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Saturday, March 28, 2009
Economic Reality - The Debt Drug
What is the most basic cause of our current economic problems? The citizens and government of the United
States of America have been over-consuming for many years and have been building up massive amounts of debt. Excessive
debt has become equivalent to an economic narcotic throughout all levels of our society. All of the subsidiary issues
we see before us every day are generated by our fundamental debt drug problem. Why won't our
political leaders tell the citizens of the US this basic fact?
In order for the US to recover from
its over consumption it must under consume for a reasonable period of time so it can restore a reasonable economic balance.
We need to go cold turkey on our debt drug habit and purge the debt drug from our society. It is ok for all us to have
a drink or two of debt from time to time but too many people in our nation have let a couple of drinks lead to a hard drug
debt habit.
President Obama and the Democrats in Congress appear to be trying to "fix" our economic
problems by encouraging more excess consumption and adding huge amounts of debt to our nation via trillions (with a T) of
national debt. This is equivalent to a drug addict trying to recover from a near death overdose by taking more drugs.
The approach that is being taken by the politicians doesn't address the fundamental problem and will only lead to
more difficult problems in the future. The recent complaints by China and others about the devaluation of the US dollar by
the excessive US government spending and debt are the tip of the iceberg of economic and currency problems we will face in
the future.
It does appear that the citizens of the US have had a good scare created by the debt drug overdose
and have begun to increase their savings rate for the first time in many years. This is very good news. Maybe
a large number of people have learned a good lesson about their own economic behavior. Now we must get the Obama
administration and the Congress in line.
Let us all hope that the debt drug haze that is covering the capitol
lifts soon and the vision of our leaders begins to clear.
TPM
10:04 pm
Tuesday, March 24, 2009
Obama On TV
I have watched President Obama on The Tonight Show, 60 minutes and tonight's press conference during
the past week. I am now convinced that Obama has a reasoned top level view on the big issues in our world today
and desires to "do the right thing" from his perspective. However, there is no doubt that his lack of
executive experience and lack of expertise on financial and economic issues and principles has put our country at a high
degree of risk of making major fiscal and economic errors in the months and years ahead.
There is no doubt that
Obama and the very liberal wing of the Democratic party want to spend their way to big government involvement in many aspects
of our lives and expand the impact of socialism within the country. It appears there is no limit on the federal
expenditures that Obama and his liberal friends will spend to impose their political agenda.
I have no argument
with Obama and company that they inherited the economic problem from the Republicans and it is now their task to solve
the problem. Unfortunately, the solutions they are choosing involve more debt and more federal programs and
fail to challenge the US population to correct the error of their ways that fundamentally created the problem. The ultimate
source of the economic collapse was over consumption by US consumers in comparison to their income and financial assets fueled
by too much debt. One can blame banks, mortgage brokers, investment bankers, the SEC, the Congress and many other people.
But the reality is that the US population has not been willing to live within its means for decades and over consumption caused
the economic issues we must correct.
It appears that the Obama team wants to put the country back on the over
consumption path, which can't happen. We must correct our overall behavior and readjust our consumption to the reality
of what we can afford. No politician, Democrat or Republican, has been willing to stand before the American people and
tell us the truth of what we must do.
We must all defend ourselves and our families from a government
that has failed in the recent past and continues to fail to lead us on economic and financial issues properly.
Be prepared for major increases in inflation and likely stagflation in the economy in the near future.
TPM
10:40 pm
Tuesday, March 17, 2009
Trying Twitter
The purple muse is now on twitter as thepurplemuse. We will see how it goes.
TPM
9:39 pm
Wednesday, March 11, 2009
Obama - Just A Liberal Democrat
We have reached the 50 day mark in the Obama administration and it appears very clear that Obama, like most
of his predecessors, has put many of his financially oriented campaign promises aside now that he has taken office.
It is also very clear that the left leaning liberal approach to policy that Obama displayed during his Senate term and earlier
in his career is now readily apparent. There is no doubt that income and wealth redistribution is a major policy objective
of the Democrats and they are working as fast as they can to make long term changes to our society through
tax policy and a variety of new programs without fixing the existing broken programs like Social Security and Medicare.
The financial problems that the country faces have been building since the 1960's when we first failed to
choose between spending our tax dollars on guns (Vietnam) and butter (the Great Society) programs during the Johnson
administration. Nixon took the US off the gold standard, which backed our money, in 1971 after foreign governments
began demanding to exchange their fiat dollars for our gold. Since the 1960's all Presidents and all Congresses
have added to the problem by their actions or failures to act on the well documented financial problems that have been building.
There is no question that Obama inherited the current difficult financial and economic situation from President Bush
and the Republicans. Very few media types desire to to review the total history because it shows that the Democrats
and Republicans are equally responsible for the current situation. However, I as I stated in earlier blogs it
is clear that Obama is clueless about the big financial picture. Obama and his liberal friends will create
as many fiat dollars as needed to acheive their economic objectives.
The DJIA to Gold ratio is now
about 7.2:1 and is continuing its long term decline that I have projected will reach at least 2:1 (and maybe lower - 1:1)
in the years ahead. If the trend plays out as I project, it will be because our government will create as many
fiat US dollars as they can in their current drunken spending stupor and devalue the dollar against all hard assets.
This process is been accelerating in the 50 days since Obama took office with no end in sight.
Each of us must
defend and protect ourselves and our familites from the actions of our political leaders.
TPM
10:04 pm
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