I could have titled this article as The Big Illusion, The Big Reality or The Big Joke. Any of these would have been appropriate, but The Big Reset best defines what you need to be prepared for, so that is why I titled it as such.
The past few weeks we have been watching our elected leaders’ quarrel over mere nickels while spending us into oblivion. All the while the posturing on both sides of the aisle has been sickening and disheartening at the same time. If you have read any of my other posts there is no argument on where I stand politically. I have never been a fan of President Obama (knowing he would be such a disaster) going as far as claiming upon his election that we all would long for the Carter days. So far that thought is right on track even though the media has made him out to be the second coming of Christ.
The Big Illusion: Living in Paul Ryan’s district I am fortunate to have one of the few Republicans (much less politicians) who actually understands the mess our country is facing. (There are no Democrats that come to mind that actually understand what we are up against). This past week the “House” voted on and passed Mr. Ryan’s $6.2T deficit spending reduction plan. This is the first plan by anyone that actually takes some steps is re-righting our fiscal mess. However, there are big problems with the plan itself and not ones that will be talked about by anyone else.
First problem: the Senate will not pass it and even if they did Mr. Obama would veto the bill before it could even get to his desk.
Second problem: $6.2T over 10 years is not enough to get us out of the mess we are in no matter what the CBO says. The calculations used by the CBO are always based on best guess projections and they are NEVER correct in the end.
Third problem: new Congress, new spending. Does anyone remember why the Republicans lost power in 2006? It was because they were spending too much. The hypocrite Democrats ran against the Republicans promising to bring in some fiscal sanity. What is their definition of fiscal sanity? Spend more, more, more… and now these same blowhards are calling the current Republican spending cuts irresponsible. As soon as a new Congress is elected, new spending bills will be introduced and Mr. Ryan’s plan is destroyed.
Fourth problem: even by Mr. Ryan’s and the CBO’s projections it will take 45 years to bring us back to even. Like that will ever happen. (Read problem #3).
The Big Reality: baby boomers are coming into retirement age. It is told to us over and over again that these people hold the majority of all the wealth. While this is true, let’s take a look at some actual numbers. There are approximately 77.3 million baby boomers. The estimated assets owned by these people are $7.6T (that’s a lot of money). Of these 77.3 million people, 10% own 2/3’s of the wealth. The average assets of the wealthiest of this group are only $1.2m. The bottom 90%, which equals over 69 million people split up about $2.6T. The median assets amongst these people are $45,900, with 1/3 of them having $0. (Yet, according to many published accounts, these people think they will be able to retire financially stable). This information alone should paint a bleak picture and put a knot in your stomach (especially if you are a boomer). On top of these disturbing numbers is what the boomers’ will be demanding from the government in the form of unfunded liabilities, also known as Social Security and Medicare. Depending on who you believe, these numbers are between $59T and $136T (I believe the number is closer to the latter). Now, where are we going to come up with this money?
This leads me to…
The Big Joke: also known as Mr. Obama. How does anyone take this guy seriously? Says one thing and does another. It’s all good to the media and our friends on the left. This past week Mr. Obama announced his $4T twelve year plan to cut spending and increase taxes. (Right, Mr. Obama will actually cut spending after giving us the largest deficits in the history of this nation by spending, spending, spending). Somehow, he will cut spending by increasing spending. The Big Joke. Oh wait, I forgot, he is going to raise taxes on the “rich” to help pay for all his spending, thus reduce spending (oh, to be in the mind of a liberal). I will not get into how raising taxes actually lowers revenues collected or how he thinks your money is actually his money to spend. I will use this information to explain why he is The Big Joke. According to the IRS, in 2008 the entire taxable income of anyone making over $100K was $1.582T. If he took every nickel from these taxpayers it would not cover his $1.65T deficit spending this year alone (not including the rest of the budget). YES, let’s tax those evil greedy rich people and all will be well! What a JOKE.
The Big Reset: is what is going to happen. This will not happen overnight, but over many years of pain and agony. As matter of fact it has already started. A few weeks ago the CEO of Wal-Mart announced that price increases are coming. Inflation has set in with commodities across the globe. If Mr. Bush were still president this would have been headline news in order to make him look bad. Since it is Mr. Obama sitting on the throne, barely a peep comes from our press. Gas prices are nearing $4 per gallon in most of the country and over $4 in other parts. The last time it was the greedy oil companies, today, not a word. QE2 is well on its way pouring capital into the markets and all indications QE3 will be next. The reason for this is to devalue our dollar in order to pay off the debt and cover current and future spending. Gold and silver are going up at a frantic pace and will continue to do so. Interest rates will drastically rise, making borrowing more expensive. This will not help the already shallow housing market. Food, clothing, and health care will cost much, much more. Heck, it will cost more to breathe (someday, there will be a tax to breathe).
Once we go through The Big Reset, someone who had a $100K income will have a $175K income. That may seem ok on the surface, but that new income will be the same as having a $75K income before The Big Rest (today). Our standard of living will drop and we will be living with the new “norm” and the process of life will start all over again.
We will have the new Illusion, Reality and Joke.
Read more at http://www.illusionsandrealities.com/