The Cold, Hard Truth

In our recent discussion, many of you say that this financial situation the nation finds itself in is fixable. All we have to do is eliminated this Federal department, that one, and then convince the recipients of all the Fed Bucks that it’s for everyone’s benefit that they stop getting government checks. Do you even hear what you are saying? Comments like this are simply not realistic:

  • Once DOGE is done and we quit using the Federal Reserve Note…
  • Flat Taxes have to come with spending cuts and entitlement program reform…
  • Did you know that snowballs last longer in hell if you put little hats on them?

Ok, that last one is me. Still, there is no way that millions of Federal employees, a hundred million welfare recipients, and 70 million Social Security recipients are going to sit idly by while DOGE and DJT tell them that the money faucet is being shut off. Even the medical field, my own profession, cannot survive without government money.

  • In 2022, 53% of Americans received at least a quarter of their income from government aid, up from 1% in 1970.
  • Government transfers account for 18% of all personal income in the United States
  • One in four Americans received Medicaid in 2022
  • One in five Americans received Medicare in 2022
  • One in five Americans receive Social Security
  • 12% of Americans are on Food Stamps, and 39% of children in school receive free lunches at school
  • In fact, Americans received $3.8 trillion in government transfers in 2022
  • Then there are employees. There are 28.5 million people directly employed by governments in the US.
  • Millions more are employees of businesses that owe their livelihoods to government largesse.

More than half of the residents of this nation are net receivers of government funds, and there is no recovering from that. To illustrate- what would you say if DJT and DOGE announced tomorrow that to save the nation, the entire Social Security and Medicare system was ending on January 21, but the taxes would remain in order to pay off the massive $40 trillion in debt? Would you be OK with that, or would you scream some variation of “That’s my money! You took it from me, and I want it back?” Or would you calmly walk into personal bankruptcy, secure in the knowledge that your personal sacrifice saved the nation?

Call it doomsaying, call it black pill, call it what you want- but saying that we can vote our way out of this is foolishly mistaken. There are no cuts, no magic wand waving, and no solution that the people of this nation will accept until they are forced to accept it. This only ends when the current system collapses.

Whatever your own personal theory on how to save this sinking fiscal ship, there isn’t one that enough people will accept that will be doable. It just isn’t going to happen. Instead of fixing it, we kept kicking the can down the road, and we will continue to do so until it all collapses.

This isn’t a new thing- I have been telling people this for 20 years.

Fair Share

The refrain from the left is that the “rich” need to pay their “fair share” as if they aren’t paying taxes. Let’s take a look at what that means.

The top 1 percent of taxpayers pay nearly double the income taxes than the bottom 90 percent. The top 1 percent of taxpayers paid more than $1 trillion in income taxes while the bottom 90 percent paid $531 billion.

The share of income taxes paid by the top 1 percent increased from 33.2 percent in 2001 to 45.8 percent in 2021. Over the same period, the share paid by the bottom 50 percent of taxpayers fell from 4.9 percent to just over 2.3 percent in 2021.

That’s right- the lowest 50% of wage earners paid just 2.3% of all income taxes, while the top 25% of wage earners pay 89.3% of them.

So just how much do you have to make to be in that upper 50%, or upper 25%? To be in the top 50%, a taxpayer must earn at least $46,637 per year. In order to be in the top 25%, a taxpayer would need to make $94,440. The top 25% isn’t all that rich- there are tons of people like nurses, firefighters, restaurant managers, electricians, and auto mechanics who fall into that top 25% category. The top 10% of wage earners? Those are people making $169,800 or more. Those are your doctors, chiropractors, accountants, lawyers, and many entrepreneurs. Successful, to be sure, but hardly evil people playing the part of Ebenezer Scrooge.

The left claims that they are only going to raise taxes on people making more than $400,000 per year. That is the top 3% of all wage earners, a group that is already paying more than 24% of their income on taxes, and who are already paying 60% of all Federal income taxes.

Even if we were to confiscate every penny made by the top 5% of earners, the government would only get $6.1 trillion. Since the government spends more than $6.2 trillion a year, that amount wouldn’t even be enough to run the government for the year, and I guarantee you that those wage earners wouldn’t be there to fleece next year.

No, when the left tells you that they want to increase taxes, they mean for everyone. Of course that won’t affect them, because they are getting a cut for themselves. You didn’t think that those billions going to Ukraine were all for beating Russia, did you?

Better Than You

California Senate committee advances a bill that would provide no money down/zero percent interest home purchase loans to illegal immigrants. The amount of the loan is for up to 20% of the home’s value, and is intended to permit the illegal to come up with the down payment for a traditional mortgage. The loan is to be repaid when the home is refinanced, sold, or transferred. If a family decides to hold on to a home, there are no provisions for repayment, potentially allowing the loan to not be paid back. Ever.

No add to this Harris’ proposal to hand out another $25k, and you see what’s going to happen in California. Illegals will be the only ones who can afford homes in California.

Collapse

As empires collapse, the government employees/legislators begin to loot the treasury in preparation for the coming hard times. I believe that we are there. In support of this, I offer the increasingly blatant examples of Congress making hundreds of millions, the Bidens selling access, this morning’s story about CBP agents on the take, and someone in the Arkansas Department of Education creating a fake $66 million contract that, according to the vendor, doesn’t exist.

I have been posting on this since 2009, nearly since this blog began.

  • Reagan borrowed his first trillion in 6 years
  • George HW Bush borrowed his first trillion in 3 years, and he increased the National debt by 170% in four years.
  • It took President Clinton 3 and a half years to borrow his first trillion dollars. All told, he borrowed $1.2 trillion in his first term, and $600 billion in his second. He increased the national debt by 140% in eight years.
  • President George W Bush borrowed his first trillion dollars in two and a half years. He borrowed his second trillion a year and a half later. Another two years, another $1 trillion. All told, President Bush borrowed $5 trillion in 8 years, increasing the national debt by 187%.
  • Obama borrowed his first trillion in 13 months.
  • Trump borrowed his first trillion in just over 7 months. In all, he borrowed about $8 trillion in four years.
  • Biden has borrowed $6 trillion in the three and a half years he has been in the Oval office. Now we are borrowing a trillion dollars every 5 and a half months.

The US treasury has borrowed $24 trillion in the past 15 years.

Printing Your Way Out of Debt

The US Treasury just announced that they will be “buying back” outstanding treasury notes during the next quarter for the first time in more than 20 years.

The Treasury Department has undertaken only two previous series of buybacks in the past century. The first took place during the 1920s. More recently, Treasury bought back $67.5 billion of outstanding debt via 45 operations held between March 2000 and April 2002

What followed the first buyback was the Great Depression.

They are claiming that the intent is to make the bond market more liquid. No, what the effect is, is to print our way out of debt. They are going to conjure up $2.5 billion out of thin air, and buy back treasuries with it, in the hopes that people will say “Oh, they aren’t in as much debt now, so I guess I will lend them some more money.”

The first operation is intended for May 29. Through July, the Treasury plans weekly buybacks of up to US$2 billion of nominal coupon securities, and up to US$500 million for Treasury inflation-protected securities (Tips).

This will place more money in circulation and will result in more inflation. There are currently $27.4 trillion in outstanding treasury notes, plus an additional $7 trillion owed to the SS trust fund. A couple of billion isn’t going to do shit, especially when they continue to borrow about $100 billion per day.

This nation and its economy are screwed.

Taking Our Profits

In the Fall of 2021, I saw the financial problems coming and promptly got out of the stock market. It crashed just a couple of months later. I posted about it at the time, but I can’t find the post. That meant for 2022, we had no Capital gains because we weren’t in the stock market.

Anyhow, I bought back into the market last July, at my wife’s insistence. She bought 450 shares of Royal Caribbean (Symbol: RCL) at $32 a share. Total cost was $14,400.

Today, RCL announced their Q2 profits, and they went from a $500 million loss for Q2 2022 to a $450 million profit for Q2 2023. The stock price skyrocketed to $112, which put the stock price near its pre-pandemic price. The value of those 450 shares was $50,400 when we sold, which is a $36,000 profit. A return rate of 350% for the year.

My other stock buys haven’t done as well. I bought 100 shares of Smith and Wesson last December at $9.82, and it is only selling today at $13.09. I own a few shares here and there, but they are sitting flat. The market may go up from here, but I am not looking to be greedy. Still, I think this is a good time for profit taking on stocks.

Still, we have done well in the market during the past year, having made just shy of $40,000 in capital gains. That will mean we owe $6,000 in capital gains taxes, but that is still less than what we would have paid in taxes on a second job. My wife knows far more about investing than I do, and that’s why I let her make the calls on that.

Exploding Debt

On June 1, the Republicans caved by giving President Biden a blank check to borrow whatever and how ever much money he wants to spend. On that day, the US debt stood at $31.46 Trillion. Within a month, the US had borrowed another Trillion dollars. Here we are, just six and a half weeks after they handed him the credit cards, with $32.54 Trillion in debt.

Proving that the Democrats never deal on ANYTHING with good faith, they are already calling for the abrogation of the handshake agreement that the parties reached to rein in the spending. They are borrowing money at a rate of over $100 Billion every business day. To put that in perspective, I wrote in 2009 that Obama had broken a record by borrowing a Trillion dollars in only six months.

It took this nation over 200 years to borrow a trillion dollars. Trump did it in seven months, Obama did it in only 6 months. It took Biden 9 months to borrow his first Trillion dollars, but he soon got better at it. His second trillion took three months, borrowing $2 trillion in his first year. In fact, he has increased the national debt by 118% in just two and a half years.

President Trump increased the National Debt by 134% in four years.

Obama increased the debt by 194% in eight years.

President George W Bush borrowed his first trillion dollars in two and a half years. He borrowed his second trillion a year and a half later. Another two years, another $1 trillion. All told, President Bush borrowed $5 trillion in 8 years, increasing the national debt by 187%.

It took President Clinton 3 and a half years to borrow his first trillion dollars. All told, he borrowed $1.2 trillion in his first term, and $600 billion in his second. He increased the national debt by 140% in eight years.

George HW Bush borrowed his first trillion in 3 years, and he increased the National debt by 170% in four years.

Reagan borrowed his first trillion in 6 years, and doubled the National debt during his eight years in the White House.

Carter increased the National debt by 150%, but “only” borrowed $300 billion in 4 years. I guess that was when $1 Billion was real money.

Ford increased the debt by 147% in 3 years., Nixon by 135% in 5 years, Johnson by 116% in 6 years, Kennedy by 106% in 2 years, Eisenhower by 108% in eight years.

Democrats, and Republicans, both in a contest to see who can spend the most in our society of “how much can you give me if I vote for you.”

Remember when the Biden spokeswoman told us that borrowing trillions didn’t cost anything because it was already accounted for? So that’s where we are- under Biden, the US has borrowed $4.75 trillion in just two and a half years. This can’t continue.

By definition, anything that can’t continue, won’t. There is no amount of voting that will fix this.