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A Toxic Mix

Article first published as A Toxic Mix on Technorati.

Our nation is suffering from more than just a budget deficit. We are dealing with a triangular threat of shortages that need to be controlled or we may indeed perish as a society. As we are beginning to see that as history repeats itself, the cost keeps getting higher as the lessons go on. As we come dangerously close to our doom from a toxic mix of shortfalls, now is the time we need our legislators to act.

As our budget deficit reaches past 14 and heads to 15 trillion dollars many Americans wonder what in the hell has happened? How did we get here and what can we expect in the future? From the start of our nation in we had little debt until the Civil War. Then our debt rose to 25% of GDP and within a few years after the war it returned to near zero. The next blip was during World War I when our debt reached 35% of GDP and then settled at 7%. Then the Great Depression and World War II it reached and all-time high of 120% and afterwards fell back to a more reasonable 25% after the war. The 1970’s saw our debt begin to spiral with the costs of LBJ’s Great Society and Vietnam when our debt reached 45% of GDP.

The fallout of stagflation of the late 70’s and early 80’s left our debt at 64% of GDP, before settling down to around 50% in the post Reagan nineties and Clinton’s budget surpluses. Under President Bush our post 9/11 deficits reached a record 65% of GDP in 2008. Since then under Obama our debt has skyrocketed to 76% and is projected to be 100% by 2012.

Baby Boomers are no longer a projection we are real. In the next 10 years the very presence of the boomers spells doom for the economy because of Social Security, Medicare and Medicaid. Thomas Jefferson thought it was immoral to pass on debts from one generation to another. In the last 50 years it has become a religion of our political leaders to pass it on and pass it on generational. Our government seems addicted to a schizophrenic tax and spend policy that must be dealt with now, it can’t wait.




Our savings deficit is at a critical level as we have seen our nation’s savings rate decline precipitously over the years. In the 60’s and 70’s the savings rate was around 12 – 13 %, in the 80’s and 90’s it was cut in half as we became deficit spenders as a people. It grew worse as we turned to a new century it was 3% and now stands at a negative 3%. In short we are a nation of net deficit spenders just like our government. As the Fed creates more money it will be in grave danger of creating a crash of our currency. As the Fed tries to control inflation and stimulate growth it has been using an insane out of control money supply theory that will doom us as a nation.

Our trade shortfall is also so far out of control we are in danger of becoming a third world country before long. The #1 nation in the world is China in trade surplus followed by Germany, Saudi Arabia, Russia and Japan. Meanwhile we are #224 out of 224, in deficit spending. Someday we may well wake up and wonder where all the dollars have gone and they will be in China. This can also give political power to China as they own more and more of our national debt.

Most great empires of the past fell from within as we seem to be. A collapse of morality, political strength, fiscal responsibility and stretched military assets all are coming together in a perfect storm that could well spell the end of the American experiment. Excesses of the ruling class, PAC’s that have all the power and people with none. Fraud, waste and abuse at all levels of society and $53 Trillion dollars of unfunded Social Security, Medicare and Medicaid funding and a tax rate that would have to double to curb it all. By 2044 our nation’s debt could well be 244% of GDP and that my friend’s is a third world country.

We need to demand that government cut spending immediately and everyone must share in the pain. It’s time to wake up and pay the bill.