THE PROGRESSIVE CONSERVATIVE, USA
An Online Journal of Political Commentary & Analysis
Volume XIII, Issue # 146, June 4, 2011
Dr. Almon Leroy Way, Jr., Editor
Government Committed to & Acting in Accord with Conservative Principles
Ensures a Nation's Strength, Progress, & Prosperity
DESTROYING THE AMERICAN DOLLAR
By Alan Caruba
THE AMERICAN ECONOMY & THE VALUE OF THE U.S. DOLLAR: WHAT HAPPENS WHEN AMERICANS WAKE UP TO
LEARN THAT A DOLLAR CAN NO LONGER BUY ANYTHING? CURRENT ECONOMIC INDICATORS: RISING
UNEMPLOYMENT -- INCREASING FEDERAL REGULATIONS WHICH HAVE THE EFFECT OF STALLING THE ENERGY SECTOR
FROM OIL & GAS EXPLORATION THAT COULD CREATE THOUSANDS OF JOBS -- CHINA DIVESTING ITSELF OF U.S. SECURITIES,
ANTICIPATING A BAD OUTCOME FOR THE U.S. ECONOMY -- THE U.S. GOVERNMENT ABSORBING FAR TOO MUCH OF THE
GROSS DOMESTIC PRODUCT FOR ITS OWN PURPOSES -- SIXTY PERCENT OF ALL THE MONEY THE FEDERAL GOVERNMENT
SPENDS GOING INTO UNSUSTAINABLE ENTITLEMENT PROGRAMS -- PRESIDENT OBAMA STILL PUSHING FOR HIGHER TAXES
& MORE GOVERNMENT CONTROL OF THE ECONOMY -- FALLING CONFIDENCE & FAITH IN U.S. CURRENCY & SECURITIES --
OUTLOOK ON U.S. GOVERNMENT DEBT DOWNGRADED FROM "STABLE" TO "NEGATIVE"
FULL STORY:
Something I never thought I would ever see in my former hometown, a wealthy New Jersey suburb of New York City,
was a Dollar Store, but one opened recently in a former supermarket. Dollar Stores are giving Wal-Mart, Target, and
similar outlets a run for their money and it’s not hard to see why. The local one has just about everything you could
need and all for astonishing low prices.
In countless ways, people are looking to save money these days. The looming problem, however, is the question of
what happens when Americans wake up to learn that even a dollar can no longer buy anything?
“When Faith in U.S. Dollars and U.S. Debt is Dead the Game is over – And that Day is Closer than You May Think” is
the cheery title of an article recently posted on EconomicCollapse.com.
There’s a reason why both the mental condition and the financial condition are called a Depression. It’s hard to be
happy about anything when your nation’s currency is not worth the paper on which it is printed. The Federal
Reserve’s answer, some fear, is to print more money and to continue to buy U.S. debt with it. It is doubtful, however,
this Ponzi scheme will continue.
There isn’t a day that goes by when some U.S. government agency doesn’t send me a news release to announce that it
is giving millions for something and, if our elected leaders are negotiating a solution to this insane spending and giving,
there is precious little evidence of it.
New unemployment numbers are up. The Obama administration continues to churn out thousands of pages of new
regulations. It has stalled the energy sector from oil and gas exploration that could create thousands of jobs. And China
is divesting itself of U.S. securities, anticipating a bad outcome for our economy.
Meanwhile, the socalled “entitlement” programs represent sixty percent of all the money the government spends.
Without some changes, these programs are unsustainable. The Democrats’ answer is to depict Republicans as wanting
to kill grandma.
THE GROSS DOMESTIC PRODUCT
In a Mid-May article posted on American Thinker.com, Randal Hoven spelled out a number of facts that are
overlooked in the political battles between Liberals and Conservatives.
“The entire debate is about a difference that is
less than 4% of GDP. According to International
Monetary Fund figures, government in the U.S.A.
is spending 41% of GDP in 2011. The current
debate is about whether government spends 40%
or 44% of GDP.”
The government is absorbing far too much of the Gross Domestic Product for its own purposes. We are in a league
shared by Greece and other nations with a serious financial crisis.
While the federal and state governments plunder every cent they can extract from those still fortunate to have a job,
any investments or will die at some point, both Republicans and Democrats have participated in expanding
government since the last Great Depression.
While President Obama’s constant blaming of George W. Bush for his first two years became a joke, Hoven notes that
Bush expanded Medicare with a prescription drug program and many of the “Liberal” programs we Conservatives
denounce occurred while Bush was President. “No Child Left Behind”? Bush. Outlawing light bulbs? Bush. Ethanol
subsidies? Bush.
The absurdity of President Obama’s mantra that millionaires and billionaires be taxed more ignores the fact that such
taxes, even if we took all of their money, would barely cover the rate at which government spends and wastes such
income.
While negotiations, we’re told, are occurring or will, the greatest impediment is Obama’s open disdain and dislike for
Republicans. This cannot be underestimated in terms of finding a solution.
At the heart of our current problems is that, having inherited a financial crisis, Obama devoted the last two years to a
government takeover of both the health care industry and the financial sector with two bills, each of which exceeded
2,000 pages and vastly expanded government bureaucracy.
More government control of the economy is the last thing this nation needs at this time. Or any time.
Social Security will be insolvent by 2037 and, together with Medicare, they have unfunded liabilities of $107 trillion in
today’s dollars. That is seven times the size of the U.S. economy and ten times the size of the national debt.
The real problem for the United States is the falling confidence and faith in the U.S. dollar. It is the default reserve
currency of the world. Just about everything trades in U.S. dollars. It’s not only Americans losing faith in our
government’s ability to maintain its value, it is everyone else.
In April, Standard & Poor’s downgraded its outlook on U.S. government debt from “stable” to “negative.” It warned
that the U.S.A. could lose its prized AAA rating. Unless Congress and the current occupant of the White House take
specific steps to fix Social Security and Medicare, the dollar compared to other major national currencies will continue
to fall. It has fallen 17% since 2009. Moody’s rating service has also issued its own warning.
Pretty soon, nobody will want to buy U.S. securities used to currently borrow 41 cents of every dollar the government
spends. The U.S. borrows about $168 million every single hour.
In April, CNSnews reported that “the federal government made $125 billion in ‘improper payments’ in fiscal 2010,
more than eleven times the total 2010 spending by the U.S. State Department.”
That’s a government that doesn’t know what it’s doing and isn’t in a hurry to fix it.
That’s why a Dollar Store just opened in one of the most affluent suburbs of New Jersey.
I know the economists and others keep saying that the Recession that began in 2007, ended in 2009. I know they can
and will cite all manner of good economic indicators, but if faith in the U.S. dollar continues to falter, it won’t matter.
---------------------------------------
© Alan Caruba, 2011
LINKS TO RELATED TOPICS:
Political Economy -- Philosophies, Systems, & Public Policies:
Government, the Economy, & Economic Prosperity
Fiscal Policy: Taxation & Government Spending
Alan Caruba writes a daily post at http://factsnotfantasy.blogspot.com. An author, commentator and business and science writer,
he is the Founder of the National Anxiety Center, a clearinghouse for information about media-driven "scare campaigns" designed
to influence public opinion and public policy.
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THE PROGRESSIVE CONSERVATIVE, USA
An Online Journal of Political Commentary & Analysis
Dr. Almon Leroy Way, Jr., Editor
Conservative & Free-Market Analysis of Government, Politics & Public Policy, Covering Political, Legal, Constitutional, Economic,
Cultural, Military, International, Strategic, & Geopolitical Issues
Conservative Government Ensures a Nation's Strength, Progress, & Prosperity