For the first time ever, the federal deficit has reached $1 trillion and could balloon to even more. The depressed economy means much lower tax revenues from families and corporations, add on to the fact that we’re still fighting a war in Afghanistan, plus a $700 billion in financial bailout and a $787 billion stimulus package.
What does this mean? Well, first of all it means the government is flat out broke. No money. But you say, I still go about my business as usual, the country is still running. True, because we are running on borrowed money, loans provided by Communist China for the most part. And because we are so broke, foreign nations are losing faith in the U.S. dollar, which means the fed has to raise interest rates to make U.S. debt attractive enough for China and India to buy. And because of increased interest rates, we get deeper into debt and devalue the dollar, causing inflation.
It’s a vicious cycle, a hole we dig ourselves deeper into every day with expanded government programs and so-called stimulus money. Can you imagine there’s talk of a second stimulus package?!
These days Treasury Secretary Tim Geithner spends most of his time on the phone or traveling outside of the U.S. to convince foreign treasurers that the green back is still good. Frankly, it borders begging other countries to continue to buy U.S. Treasuries.
So how can this cycle be stopped? It’s simple, really. Run the country as if it’s a household. Don’t spend what’s not there! Cut expenses! Be frugal! Unfortunately, it’s a philosophy that the White House and the Democratic Congress cannot seem to understand.
Pingback: Twitted by AsianConsBlog