$1.8 Trillion Annual Deficit – The Problems with Biden’s Budget

Angry Grizzly BearWith gratitude to the National Conference of State Legislatures (NCSL), their analysis of the proposed budget was broken down, and some sense was made.  Not that the news is logical, acceptable, or palatable, just that the budget documents were broken down, which was helpful.  We start with the most bass-ackwards aspect of the budget by asking one question, “Where is the money supposed to come from?”

The 2022 Budget Proposal left President Biden’s desk requesting Congress to spend $6 Trillion and add $1.8 Trillion in new deficit spending to the bloated debt the government already owes.  “Who is going to buy the bonds and make money on this debt?”  When a person employs a search engine, asking this exact question, many answers come forward, and some do not make any sense.

Peter Schiff stated:

The government doesn’t have money that it doesn’t take. Any dollar that the government spends is a dollar that the private sector can’t spend or can’t invest. The government has to take money out of the economy before it can put it back in. Nobody seems to understand this basic point because they see the Fed creating money, and they think, well, we just print money. They don’t realize that when they print money, they destroy the value of the money that’s already there. So, they’re not adding new purchasing power. They’re just redistributing it” [emphasis mine].

Thus the first problem with America’s debt and proposed budget transparent; there is no money that government can spend unless it first forcefully removes it from the owner.  That is theft, or as we recently discussed, legalized theft.  The Supreme Court of the United States (SCOTUS) has ruled that legalized plunder, legal theft, or forced taxation are the price we pay for civilization, thus making legal the government’s actions to steal money.Government Largess

Let me be clear; I am not an economist.  I select several very bright and experienced people to help explain things to me.  However, I can help others with less interest in economics understand what is happening in America right now to answer the question put forward, “Who is buying America’s debt instruments?”  The simple answer is that the Federal Treasury is buying the debt instruments, as the whole world sells their bonds and other American debt instruments.  What the Federal Reserve is doing is called “monetizing debt.”

Monetizing Debt

Gravy Train 3The definition of monetized debt is as follows. “Debt monetization or monetary financing is the practice of a government borrowing money from the central bank to finance public spending instead of selling bonds to the private sector or raising taxes. It is often informally and pejoratively called printing money or money creation.”  Money can only be created in two ways: selling products and services and lending money where the borrower pays interest.  While there are many different debt instruments, i.e., credit card, home loan, student loan, bonds, Treasury Notes, etc., the principle remains the same: you either sell goods and services to make money or lend money and make money on the interest.

Why does monetizing debt matter?

Two simple reasons the government allows debt to be monetized.  To hide debt, it doesn’t want the public to know about, and to absorb cash on the market as a tool to fight inflation.  Here’s the problem, there is too much debt on the government’s books to hide it from the public any longer.  Add to that the sheer volumes of cash in the marketplace after handing out money during COVID, and the Federal Reserve will monetize debt.  Even if the chair of the Federal Reserve denies monetizing debt, debt is being monetized.Burning money - THE JOSIAH BARTLETT CENTER FOR PUBLIC POLICY

In short terms, your pocketbook is going to take another hit on the chin, and possibly two.  First, your interest rate on privately held debt, credit cards, student loans, homes, etc., is going to go up, all while making lenders nervous and refuse to lend money.  Second, inflation is already making the dollars held less valuable.

Inflation first; inflation is the devaluation of dollars.  The government floods the marketplace with cash, and the currency you hold will drop in value.  For example, recently the inflation was reported to have been 4.6% higher year-over-year.  This announcement was made in April 2021, so all the money you earned last year suddenly became 4.6% less valuable this year, all before the interest rate increases affected those dollars.Inflation - 8 Things Everyone Ought To Know.

Case in point, the US Government sent me $1000 in January; I held onto those funds due to a move that was coming and spent the money in June.  However, between January and June, inflation moved up at a steady pace, and when I went to spend that $1000, it was only worth $850.  That is the power of inflation in your pocket.

Have you asked for a credit increase recently and been denied?  What about your credit limits on your credit cards, have they shrunk?  Both are indicators that the lenders refuse to lend due to the tremendous risks caused by fiscal insanity in the Federal Government.  What about home loans, have you had to produce more documentation, prove more income, and work harder to qualify for a loan?  What about student debt?  The government controls the lending of student debt.  Even here, the Federal Government cannot demand a lender loan money to student’s and many students have found their college expenses grow, and their ability to borrow shrunk.Inflation pickpocket | Cayman Compass

In a simple fact of life, every household in America understands perfectly. When your credit scores go down, your ability to borrow reduces, and it becomes harder to meet all your bills every month.  Every city, county, state, and even the Federal Government should know this lesson, but they refuse to believe problems arise when credit scores go down.  All because those elected believe they can tax some more, and the money magically appears.

Does money magically appear in your pocket; of course not!  It must be earned through working, selling goods and services, or trading your time for employment with an employer for a paycheck.  Does the law allow you to write blank checks, kite checks, backdate checks, or simply float a check waiting for a future payday; of course not!  Yet, this is what the government is doing right now with your money.  The government is spending money, promising the lenders that a future payday will be theirs, but the government has to spend money to get money.  Does that excuse work for you when the electric company, gas company, cellphone, and other bills arrive?A Helpful Chart : How Inflation Changes Mortgage Rates

The most heartbreaking statement I have heard in a long time was recently made by a physician’s assistant, who claimed, “Aren’t we all just one paycheck from disaster?”  The simple truth, mostly, yes!  Studies exist that talk about financial resiliency in America.  Financial resiliency is all about being able to weather a patch of trouble without losing your possessions in bankruptcy.  The conclusions were all but unanimous. Along with most industrial nations, America has no financial resiliency due to government fiscal policies that hinder saving money and the need to live on credit cards to keep the basics of life paid for each month.

When inflation is stealing the value of your money, no wage can compete with government theft, all before taxes.  Add in tax laws that are counter-productive, job-killing, and increase the cost of doing business, and the job you have becomes tenuous at best.  Add in the hidden debts the government is trying to hide, and nobody in America is making money.

QuestionWhat about those who consider themselves “Rich?”

The same problems you are having with inflation are the same problems everyone is having with inflation.  Let’s go back to my $1000 that became $850 through six months of inflation.  We all spend the same money, and inflation is killing everyone’s dollar equally!  Hence, I beg you, do not allow the media hype about rich versus poor to derail the point.  Inflation and monetized debt are killing the US Dollar, which is why so many foreign investors have dumped their US Debt instruments for safer financial shores.

While some people have more financial resiliency than others, everyone’s dollar is dropping in value.  Inflation and low financial resiliency mean making budget cuts to charities, hiring someone to maintain a lawn, and a host of other ways and means American’s share our money.  It can mean turning off services, weighing how much fuel can be used, and a host of other belt-tightening decisions.  All things the government should first be doing, and they refuse.24+ Inspirational Quotes For Unemployed - Audi Quote

Yours and my liberty and freedoms depend upon stable economic policy, firm fiscal policies, and elected officials scrutinizing the government for waste, fraud, and abuse.  Yet, what do we regularly find; fraud, waste, and abuse!  The Department of Defense has lost multiple trillions of dollars; not a single politician is asking for an audit and an explanation or is willing to withhold additional appropriations until the lost money is accounted for.  The Department of Veterans Affairs continues to mismanage funds, misappropriate funds, and waste money like overripe fruit; yet, still, we have zero interest from the politicians elected to scrutinize government.

I repeat Peter Schiff, only for emphasis:

The government doesn’t have money that it doesn’t take. Any dollar that the government spends is a dollar that the private sector can’t spend or can’t invest. The government has to take money out of the economy before it can put it back in. Nobody seems to understand this basic point because they see the Fed creating money, and they think, well, we just print money. They don’t realize that when they print money, they destroy the value of the money that’s already there. So, they’re not adding new purchasing power. They’re just redistributing it” [emphasis mine].

Inflation Quotes | Inflation Sayings | Inflation Picture Quotes - Page 2In redistributing your money, the government has proven they are the problem, and the solution begins locally!  Change your mayor, city council, county board, school boards, and every other elected official.  Getting the local governments in fiscal shape allows state governments to begin practicing fiscal health and sanity.  Then, we put people into the Federal Office more interested in scrutinizing the government than in writing endless laws and abdicating their legislative role to the executive bureaucrats and the judicial branch.

Knowledge Check!The budget put forth by President Biden is the height of insane, and I have only covered less than 1/10th of the budget problems in this article.  Granted, I covered the most egregious problem, but the fact that the legislative branch is even negotiating a compromise is beyond insanity and borders on criminal negligence!  We, each citizen of a representative government, must stand and tell our representatives NO MORE!  No more fiscal insanity, borrowing to buy votes, entering into debt obligations that make captives of unborn millions of other people.  No more will we allow them to buy votes to maintain power.  End the financial abuse of the taxpayer; your wallet will thank you!

© 2021 M. Dave Salisbury
All Rights Reserved
The images used herein were obtained in the public domain; this author holds no copyright to the images displayed.

NO MORE BS: Truth About Casino’s and Lotteries

Government Largess 4In the late 1980s, I was a newspaper delivery boy for the Bangor Daily Newspaper.  My route included Bayside, home of the Northport Yacht Club, the marina, and the cottages that make up this secluded community.  One day, a yacht-owning customer bought a paper, then asked me about the hottest topic, Maine was about to adopt a lottery program to “help pay for K-12 education throughout the state.”  As a kid of 11, I had no opinion on this topic; I just sold the newspapers.  But, the conversation got me thinking, and that following Sunday, I sat down to the editorials and read both sides of the contest.  Including a political cartoon that has never left my mind.

Stupidity-TaxAs I have aged and experienced, this cartoon returns to mind quite often.  As does the premise behind lotteries and casinos, the house always wins.  While living in New Mexico, the gaming commission complained that with revenues from lotteries slumping, less money could be paid to the state for K-12 education, causing a cash shortage requiring higher taxes for public education.  With their high six-figure salaries, their enormous cash outlays, and income, the gaming commission could not find sufficient money; I am not buying the excuses!  But, the house always wins.  Believe it or not, the announcement that higher taxes were looming because of a slump in lottery buying led to higher sales of lottery tickets, and the “cash crisis” was obverted.

Worse, casinos saw an increase in gambling attendees, which also helped to avoid a cash crunch causing higher taxes.  The increase in sales on lottery tickets and casino gambling also saw an expontential increase in gambling debts, gambling addictions, and gambling-related crimes to feed the people’s gambling obsessions, worsening the public burden on gambling support programs and increasing the costs of these programs.  The house always wins!King of Id-Casino

Richard Brookhiser authored “What would the Founding Fathers Do? (Our Questions Their Answers), and on pages 97-99, discusses President Thomas Jefferson’s debt and his pitch to the Virginia Legislature to hold lotteries arguing both for and against state-sponsored lotteries.  In Jefferson’s remarks, we find the trouble and the social consequences of state-sponsored lotteries.  Pres. Jefferson stated, “If we consider games of chance immoral, then every pursuit of human industry is immoral; for there is not a single one that is not subject to chance.”  Further pointing out that farmers bet on the weather, Captains of ships bet their lives and crew lives, builders bet on market conditions, etc.  Jefferson’s second point on state-sponsored lotteries makes two compelling points to today’s discussion, that of the addicted gambler and the responsibility of the state to protect them against their actions, and that building, shipping, trade, farming, etc. all produce or handle real products and services that pay off the debts; but games of chance are pure diversions and thoroughly unproductive.

Lottery Tax QuoteBrookhiser noted, “Libertarian Jefferson saw chance everywhere; Republican Jefferson saw the damage that pursuing games of chance create, and both Jeffersons dueled to Jefferson’s death.”  Worse, both of President Jefferson’s ideas are found in current society and the gambling crisis prevalent in every state in the American Union!  We find thoroughly unproductive state lotteries raking in cash through tickets and casinos, balls, and scratch-offs, creating a regular addicted population of gamblers for the government to expand to take care of, protect, and guide.  As a conservative, I ask continually, why is it the government’s job to protect and guide the addicted through their own choices, behaviors, and lifestyles?  If President Jefferson were here today, I would ask him why he considers it the government’s job to engage in thoroughly unproductive lotteries and games of chance and why the addicted need government intervention?

Detective 4Since President Jefferson is not here to ask, I put the question to you.  With the expense of holding games of chance, casinos, and lotteries, is this money well-spent by the taxpayers?  Since these games of chance, lotteries, and casinos breed social problems, creating poor people, and destroying morals, ethics, and values, is the government responsible for the addicted people crushed by gambling?  I have worked on Indian Reservations, where gambling is a significant industry, and I witnessed how much casinos create trouble, damage, and chaos.  My heart wept at the lives destroyed, the potential wasted, and the land blighted through gambling, and I cannot shake wondering why the state would allow and support the gambling and games of chance.

Brookhiser quoted President Jefferson, “… As in those of insanity, idiocy, and infancy, etc., it is the duty of society to take gambling addicts under its protection; even against their own acts, and to restrain their right of choice of these pursuits, by suppressing them entirely.”  I say NO!  If you choose to gamble until you are addicted, it is not the responsibility of anyone but yourself.  Sure, you will need help to overcome the addiction, but society should not foot the bill!  Like every other addiction humans become entangled with; society should not have to foot the bill to help the addict.  Helping the addict is the role of the church and non-profit, non-government-supported relief agencies, not the taxpayer!  The house always wins.

ArizonaUsing Arizona as an example, the Arizona Lottery gave back to the community $226.14 Million in 2020.  In 2019, the Arizona Lottery, using a Multi-State Lottery Association scheme, exceeded $1 Billion in revenue.  Speaking of how the house always wins, see the disparity between raised and given back?  More than $8000 Million went to overhead, salaries, and other sources, but somehow Arizonans are expected to feel grateful for the $226.14 Million in crumbs returning to Arizona.  Why again is the state sponsoring games of chance, creating new and “exciting” games of chance, and helping gambling addicts created through state-sponsored lotteries?

In researching for this topic, I have reviewed resources for and against lottery winners’ ravages, from the lottery’s curse, where people have gone broke and are worse off than before winning to the exact opposite where up to a decade after winning, the winners are better off financially and emotionally.  The deciding factor always comes back to the individuals involved’ attitude and choices, just like everything else in life, how you choose, how you evaluate consequences, and what you do with this information determines your destiny.  Yet, I return to the same questions, time and time again, why is the state sponsoring games of chance?  Where does all the rest of the money go?  Why is the state involved in addiction recovery programs when they caused and supported those populations becoming addicted in the first place?

Stupid People TaxA “Liberty FIRST Culture” needs to be asking more challenging questions and demanding more answers that make sense logically, that open doors for success, not addictions to unproductive behaviors.  I learned early that gambling was a tax on stupidity and have avoided the lure of lotteries.  The curse of gambling addiction has affected my family, city, state, and country for far too long without accountability from the state for their abhorrent actions and behaviors in supporting lotteries and casinos.  We, the citizens of America, need to understand and have clear information to improve choices and government directions.  Where casinos and lotteries are concerned since the house always wins, who owns the house?

© 2021 M. Dave Salisbury
All Rights Reserved
The images used herein were obtained in the public domain; this author holds no copyright to the images displayed.