In the wake of the Standard & Poor’s downgrade of the United States credit rating, the Federal Reserve announced today that quantitative easing (part 3) would not take place. Rather, Ben Bernanke – chairman of the Federal Reserve, announced that interest rates would stay at near 0% levels for the next two years. While this may have lit a fire under Wall street’s buttocks, it dropped the long term value of the U.S. dollar down 4.5%, or about 72¢ against the Swiss franc.
The federal government, for their part have already borrowed 60% of the money granted to them in the $2.4 trillion debt ceiling package and Senator Harry Reid has picked Max Baucus, John Kerry, and Patty Murray while Senator Mitch McConnell has picked Jon Kyl, Pat Toomey, and Rob Portman to bypass Congress forming a “bipartisan SUPER committee” to decide the collective financial fate of this nation.
Is this a push for the bankruptcy of the United States?
Whether intentional or consequential, the choice by the Federal Reserve to delay the rise of interest rates for two years presents, yet, another manufactured crisis that will present itself in the form of EXTREMELY high interest rates after the two years lapse… and who is paying the difference between the interest rate the government gets from its creditors and the low rate given to investors? The answer is the same as it has been for the last 10 years, put it on our tab… a future generation will solve the problem.
Both Democrats and Republicans are making a mockery of this country and its political process by insulting the intelligence of the average American who is willing to take on the burden that our parents refused to take on and that both their AND our grandchildren should not have to burden.
For example, there are tens of thousands of people taking advantage of the Earned Income Tax Credit (EITC) by simply not declaring all of their income. These same people are very adamant about closing tax loop holes for top 2% income earners of Americans, they do not care that 15-20% of income tax evasion centers around lower-income people taking advantage of the EITC loop holes by misreporting their earnings. These people do not care about the people who supply their vacation money at the cost of their own vacation, nor do they have regard for the people who scrimp and save to make ends meet without government help – except to refer to them as stupid or greedy. This happens because none of these people have to look at the person whom they are taking from in eye. They have no awareness of whom they are hurting and what they are doing to this nation because they can not even take care of their own financial problems. All they know is that they are “entitled”.
Social security is the same way. There are many people who have NO business receiving social security benefits that receive them, simply because they qualify. The original intent behind social security and medicare/aid programs were to help the poor, however, the federal government failed to regulate these programs with distributive justice; a process that’s required for the success of these programs.
Even though these programs, in their current forms, clearly spell out the eventual bankruptcy of the United States as soon as 2021 (according to S&P’s and Moody’s statements), lawmakers continue to balk at losing the political leverage these programs allow them to have during election time. The President is busy campaigning, Congress is on vacation, and the blame game between the Republican and Democrat constituencies rages on. A battle incited by their own leadership’s talking points, rhetoric, and propaganda.
The biggest reason I declare myself as politically “independent” is because I see good legislation coming from the both parties, but the leaderships of both parties refuse to acknowledge good legislation, so it never leave committee. The first proposal of the FAIR tax I saw written was by a Democratic Representative of the House. The first proposal of President Obama to deal with illegal immigration by going after employers who hire them was the best idea I’ve heard in a long time, but Republicans stuck to the idea of a worthless fence. Republicans have presented some good ideas on phasing out federally funded entitlements that Democrats will not allow to hit the Senate floor.
Washington’s broken, but not because its representatives refuse to collectively bargain with each other. It’s broken because its seniority members refuse to separate matters of politics from matters of national security. Whether by intent or by consequence, together, these people are willing to roll the dice while the bankruptcy of the United States hangs in balance. I am afraid that by 2012, Congress and/or Presidential change or not, the fiscal realities will become that we can not longer afford the interest payments on our loans and will default (as Greece did) overnight.
I will bet that this “super committee” will attempt to use accounting tricks on the credit agencies to no avail and Moody’s will downgrade American credit as well. All of this will give credence to claims made by China and Russia’s that the United States is too irresponsible with its currency to retain the status of “reserve currency”. Once we lose that privilege I can guarantee that war will ensure over debt payment.