Since late 2008 I've been expressing my concern over the rising debt crisis that this country faces. These concerns began with the Bush administration and the TARP bailouts and continued with Obama's economic stimulus package, GM/Chrysler bailouts and Obamacare. Our debt has skyrocketed and the deficit spending seems to be never ending.
My hope was that the new GOP House would begin the process of stopping the bleeding. That they would first find a way to stop the deficit spending and then formulate a sound plan on how to begin repaying our debt. Something like this would signal to the rest of the world that the dollar remains a sound investment and that their money would be safe with us. That was my hope.
Well, last week, that hope took a hard body blow. The GOP house proposed a budget that included $60 billion in budget cuts. Sounds like a lot of money, but lets add some perspective. The Federal Government overspent a deficit level of $226 billion in FEBRUARY ALONE...just last month. That's one month, $226 billion in deficit spending. And the new GOP house proposes a mere $60 billion in ANNUAL budget cuts. Obviously, this is unacceptable.
Even worse, that proposal was quickly shot down by the Democrat-led senate because it was considered too severe and too drastic in budget cutting.
So, it is now clear that despite the election results we continue to send people to Washington who lack the courage to do what must be done to protect our credit and save the dollar (and given the response in Wisconsin when the Governor attempts some modest proposal to reduce spending you can hardly blame them). There are exceptions - Paul Ryan and Michelle Bachmann to name a few - but for the most part the politicians continue to behave like politicians and have essentially sent the world a message that in America it's business as usual. Our borrow/spend mentality continues, and we will do nothing to modify this behavior no matter how dire the economic forecasts become.
Unfortunately, those forecasts are soon to become very dire indeed. I believe the course has been set and our economy is headed for some very difficult times. I believe we are in for an inflationary period like never period. I believe the dollar is on danger of a massive collapse, followed by the stock market. The effects will be severe and they will be global. I don't know when this will happen but given the cowardice we see in Washington I don't see how it couldn't happen.
Hopefully I am wrong.