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July 31, 2011

Basic Economics for Financial Journalists and Other Dummies (i.e. Democrats and their media apologists)

Topics: Political News and commentaries

As Washington creeps toward a deal to give Barack Obama another blank check to rush our nation further toward what can only ultimately have one, and only one, endpoint - national bankruptcy, and the media continue to promote Keynesian thinking and the myth that the economy would have been weaker in the absence of government spending (and that more spending and bigger government is better for the economy), and that "austerity" in Washington could further slow the economy in the future, readers should take a little time to learn some basic economics, and try to understand that contrary to what the Obama administration and his fellow Democrats would like Americans to believe, money doesn't disappear if it's not spent by government; quite the contrary ... less government means more money left in the private sector, where it is more likely to create jobs and generate wealth.

Step 1 - watch this video: Think... simply stated, national income is the horse and GDP is the cart. This video elaborates on this topic, and watching it may be more enjoyable than reading my analysis.


Step 2 - Read Daniel J. Mitchell's Basic Economics for Financial Journalists and Other Dummies.

Then, take the time to ponder the fact that after a debt ceiling increase is approved - though it will surely produce a brief sigh of collective fiscal relief - the U.S. economy and markets will suffer painful effects, in the absence of any real restraint our alarming budget trajectory will not be reversed and there will be almost no longer-term positive impact. In fact, there is more likely than not, a likelihood of a downgrade of the U.S. credit rating, and our nation will continue to go ever-deeper in debt ... moving ever closer and ever faster toward fiscal Armageddon in an upward debt spiral that will increase - no matter what we do. With spending at current levels, the public debt will continue to grow from today's $14.4 trillion - to over $21 trillion in a very short time.

Simply put, our national debt stands, as of the time of this writing, at $14.4 trillion ... and increasing every second. There is just one, and only one outcome for us at this time - fiscal Armageddon (national bankruptcy).

And this will remain our only outcome so long as Barack Obama (who presenting a budget that would double the national debt in five years, triple it in ten, and add thirteen trillion dollars worth of red ink to the nation's debt) is in the White House, the Democrats control the Senate, and Congress and the president are unable to agree on reforming Medicare, Medicaid, critical tax reforms that increase revenue without raising taxes, and a balanced budget amendment to the Constitution.

Related:
While we're talking about debt and government spending ...
CBO: U.S. Budget Outlook 'Daunting'
Barack Obama & Co. are themselves history's best argument in favor of a balanced budget amendment to the Constitution

Posted by Richard at July 31, 2011 10:54 AM



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