The framers of our Constitution often viewed the US democracy as an experiment. This experiment came under the severest test during the Civil War and once again during the Great Depression.
As I listen to our politicians blame each other, the President, external factors, and spin issues to deflect attention away from themselves to ensure re-election, I often wonder whether this grand experiment is rapidly approaching its failure point.
Serious financial issues such as Social Security, Medicare, and our mounting debts continue to be the proverbial can being kicked down the road.
I believe that if the incoming Congress does nothing to curtail spending in the next session, then the can will have been kicked further down the road only to roll off a very steep cliff in the not so distant future.
The Korean Penninsula at Night
In his book "Decision Points" former U.S. President George W. Bush mentioned this satellite photo of the Korean Penninsula at night. This photo clearly highlights the difference in how these two countries are faring under their respective governments. Sadly, President Bush cites the estimate of 1 million North Koreans who have died due to malnutrition in 6 years. Hard to argue with that fact and the photo as to which country has fared better.
Warnings by Paul Volcker and William E. Simon
The foreword to former Treasury Secretary William E. Simon's "A Time for Truth" dedicates the book to his children so that they "can never say that they were not warned". This book was written in the late 70's and was followed by "A Time for Action" as Ronald Reagan entered the presidency. .
Around the time that the Reagan team was taking shape, then Federal Reserve Chairman Paul Volcker described the election and electoral mandate to right the nation's economic house as a "rare opportunity that does not come along too often".
Though a Democratic President, Bill Clinton, presided over four years of budget surpluses during the 90's, the warnings uttered by William Simon and "rare opportunity" described by Paul Volcker were neither heeded nor seized.
Let's hope that there is another opportunity in the horizon.
Around the time that the Reagan team was taking shape, then Federal Reserve Chairman Paul Volcker described the election and electoral mandate to right the nation's economic house as a "rare opportunity that does not come along too often".
Though a Democratic President, Bill Clinton, presided over four years of budget surpluses during the 90's, the warnings uttered by William Simon and "rare opportunity" described by Paul Volcker were neither heeded nor seized.
Let's hope that there is another opportunity in the horizon.
Comparing Dr. Jeremiah's Predictions to Bloomberg's Reports
In the most recent chapter of "Economic Armageddon", Dr. Jeremiah describes how the United States' reign as the world's foremost economic power will decline once it loses its "reserve currency" status (the currency against which all foreign currencies are pegged). Having the world's reserve currency has benefits that, once lost, will relegate America to a 2nd tier financial power. Dr. Jeremiah believes that our nation will lose this longstanding status in the future.
Today's Bloomberg podcasts on the economy interviewed international economists who discussed the merits of regional reserve currency standards to be held by China, Europe, and Australia/New Zealand. So, the long held reserve currency status appears to be fleeting.
Meanwhile, our leaders in Washington are posturing for the 2012 election while our economic house of cards continues to shimmy towards collapse.
Today's Bloomberg podcasts on the economy interviewed international economists who discussed the merits of regional reserve currency standards to be held by China, Europe, and Australia/New Zealand. So, the long held reserve currency status appears to be fleeting.
Meanwhile, our leaders in Washington are posturing for the 2012 election while our economic house of cards continues to shimmy towards collapse.
The Four Horsemen of the Apocalypse (Wall Street)
Nobel Prize-winning economist Joseph Stiglitz’ Four Horsemen of Wall Street — Greed, Mendacity, Stupidity and Arrogance: the source recent financial crises.
The National Debt
The national debt hit $1 trillion while Ronald Reagan was President. It is now estimated to be approximately $12 trillion. Many used to say that deficits don't matter since we owe it to ourselves. Not now. Countries such as China, Japan, Saudi Arabia, and even Russia now own our debt.
But, Dr. Jeremiah stresses that $12 trillion is just the tip of the iceberg. There are approximately $25-30 and $75 trillion in unfunded liabilities for Social Security and Medicare, respectively. Plus, there are the hidden government guarantees associated with our alphabet soup entities: FDIC, Freddie Mac, Ginne Mae, Fannie Mae, and the Pension Guaranty Trust -- the proverbial moral hazard. The current demographics and economics point to either sovereign default at best or financial collapse at worst. This is quite sobering.
Since WWII, we have gone from the benefactor to the world to the ultimate sovereign debt crisis waiting to happen.
Many believe that unless we see some form of a new fiscal policy and soon from Washington, we are destined to join the ranks of Ireland, Spain, Portugal, and Italy. The scary thing is that our leaders in Washington do not seem to have this iceberg in their sights. The last 3 years has not served as a wake-up call.
But, Dr. Jeremiah stresses that $12 trillion is just the tip of the iceberg. There are approximately $25-30 and $75 trillion in unfunded liabilities for Social Security and Medicare, respectively. Plus, there are the hidden government guarantees associated with our alphabet soup entities: FDIC, Freddie Mac, Ginne Mae, Fannie Mae, and the Pension Guaranty Trust -- the proverbial moral hazard. The current demographics and economics point to either sovereign default at best or financial collapse at worst. This is quite sobering.
Since WWII, we have gone from the benefactor to the world to the ultimate sovereign debt crisis waiting to happen.
Many believe that unless we see some form of a new fiscal policy and soon from Washington, we are destined to join the ranks of Ireland, Spain, Portugal, and Italy. The scary thing is that our leaders in Washington do not seem to have this iceberg in their sights. The last 3 years has not served as a wake-up call.
Social Security - Our Government's Ponzi Scheme
The term "Ponzi scheme" is a widely known description of any scam that pays early investors returns from the investments of later investors. (source: Wikipedia)
Bernie Madoff is the most recent Ponzi schemer. As I continue to delve into Dr. Jeremiah's book "The Coming Economic Armageddon", I never considered our Social Security (SS) system as being a modern day Ponzi scheme but it does fit the definition. Current workers are contributing to benefits of retired workers.
Dr. Jeremiah states that his research reveals approximately $25-30 trillion dollars in unfunded SS. That means current day contributors will probably see very little in return for a lifetime of SS taxes.
Tomorrow - Dr. Jeremiah's view on our current national debt.
Bernie Madoff is the most recent Ponzi schemer. As I continue to delve into Dr. Jeremiah's book "The Coming Economic Armageddon", I never considered our Social Security (SS) system as being a modern day Ponzi scheme but it does fit the definition. Current workers are contributing to benefits of retired workers.
Dr. Jeremiah states that his research reveals approximately $25-30 trillion dollars in unfunded SS. That means current day contributors will probably see very little in return for a lifetime of SS taxes.
Tomorrow - Dr. Jeremiah's view on our current national debt.
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