government spending

Debt Deal is a Blank Check

August 1st, 2011 7:48 pm  |  by  |  Published in congress, Debt, Economics, government spending, national debt, Peter Schiff  |  Comments Off

by Peter Schiff, CEO of Euro Pacific Capital, and host of The Peter Schiff Show, broadcasting live from WSTC Norwalk CT from 10am to noon Eastern time every weekday, and streaming at www.schiffradio.com.

By supposedly compromising to raise the debt ceiling, Congress and the President have now paved the way for ever higher levels of federal spending. Although, the nation was spared the trauma of borrowing restrictions, the actual risk of default existed solely in the minds of Washington politicians.  But the real crisis is not, nor has it ever been, the debt ceiling. The crisis is the debt itself. Economic Armageddon would not have resulted from failure to raise the ceiling, but it will come because we succeeded in raising it. This outcome falls along the lines that I had forecast (See my commentary, “Don’t Be Fooled by Political Posturing” from July 9th).

Both parties are now pretending that the promised cuts in spending outweigh the increase in the debt limit. But the $900 billion in identified cuts are spread over a decade and are skewed toward the end of that period. There are an additional $1.4 trillion in cuts that the plan assumes will be identified by a bi-partisan budget committee. But similarly empowered panels in the past have almost never delivered on their mandates.

More importantly, none of these “cuts” are actually binding. There is plenty of time for future Congresses to reverse what was so laboriously agreed to over the past few weeks. My guess is renewed economic weakness will be used to justify ultimate suspension of the cuts. In addition, most of the spending reductions were already scheduled to take effect before this agreement. So what did we really get?

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Gold Faces Short-Term Price Trap

July 29th, 2011 10:42 pm  |  by  |  Published in Economics, Federal Reserve, gold, government spending, inflation, Money  |  Comments Off

by John Browne, Senior Market Strategist at Euro Pacific Capital

Although I believe gold still faces a very rosy future, an agreement in Washington that avoids default and growing concerns of a global economic slowdown could create significant near-term headwinds for gold investors.

While the dysfunction of the US government is on stark display over the debt ceiling negotiations, other areas of the world show similar policy confusion. In the European Union, great doubts exist as to how the leaders will be able to stem the tide of serious sovereign debt contagion without inviting recession and an uptick in inflation. In China, commentators seem to lack confidence that the economy can maintain its impressive growth rate if its major trading bloc partners fall back into recession. This uncertainty has created a level of financial fear that has contributed to gold’s run up to more than $1,600 per ounce. However, this also means that any weakening of these fears could lead to a pull back in gold. An agreement in Washington, however meaningless, may be such a trigger.

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Obama Demagogues Default

July 25th, 2011 7:20 pm  |  by  |  Published in Big Government, congress, Economics, government spending, Obama  |  Comments Off

by John Browne, Senior Market Strategist at Euro Pacific Capital

President Obama has continued and increased the reckless spending of the previous Administration. Now, as the federal debt reaches its statutory limit, he is spreading fear and panic in the hopes of having it raised.

Many of the key people responsible for America’s historic mess, including the President, Treasury Secretary Geithner, former NEC Director Summers, and Fed Chairman Bernanke, have pronounced publicly that a failure to lift the debt ceiling will cause a catastrophic Treasury debt default.

This is simply not true. The US Treasury has tax revenues that cover the service of its current (staggering) debt of some $14.3 trillion.

Yet, that doesn’t mean the US government won’t be forced to default in other ways. Failure to pay the
nominal interest and principal on bonds is only the narrowest definition of “default.” When a broader definition is used – which includes the use of inflation to erode the real value of US debt – the US government has in fact been in a state of continuous default for almost a century.

A 2011 dollar is worth just four cents in terms of a 1914 dollar. As that new money circulates, your dollar will lose some 53% of its purchasing power, productivity increases notwithstanding. That’s just in the last three years!

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The Extinction of Retirement

June 16th, 2011 10:31 pm  |  by  |  Published in Big Government, Economics, government spending, Social Security  |  Comments Off

by Michael Pento, Senior Economist at Euro Pacific Capital (www.europac.net)

For the better part of a century the foundations for a semi-comfortable retirement for many Americans have rested on the financial pillars of rising real estate and equity prices, positive real interest rates on savings, the continued solvency of public and private pension plans, and the reliability of national entitlement programs (Social Security, Medicaid). But in the last few years, the economic sands have fundamentally shifted and these pillars are no longer sturdy, some have cracked completely. For many Americans, the traditional idea of a comfortable retirement, filled with golf carts, cruises, and fishing trips, is going the way of the dodo bird.

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Cap the Debt: How Congress Can Learn From Truman

June 13th, 2011 9:55 pm  |  by  |  Published in Big Government, congress, Debt, DownsizeDC.org, Economics, government spending, Liberty, national debt, Obama, War  |  Comments Off

Quote of the Day: “History clearly shows the government that stimulates the best, taxes, spends, and intrudes the least. In particular, the lesson from 1945-47 is that a sharp reduction in government spending frees up assets for productive use and leads to renewed growth.” – Economists Jason E. Taylor and Richard K. Vedder

On May 31, the House rejected President Obama’s request to raise the debt limit with no spending cuts. In addition to every Republican, 46% of Democrats opposed this bill.

* This demonstrates the power of polls, which shows even a substantial percentage of Democrats oppose raising the debt ceiling
* But it also demonstrate the power of your RELENTLESS PRESSURE on Congress

More and more Democrats realize the U.S. is on an unsustainable path and that reforms must be implemented NOW instead of putting them off any longer.

The vote was good news, but this is only the beginning of the fight. WE ARE HOLDING THE LINE . . .

NO increase on the debt ceiling.

Unless you tell your Representative and Senators where you stand, they may be tempted to cut a deal which will raise the debt limit while making only symbolic and marginal spending cuts.

Both Democrats and Republicans need to learn from history, particularly the Democratic Truman Administration. That’s why I sent this letter to Congress, from which you may borrow or copy . . . Read More »

Fed Stimulus Leads to Stagflation

June 5th, 2011 4:14 pm  |  by  |  Published in Economics, Federal Reserve, government spending, inflation, Money  |  Comments Off

by John Browne, Senior Market Strategist at Euro Pacific Capital

Despite the full onslaught of Keynesian economic policies, including the injection of unheard of sums of printed money into the financial system, state sanctioned accounting tricks, negative real interest rates, massive deficit spending, and debasement of the U.S. dollar, the American economy is slipping back fast towards recession. This week’s release of dismal employment figures, in which the entire economy could only muster 54,000 new jobs, confirms that fact.

It is certainly reasonable to assume that more jobs would have been lost in 2008 and 2009 if the government had not steeped in as aggressively as they had with this Keynesian barrage. But if we had chosen the less interventionist path our present reality may have been quite different. We had the opportunity then to lay the ground work for a real recovery. This was a theme that I continually stressed at the time.  Instead, our leaders chose the time worn strategy of inflation as an economic cure all. It hasn’t worked, and our economy is far worse now as a result.

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Stimulus Wears Off

June 1st, 2011 10:36 pm  |  by  |  Published in Big Government, Economics, government spending, jobs, unemployment  |  Comments Off

by Michael Pento, Senior Economist at Euro Pacific Capital (www.europac.net)

The artificially engineered U.S. recovery is already starting to falter as a continuous procession of disappointing data continues to confirm the sad truth. Recent numbers on GDP, durable goods, housing, regional manufacturing, initial unemployment claims and leading economic indicators all indicate a sharp slowdown in GDP growth. Just today the ADP Employment report showed that the private sector added a paltry 38,000 jobs in May, down from 177,000 jobs in April, significantly below expectations, and the weakest number since September 2010. Just yesterday Case Shiller announced that the U.S. housing market had officially achieved a “double dip,” in that national home prices have given up the entire 5% bounce that they had achieved after the May 2009 lows. These signs of continuing malaise comes at a time when the government is contemplating ways to dramatically cut spending. But given the economic weakness, is America really ready to accept the short term consequences that a government spending cut would cause?

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Rand Paul, Fearless Superstar of Liberty

May 27th, 2011 11:58 pm  |  by  |  Published in Big Government, Civil Liberties, Constitution, Debt, Election, government spending, Gun Control, Liberty, Maven Commentary, patriot act, Rand Paul  |  9 Responses

Rand Paul, not even 1 year in the U.S. Senate, is already creating a legacy for himself. And if you believe in the Constitution and the human liberty it protects then it looks good, very good. Paul has been steadfast and fearless when it comes to remaining true to his campaign promises. This is an anomaly in the float-with-the-current like a rotten log cesspool that is Washington DC circa 2011.

Paul has pushed for balancing the budget aggressively, stood up for consumer choice, and all the while doing everything in his power to cut government spending. Now, he’s revealing his diamond-tough huevos by going up against the whimsical idiot-savants of hypocrisy in his own party and the truth-bending emotionally-charged demagogues on the other side. His only allegiances are his promises and the U.S. Constitution. If enough of his peers in DC started doing the same our Founding Fathers might stop rolling over and over in their graves to salute the flag once again.

Listen here to Rand Paul discussing recent renewal vote on The PATRIOT Act with everyone’s favorite Neo-Conservative whipping boy, Sean Hannity (from Hannity’s radio show). Near the end Rand Paul reveals who he may vote for in the upcoming POTUS 2012 election and touches on his own potential aspirations for that same office.

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Why A Debt Ceiling Is Better Than A Balanced Budget Amendment

May 26th, 2011 10:59 pm  |  by  |  Published in Activism, Big Government, congress, Constitution, Debate, Debt, DownsizeDC.org, government spending, national debt  |  Comments Off

Quote of the Day: “I have always believed that government had a limited capacity to do good and a virtually infinite capacity to do harm…” — Neil Hamilton, Member of Parliament in the United Kingdom (Source: House of Commons debates, 8 February 1994)

Earlier this year, we thought we’d be willing to trade an increase in the debt ceiling for something of lasting value — like a balanced budget amendment. We now think that’s a strategic mistake.

The real strategic opportunity lies in the debt ceiling itself. As long as we maintain THAT, then nothing else needs to be done to balance the budget.

We’ve started a permanent new campaign to promote this idea called, “Cap the Debt.”

Here’s what I wrote in my first letter to Congress using this new campaign . . . Read More »

Abolish Corporate Income Taxes

May 18th, 2011 10:10 pm  |  by  |  Published in Activism, Big Government, Constitution, DownsizeDC.org, Economics, government spending, Taxes  |  1

Many people hate corporations. Progressives and populists blame them for a host of sins, and several libertarians assert they couldn’t exist in their present form without the State. We at DownsizeDC.org oppose the crony capitalism of the Corporatist State, and we cringe whenever people assume our pro-free market philosophy is a “defense” of corporations.

That is why our new campaign is a “heresy.” What we propose may shock you, but we have good reasons.

Our position is that even if you hate corporations . . .

Abolishing corporate income taxes is in your self-interest.

These taxes are unproductive as revenue-generators, but what they really do is make politicians more powerful, at your expense.

The following letter to Congress explains the benefits of abolishing the corporate income tax. The hard-wired message to Congress says . . . Read More »