The reason spending cuts do not matter is no one is serious about them. The Democrats will push the debt to 20 trillion by 2016 and the Republicans to 19 trillion. Is there any real difference in the political philosophy of these two parties? Both sides are afraid to cuts spending. Rather they make nominal changes, shake hands and then congratulate themselves for being masters of the universe.

  • S&P lowered the US rating on Debt. They did this despite political pressure from Washington not to. Government is not interested in stopping its growth. GDP to debt limits or threat of a government shut down does nothing, except allow more political trickery to continue the growth of government.
  • I do know for fact that the people holding our debt in foreign countries are not so naive.
US debt and spending

It does not get me excited when people talk about spending cuts. Cut the budget 50% or more this year and then I know people are serious, everything else is just political smoke and mirrors.

What is the problem with politics and US spending?

The problem is the Republicans support the industrial military complex (we are in 135 countries around the world in some form) as much as the Democrats support corporatism (subsidies and bailouts under the guise of Keynesian economics). Whether it is foreign spending to support our foreign empire or┬ádomestic spending to transfer your wealth to another man’s wife, it does not matter, it has to stop. When interest rates go higher the interest on the debt by 2016 will be higher than military spending. Then what?

Is America doomed? Not yet, but eventually the dollar could collapse under the weight. If foreign countries like China or even domestic holders of US bonds and currencies start to panic, then the US will not longer be able to finance its government, no matter how many hand shakes and smiles in Washington. I do not think America will collapse economically, but I would not put money on it either.

What is inflation? Even if this does not happen the devaluation of the dollar and a return of inflation is apparent. Inflation is a tax on the poor and working people at the expense of the wealthy who have the ability to hedge with investments.

My recommendations are:

Vote for the right person on the 2012 US elections. I do not know who I will vote for at this juncture. Maybe if Ron Paul runs I will be for him.

Obama wants a budget that by 2016 we’ll have $20 trillion worth of debt, Republicans want one where there’s only $19 trillion worth of debt in 2016. That’s not much of a reform as far as I can see. – Ron Paul