Deja Vu All Over Again

Monday night we had a bunch of folks over to the Logical Household for dinner. A lot of interesting conversations, but the one that really interested me was listening to a group of folks who had lived their early working lives during the early 1970's. Now I was still blissfully unaware of how bad things were as a teen-ager (oh sure I heard the news stories and heard my parents worry about how to make ends meet) but these folks were working or just marrieds and starting families during that time and the stories that they told about the hyper inflation and high interest rates were eye-opening. Mostly due to the similarities to today. Then I read this.....

Here we stand more than a year into a grave economic crisis with a projected budget deficit of 13% of GDP. That's more than twice the size of the next largest deficit since World War II. And this projected deficit is the culmination of a year when the federal government, at taxpayers' expense, acquired enormous stakes in the banking, auto, mortgage, health-care and insurance industries.

With the crisis, the ill-conceived government reactions, and the ensuing economic downturn, the unfunded liabilities of federal programs -- such as Social Security, civil-service and military pensions, the Pension Benefit Guarantee Corporation, Medicare and Medicaid -- are over the $100 trillion mark. With U.S. GDP and federal tax receipts at about $14 trillion and $2.4 trillion respectively, such a debt all but guarantees higher interest rates, massive tax increases, and partial default on government promises.

But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.

This is not a blame Bush or blame Obama thing....BOTH administrations have had a hand in this mess - and then there is the FED.

What this IS about, is the fact that this country is in need of an economic wake up call! We need to quit spending beyond our means and we need to setting priorities. What is the priority...keeping Medicare and Social Security solvent or Universal Health Care? Because I am telling you now if we try to do everything we will fail at doing them all because there are not enough resources. It's that simple.