Why fake it? Will the truth never be known?

Here's a couple of articles where people are exposing government fictions. The first is how the government is allowed to project huge tax increases that people don't react to at all except by paying them. It's too silly an idea to even debunk.

Government pretends people won't react.

Also, here is more detailed information about what I said were fantasy White house projections for the budget for the next ten years. It will be far worse even than they admit. As it turns out, maxing out as many credit cards as you can get your hands on is a bad idea.

Fantasy projections.

Warren Buffett sums it up:

If you don’t know who the “Patsy” is – YOU are the “Patsy”.

Guy who thinks debt is hunky dory

This article is funny/annoying. He thinks deficits are sexy, and anyone who would worry about them is an idiot. I have some comments in green.

"...To summarize, deficit hysteria is a hoax concocted by far-right demagogues who are trying to advance their socially-destructive agenda for their own personal gain. Like me. Fortunately, the opposition has mounted an impressive counter-attack and refuted many of the spurious claims made by the deficit worrywarts. New York Times columnist Paul Krugman has done a particularly good job of educating the public on the issue and analyzing the movement's supporters. Here's a clip from his article titled "Fiscal scare Tactics": Paul Krugman is far too silly, wrong, and blatantly serving of progressive interests to educate anyone. He's hardly impressive. Iv'e thought of having a blog just to mutilate his ideas, but other people have already done it.

"To me ...the sudden outbreak of deficit hysteria brings back memories of the groupthink that took hold during the run-up to the Iraq war. Now, as then, dubious allegations, not backed by hard evidence, are being reported as if they have been established beyond a shadow of a doubt. Now, as then, much of the political and media establishments have bought into the notion that we must take drastic action quickly, even though there hasn’t been any new information to justify this sudden urgency. Now, as then, those who challenge the prevailing narrative, no matter how strong their case and no matter how solid their background, are being marginalized.

This is blatantly false. If anything, the politicians and media have circled the wagons around Obama and Bernanke to pretend we're having some awesome recovery, it's because Obama saved us, and the drunken sailor spending spree was totally unavoidable. The new information is that Obama and company have spent more money than all previous presidents since George Washington combined. That is a newsflash. I don't know of more than a handful of real economists who think what they are doing makes any sense and can actually work. There are maybe 500 economists and analysts saying, "Keep doing this and you will collapse the world economy." So yeah, we might want to take a look at what they're doing.

True, there is a longer-term budget problem. ....But there’s no reason to panic about budget prospects for the next few years, or even for the next decade (because) interest payments on federal debt; according to the projections, a decade from now they’ll have risen to 3.5 percent of G.D.P. How scary is that? It’s about the same as interest costs under the first President Bush."

This is just plain retarded. He's basing this on the White House's absurd projections of growth, and projecting the near zero interest rates into the future. Nobody on earth thinks either one of those things will happen. When you actually run the numbers using really basic math, you see it gets out of control pretty fast.

Mike Whitney March 5, 2010

Three lines crossed, now cross your fingers

"Peter Bernholz, professor of economics at the University of Basel, Switzerland, in his most recent book, Monetary Regimes and Inflation: History, Economic and Political Relationships, analyzes the 12 largest episodes of hyperinflations – all of which were caused by financing huge public budget deficits through money creation.

His conclusion is that the tipping point for hyperinflation occurs when the government’s deficits exceed 40% of its expenditures. The deficits being run by the Keynesians in Washington are now at that level, well beyond anything ever attempted in U.S. history."

So, there are a few things I want to say about this. Not only have we passed the 40%, we have crossed two other "death spiral" lines. The IMF says that once a country's fiscal deficit is above 90% of its GDP, it doesn't recover (done in 2009). Also, there is the Greenspan-Guidotti Line. Once you pass that line, where you owe foreigners more than you have in reserves (We flew past that line in 2009.), you don't recover.
I also had to include this hilarious graphic. Even the Heritage Foundations line on this chart accepts the ridiculous economic projections for growth. They are based on a gigantic improvement in the economy starting almost immediately and lasting for years without interruption. There's not an economist on the planet who thinks that will happen, not even Obama's boot licker Paul Krugman. Oh, by the way, this doesn't even take into account the looming disaster of socialized healthcare, or costs of fixing the other socialist programs like medicare and social security. Also, as I have pointed out before, based on actual numbers, the deficit this year will be far more that the gigantic $1.5 trillion they claim.

Some more commentary, original article:

“…An unsustainable trend will not be sustained. The national debt will not reach $25 trillion in 2019. Unless the current policies of the Federal Reserve and Obama administration are reversed, the U.S. economic system will collapse well before that. In a recent report, Société Générale, one of France’s biggest banks, noted the possibility for collapse:

"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse. The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Aging populations will make it harder to erode debt through growth. High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt. “

There is no foreign country willing to buy the $13 trillion of debt paying 1% we will need to issue in the next ten years. Obama and Congress are working on another stimulus program, clearly indicating that they are going to continue their efforts to spend the country out of crisis.

Trust in the American financial system and its leaders is dissipating rapidly. At some point in the not-too-distant future, the U.S. Treasury will attempt to sell debt and foreign buyers will boycott the auction. That will mark the point of no return. The unprecedented levels of debt propping up the American Empire cannot withstand higher interest rates. When it collapses under the weight of its massive debt, the dollar will crash and hyperinflation will result. People need to prepare for a future of turmoil and uncertainty. From an investment perspective, gold will retain its value as the dollar falls. Shorting U.S. Treasuries will ultimately prove to be a great investment…”

By James Quinn, March 5, 2010

Fantastic Article about US options to deal with debt