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Ron Paul just released a new book – End The Fed – and it’s already ranked #42 on the Amazon best seller list.  Ron Paul is also a major supporter of HR 1207, a bill making its way through congress to perform a full audit of the federal reserve.  My copy of the book has just been ordered so I don’t have much to say on it yet.  But I continue to support Ron Paul’s push for a leaner and more transparent government.  If you feel the same, then click below and buy the book.

End the Fed by Ron Paul

It’s a huge problem that our fiscally reckless government  has been kicking down the road for decades.  It’s the bankruptcy of social security, which everyone knew was going to happen, but government economists were saying would not happen until 2017.  But now thanks to a deep recession, and probably also due to incorrect government calculations, the day has come 8 years early.

From the Associated Press article on Social Security, is the following:

Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that’s happened since the 1980s.

The deficits — $10 billion in 2010 and $9 billion in 2011 — won’t affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

Applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent. Social Security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn’t expect the increase to be so large.

What happened? The recession hit and many older workers suddenly found themselves laid off with no place to turn but Social Security.

But there is a huge flaw in the AP article, mainly in their statement that “Social Security has accumulated surpluses from previous years totaling $2.5 trillion”.  This is only partly true, and its related to the demographic trend of the population.  When social security was created there were far more workers paying into the system than pulling out of the system, resulting in decades of accumulated social security surpluses.  Normally this would not be an issue, if social security were a true trust fund.  But politicians have been raiding the surpluses nearly since social security’s inception, counting the surpluses in the same bucket as general income tax revenue, and every penny of the surpluses has already been spent.  To that point, consider the following snapshot of the current total outstanding government debt of the United States, directly from the source, the United States Treasury website.

As of September 24, 2009, the total national debt of the United States is nearly 11.771 trillion dollars.  Of that total, 7.46 trillion is held by the “public”, which represents the current total ownership of U.S. government bonds.  The other portion of the national debt – some 4.31 trillion dollars – is the money borrowed stolen raided from retirement funds – social security retirement funds and other government worker retirement funds.  I haven’t verified the $2.5 trillion figure from the AP article, but one thing is certain.  Regardless of the true figure of social security “surpluses” built up over the last few decades, it is more than accounted for in the $4.3 trillion dollars already borrowed and spent.  Social Security is now officially bankrupt.

Also see:

• The United States Has Not Had A Balanced Budget Since 1957!
• Obama Flip Flops On Fiscal Discipline And National Debt
• Santa Demands Bailout
• The United States National Debt Limit Has Become A Joke

Julian Robertson, founder of Tiger Management, has a bleak perspective on the enormous debt load of the United States.  CNBC recently interviewed him and summarized his take in this article, the excerpts of which are below.

The US is too dependent on Japan and China buying up the country’s debt and could face severe economic problems if that stops, Tiger Management founder and chairman Julian Robertson told CNBC.

Robertson said inflation is a big risk if foreign countries were to stop buying bonds.

“If the Chinese and Japanese stop buying our bonds, we could easily see [inflation] go to 15 to 20 percent,” he said.  “It’s not a question of the economy. It’s a question of who will lend us the money if they don’t. Imagine us getting ourselves in a situation where we’re totally dependent on those two countries. It’s crazy.”

China and Japan are still the largest foreign holders of U.S. debt.  Check out the latest report from the treasury department website to see the trends of their purchases and sales.  The image below is a subset of the data from the treasury website.

Don’t listen to the Associated Press, who in their latest article stated that “budget deficit tops $1 trillion for the first time”.  From their recent article,

The federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall, intensifying fears about higher interest rates, inflation and the strength of the dollar…

The mainstream media is generally ignorant about anything related to budget deficits or national debts.  A yearly budget deficit is the difference between what we bring in from taxes and what we spend in services.  The national debt is the total accumulation of all those deficits.  A quick way to find the REAL yearly deficit is to subtract the total national debt from any day in one year from that same day in the previous year.  By those realistic calculations, our annual deficit has already topped $2 trillion.  Here are a few snapshots from the United States Treasury website.

The national debt (portions of which are not hidden) is already at $11.524 trillion.  It was $9.502 trillion one year ago today.  The Associated Press has it wrong.  The annual budget deficit did not just break the $1 trillion dollar record.  It took a giant leap beyond that record and jumped to over $2 trillion dollars!

Way to go Obama!  Let’s see if you can hit the $10 trillion dollar mark before you leave office!!

Also see:

• The United States Has Not Had A Balanced Budget Since 1957!
• Obama And Fiscal Disaster, Worse Than Bush
• Obama Ethnicity Certified – He Is Japanese

According to the Associated Press, Obama is rejecting a second economic stimulus.  They just published an article entitled Obama rejects 2nd stimulus:  Give Recovery Time.   Here is an excerpt below.

President Barack Obama on Saturday dismissed the idea that the United States might need a second stimulus to jolt the economy out of recession and urged Americans to be patient with his economic recovery plan.

The views from the AP article came from Obama’s weekly Internet address to the nation, the full transcript of which can be found here.   Here is an excerpt from that address:

Now, I realize that when we passed this Recovery Act, there were those who felt that doing nothing was somehow an answer.  Today, some of those same critics are already judging the effort a failure although they have yet to offer a plausible alternative.  Others believed that the recovery plan should have been even larger, and are already calling for a second recovery plan.

But, as I made clear at the time it was passed, the Recovery Act was not designed to work in four months – it was designed to work over two years.  We also knew that it would take some time for the money to get out the door, because we are committed to spending it in a way that is effective and transparent.  Crucially, this is a plan that will also accelerate greatly throughout the summer and the fall.  We must let it work the way it’s supposed to, with the understanding that in any recession, unemployment tends to recover more slowly than other measures of economic activity.

Obama stopped short of rejecting another stimulus, but with a national debt over $11.5 trillion, and a financial disaster bailout cost of $12.8 trillion, lets hope Obama has finally come to his senses and does actually reject any additional stimulus.

HR 1207 calls for a full audit of the federal reserve, something that has never been done before.

Rick Santelli is one of the only regular commentators on CNBC that understands what is REALLY going on with this economy.  Herb Greenberg was once on that list, but he unfortunately left CNBC a while back to pursue other interests.  And then there was one.

Back to Rick.  Here is the rant that was heard around the world today on CNBC, and Rick is dead on right about this one.

Rick does not play favoritism with his criticisms.  Here is an older video showing Santelli blasting the CHIEF IDIOT of CNBC, Jim Cramer.  Thanks to Don Harrold for putting this piece together.  In the video, Santelli blasts Cramer for his blatant stupidity of calling a bull market the entire way down.

Criticalmas also gives an excellent summary of Cramer’s stupidity in this post.

There’s a great economic truth summary from iStockanalyst, with excerpts below:

The entire last two decades of so-called “Economic Growth” has been fueled by one fraud after another, starting with the Internet Bubble.

This fraud has been systematic and the mainstream media has been both an implicit and explicit enabler of these frauds, instead of doing its job, which is to root them out.  The looks on the faces of the other CNBC “anchors” was one of abject fear – perhaps parts of ”The Fourth Estate” is coming to realize that when the pitchforks and torches come out – and they certainly will if we hold the course we’re on – they might have some trouble explaining why they shouldn’t be near the head of the list of those being “sought”?

Back to the Santelli Tea Party.  It may have just been a metaphor, but his talk of a TEA PARTY has gotten the world riled up.  People have had enough of the socialism of losses from STUPID CEO BANKERS.  The world is now putting pressure on Rick Santelli to come through and organize a massive tea party in Chicago this summer.  Perhaps we can have a “Cramer Roast” in Grant Park to celebrate.  Thanks to ticker-forum for the picture below.  Stay tuned, but make mine a jasmine pearl oolong tea, please.

There have been many revisions to the 2009 Stimulus Plan.  Today’s vote on the 2009 Stimulus Plan was for the compromised version.  It has already passed the House of Representatives with overwhelming democratic support, and the Senate vote is expected to occur this evening.

Here is a video of House member John Boehner and his comments about voting on the 1,100 page stimulus plan that nobody read.

If you decide to read the full text of the 2009 Stimulus Plan, you will have done what no member of congress has done prior to voting. The full text is available at these links:

• Full Text of 2009 Stimulus Plan, Division A
• Full Text of 2009 Stimulus Plan, Division B

Also check out these House of Representatives home page links for any updated documents on the 2009 Stimulus Plan.

• United States House of Representatives
• House of Representatives Committee on Appropriations
  
• House of Representatives Committee on Rules
• House of Representatives Committee Offices

For a more digestable view on the 2009 Stimulus plan, check out the following documents:

• House Appropriations Committee American Recovery and Reinvestment Detailed Summary
• House Appropriations Committee Summary  Overview

The CNBC House of Cards 2 hour documentary is airing all week.  Set up your TIVO to record one of them, and watch it at your leisure for an informative and highly entertaining view of stupidity in action.  Or, check this link to watch some of the segments directly on the CNBC website.

Here’s what looks like a CNBC produced 8 minute trailer of House of Cards on youtube.

There is no doubt that Obama is magnitudes more qualified than McCain to run this country.  But the low McCain bar is not good enough to throw undying support toward Obama.  Obama got elected on the premise of change, and part of that change was supposed to be FISCAL DISCIPLINE.  Fiscal discipline is specifically listed as one of the top issues on the Obama 2008 campaign website.

Barack Obama will restore fiscal discipline to Washington:

Everyone knows fiscal discipline is tough, especially in the midst of a deep recession and financial crisis.  But a $900 billion economic stimulus plan, 100% of which will be got from additional borrowing, in no way qualifies as fiscal discipline.   Bush was a fiscal disaster during his 8 year term as president.  He managed to nearly double the national debt from $5.7 trillion when he took office to about $10.6 trillion when he left.  During his last year in office, he ran a true budget deficit of over $1 trillion.

What is the projection of the 2009 deficit during Obama’s first year in office? – From the Budget and Economic Outlook report for 2009-2019,

CBO projects that the deficit this year will total $1.2 trillion, or 8.3 percent of GDP. Enactment of an economic stimulus package would add to that deficit.

Read that last sentence carefully.  Obama’s $900 billion planned stimulus is not included in the projected $1.2 trillion deficit. What else is not included in the deficit projections?  From the same report,

The legislation that created the TARP requires that the federal budget display the costs of purchasing or insuring troubled assets using procedures similar to those specified in the Federal Credit Reform Act but adjusting for market risk (in a manner not reflected in that law). In particular, the federal budget should not record the gross cash disbursement for the purchase of a troubled asset (or cash receipt for its eventual sale) but instead should reflect an estimate of the government’s net cost for the purchase. Broadly speaking, the net cost is the purchase cost minus the present value—calculated using an appropriate discount factor that reflects the riskiness of the asset—of any estimated future earnings from holding the asset and the proceeds from the eventual sale of the asset.

Geldpress Comment: In a nutshell, the government intends to use the same “mark to model” scams provisions that enabled Frannie Mae, Freddie Mac, Lehman Brothers, Bear Stearns, Citibank, Washington Mutual, and dozens others to cheat the taxpayers out of of $8.5 trillion dollars and counting.  And the true true deficit numbers from Obama’s first year in office may not be known for years, well after those insolvent financial institutions finally come clean and admit that the “assets” are WORTHLESS!  If these assetts had value, than their would be a legitimate market value posted to them.  It’s not that “mark to market” does not work.  Mark to market is the best tool for determining fair value for an asset.  The CBO just doesn’t like the answer that “mark to market” is telling them.  So the CBO decided to do exactly the opposite of what they are forcing financial firms to do.  They embrace “mark to model” (better known as mark to myth) to soften the blow to the federal budget projections, and kick the fiscal disaster can down the road a few more years.

Sooner or later this country will be required to institute a sound money policy, including transparency, and real balanced budgets.  As it stands, this country has not had a real balanced budget for over 50 years.  Economics 101 tells us that government deficits normal and allowed to soften the blow from recessions or even deep financial disasters. But the same economics book tells us that governments must work to pay down the bills during the boom years.  This has not happened since 1957, the last time the United States had a true balanced budget, and a true decrease in the national debt.

Where will it end?  What are your projections for the national debt in 2012?