adverse banks. You got it – very bad and the result – even if they can get the money it will be at a very high price. A rat on wheel. Even worse when does the world stop using our devalued currency for trade. When does the world cut us off by not buying our debt or worse selling off huge pieces of our debt or currency on the open market. I can’t believe it hasn’t happened yet but I think the final blow will be such a scenario.
It sounds dark and gloomy and it really is. Perfuming this pig is what has been done over the past decades and now the pig is laying hobbled in the Serengeti of life and we all are too. Regardless if you are financially stable many other consumers in the market aren’t. Whose fault it is doesn’t matter at this point because wherever you go there you are. We all know the affect of bad credit, bankruptcy, foreclosure and late payments. This fact will knock probably half of American households from aggressively participating in the US Consumption Economy. So no matter what we do we remain impotent as long as the economic base of our economy remains hobbled. So what do we do?
Well I have said and will continue to hock my simple ideas.
1. Expunge late payments from consumer’s credit for the last 18 months and next 12 months for only those trying to pay their bills. This is an obvious psychological relief for tens of millions and also will allow those households to be a part of the economy down the road without paying huge sums of money for credit just to buy things.
2. Allow a onetime refinance for every household to consolidate all their debt so they don’t go bankrupt and have the things above happening for long periods of time. The government should have an insurance program to support the consumer’s loans but not spend any money to bail them out – sounds reasonable doesn’t it? Since it’s the underlying issue that is causing so many bank portfolios to crater. This alone would be a huge boon for the housing market, banks, mortgage companies and many more.
3. The deficit. I hope many people are reading I owe US NOT! On my web site but we can enact a law requiring that 10% of the portfolios of all pensions, unions, 401k’s etc.. be allocated to buy back all US debt. This would have over 10 trillion of new money available – and has to be 100% used for the deficit. This would cause our financial markets to skyrocket and no one gets hurt. I can go into more detail but there is a #1 trillion dollar credit investment the US can make by buying zero coupon bonds thus guaranteeing the money is repaid over 10 years. This is fundamentally a game changer for our country.
4. Sell Economy bonds to only US citizens – after all this Economic War isn’t it.
I can go on and have on many radio shows but the fact is we are in big trouble and we need to think of many different ways aside from just throwing money down another black hole that we don’t have.
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