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Tuesday
Jan242012

Guardedly Pessimistic or "The Brain That Wouldn't Die"

More and more people are starting to realize the dire situation our government is in. The reason I am guardedly pessimistic is that I still hope that some changes will be made in our government. I find it difficult to believe that the government will not take some action. But of course there is one of my favorite aphorisms- Never Underestimate the Power of Stupidity. Maybe our government's fiscal policy is like that old movie, "The Brain That Wouldn't Die.

There are a few people like me who have been predicting this for some time. Personally in order to avoid being dependent on Social Security, I took steps. Many of my contemporaries did not. A lot of my steps did not go as well as I had hoped, but I am working on that. 

Ron Paul was one who understood. He made this comment in April 24, 2002:

“Federal Reserve policy will continue at an expanding rate with massive credit expansion, which will make the dollar crisis worse. Gold will be seen as an alternative to paper money as it returns to its historic role as money. Erosion of civil liberties here at home will continue as our government responds to political fear in dealing with the terrorist threat by making generous use of the powers obtained with the Patriot Act. … The Congress and the president will shift radically, expanding the size and scope of the federal government. This will satisfy both the liberals and the conservatives. Military and police power will grow, satisfying the conservatives. The welfare state, both domestic and international, will expand, satisfying the liberals. Both sides will endorse military interventionism overseas. … During the next decade, the American people will become poorer and less free while they become more dependent upon the government for economic security. … I have no timetable for these predictions, but keep them around and look at them in five to ten years. I hope and pray that I am wrong on all accounts.”

Ron Paul was right of course. 

Doug Casey Research wrote an interesting article last week about government spending entitled "The US Government is Bankrupt." Although I recommend you read the whole thing, if you are so inclined, here is the most important part that explains why the crisis is happening:

As with Social Security, the demographics for Medicare are disastrous. Again, 12% of the population now is over 65, but by 2030 it will be 23%, so, everything being equal, spending is going vastly higher. But it's much worse than that because of skyrocketing medical costs. Note that there is no necessity, in a free market, for medical costs to rise. Rather, they should be expected to fall, like the cost of most technology.

I still do not think that the US Government is bankrupt because I expect they will repudiate Medicare. Are you ready for this? If not I suggest two things you can do right now. Cut your expenses to the bone and save, save, save. Exercise and lose weight. I am starting to do both. Are you ready? 

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