Sunday, June 19, 2011

The 20' Tall Wall of Debt

This article is for the "numbers people" out there.  I have written that our national debt would make a 20 foot tall wall, around the world at the equator, of dollar bills (laid end-to-end and stacked flat).  As unbelievable as this sounds, I have decided to prove the numbers.

The equator is 24,902 miles long.  With 5,280 feet in a mile, this equals 131,482,560' around the world.

A dollar bill is 6.1" long and .0043" thick.  1.97 dollar bills reach a foot in length.  233 stacked dollar bills are one inch thick.

1.97 (dollar bills) X 131,482,560' (around the world) = $259,020,643 for one lap.

$259,020,643 X 233 (number to equal 1" thick stack) = $60,351,809,120 for a 1" high wall.

$14,437,648,300,000 (U.S. debt on 6/18/11) ÷ $60,351,809,120 = 239.22"

239.22" ÷ 12" = 19.94'  (rounded to 20')

Our current U.S. national debt is equal to a wall of stacked dollar bills that would stretch around the world, at the equator, twenty feet tall!

President Obama has proposed his next budget which has an estimated deficit of $1,600,000,000,000.  If passed, this amount of spending would add another 2.2' to that 20' tall wall.

As Janet Napolitano has made her infamous statement concerning her resistance to a border wall between Arizona and Mexico, "You show me a 50-foot wall and I'll show you a 51-foot ladder at the border."  Well, to the Leftists in our country, no wall is too tall for them. 

If you are having trouble wrapping your head around the 20' tall wall, maybe this will help you grasp the enormity of the debt crisis:

1,000,000 (million) seconds = 11.57 days
1,000,000,000 (billion) seconds = 31.71 years
1,000,000,000,000 (trillion) seconds = 31,710 years

If our national debt were paid off $1 per second (without any more increases and no interest), it would take 457,797 years.  But, instead of paying it off, we are adding over $1,000 per second to the total (and that is 24x7). 

Folks, WE have a problem! 

Saturday, June 18, 2011

The Garbage Can - Updated

Based on the past, I have been fairly quiet lately as far as posting blog entries about political issues.  It is not that there was nothing to write about; more accurately, it is that there was so much to write about that it literally became somewhat overwhelming.  Well, I opened a new bottle of ink and am ready to write again.

1.  Remember "Climategate" from last year?  This is where the British scientist was humiliated when some email account was hacked and he and others were exposed for fabricating statements and stretching the findings in order to further support the hoax of man-made global warming. 

Well, he is back in the news.  It seems that after being embarrassed and demoted, he has found Jesus (not literally).  After just one year of additional data added to what he had last year, he now finds that the "true" evidence is over-whelming that man-made global warming is in fact a reality that must be solved.

A year ago, his data did not support this strong of a conclusion and the 15 years of data showed a 90% probability.  But, adding year 16 to the data, now the average is 95%, which is the needed minimum for scientists to label a theory as a fact.  I find one thing that does not seem to add up right.  If you have 15 years with a 90% average of certainty and you add one more year to the mix and it raises the average certainty to the desired 95%; that 16th year would have needed 170% of all measures to agree in order to change the average by 5% for the prior 15 years.  Basically, that is impossible as you cannot have more than all - 100% in any year. 

So, in order to redeem his name in his circle of experts and to attempt to regain his position of authority at his university, he has toed the line.

2.  The more that we observe BO and what he does concerning the Middle East, not counting the things he is doing and saying behind the scenes; I say that he needs a good dose of Grecian Formula.  His Muslim roots are showing.  It is time to add a level of disguise to his true intentions. 

BO has issued an ultimatum to Israel.  He has told them that they have 30 days to accept the terms he laid out in his speech a couple weeks ago.  You remember, that is when he laid the foundation for a lasting peace between Israel and Palestine.  He is demanding that Israel go back to the 1967 borders and begin negotiations from that point.  He is also in favor of the new nation for Palestine having control of all of Jerusalem. 

BO's plan would weaken the defense capability of Israel and prohibit Jews from visiting the Temple Mount.  If Israel does not surrender to this plan, BO claims that the U.S. will not be able to help them during the U.N. meeting in September, as the rest of the united world calls for a nation of Palestine at the expense of Israel. 

Israel is being set up by BO and his administration, as well as many other countries, to find themselves in a no-win situation.  He seems to believe that they will have no choice but to agree to do whatever he has decided is best for them.  There is just one problem, Israel seems to have a mind of their own and appears to believe that they are in best position to determine what is best for them and they do not like the BO plan. 

When they refuse these terms, the U.N. will unite against Israel and use the same excuse as was used to attack Libya - "the need to protect".  This will be the battle cry for the anti-Semites as they come against the Jews and support the Arabs. 

Speaking of Arabs, did you hear that the Muslim Brotherhood has a new name?  They are now the "Freedom and Justice Party".  That makes me feel much better.

3.  Do you remember a couple years ago when Washington was wanting to crack down on AZ and it's open gun laws.  They claimed that because of our laws, people were buying guns in AZ and sending them to the drug gangs in Mexico.  There, these guns were being used for violence.  I wondered at the time just how it was that BO knew that the guns in Mexico came from AZ.  Well, it turns out that he was right, the bad guys were openly buying guns in AZ and transporting them across the border.  But, now we know the rest of the story.  Our dear BO administration, through the BATF, was setting up the sells and fully aware of the illegal buyers and watching them take the guns to Mexico.  They made no attempt to stop this crime, for some reason.  Now, they are under investigation by Congress because one of these guns was used to kill a border patrol agent.

4.  I have previously written about our national debt.  If you read those posts, you might remember that I compared the debt ($14.3 trillion) to a wall of $1 bills, end-to-end, circling the earth at the equator.  This wall of dollars would be 20 feet tall.  Yes, it would stretch all the way around the world and be a wall of flat dollar bills that would be 20 feet tall!  The current budget being debated in Congress, which was proposed by BO, has an additional deficit which would add another two feet to the top of that wall. 

5.  I have also written about monetizing the debt.  That is where the Federal Reserve prints money and uses it to buy Treasury Bonds.  The Fed refers to this policy as QE-quantitative easing.  We have had QE1 and at the end of this month QE2 will end.  QE2 was where the Fed bought about $600 billion of our debt over the past several months.  They say that they are not going to do that again, right now. 

China is trying to sell off a lot of the debt that they previously purchased from us as they appear to believe that it may become worthless or at least be paid back with highly inflated dollars.  Actually, there is a very good reason for them to worry about this.  When a country gets in debt like we are (actually, no country has ever been in debt like we are), with Washington continuing on an out-of-control spending spree and adding more debt each year (lately at least one trillion each year); there are two very possible results:  first is that we would default on paying our debt; and second, we would intentionally inflate our dollar so that we would pay back the lenders with worth-less paper money.  The later appears to be the path we are taking.

Every time the Fed prints more money and adds it to the money supply, our dollar loses part of its value.  Recently, they have been printing gross amounts of extra cash which was used for QE2. 

If the Fed sticks to their statement of no QE3 and when China has decided that they want out from being our lender, what will happen?  Our government is frequently selling bonds in order to get more money to spend.  Remember, a bond is just an IOU.  They cannot control their spending and stay within a budget where expenses do not exceed income, so they print another bond and sell it to an investor.  When the Fed and China are not going to buy more bonds, who will the investor be for our next bonds?  As with any financial risk, the more the risk, the higher the interest rate.  In order for the government to sell bonds, they will have to offer them at higher rates of return for the investor.

So, our choices are:  1. default on our national debt; 2. stop spending more than we take in; 3. sell more bonds at higher interest rates.  We will not take door number 1 and default and Washington is addicted to spending money they do not have so we can rule out door number 2.  That means that we will issue and sell more bonds, increasing our national debt and pay the investors a higher rate in order to attract those with the money.

When this happens and these bonds have higher interest rates, that will have an effect on mortgage interest rates in the U.S.  The record low rates we have been experiencing recently will be gone and in order for the secondary mortgage market to be able to attract investors in mortgage backed securities, they will have to have a higher interest rate for a better return.  If mortgage rates do not go up, investors will tend to buy Treasury bonds with the higher rate of return.  So, either mortgage lending will dry up or rates will go up.  When the rates go up, fewer potential buyers will be able to buy a home and it will be harder to refinance your existing house.  This will further slow down the real estate industry, will slow down home construction, and will cause another wave of foreclosures.  These will tend to further drive down market values. 

About the only thing that will delay the above from happening real soon is if the Fed changes their mind and does QE3.  This act will tend to hold mortgage rates down but will be an additional pumping of extra cash into the money supply, causing further inflation.  This move will also only delay the inevitable.  At some point in time, the Fed will not buy more debt, rates will go up and the economy will be further repressed.  On this part, our choice is now or later.  With BO looking to get re-elected, I would expect there to be some arm-twisting with the Fed.  BO can write off four more years if interest rates jump up, causing a more depressed economy, killing the housing industry and driving more into unemployment.  So, our economy will probably be artificially propped up for a brief time so that BO has a chance of winning in 2012.  But, after the election, as the saying goes, "all hell will break lose". 

In the near future, we will either have higher interest rates hurting the economy; or we will continue with a very weak economy and have accelerated inflation, making everything cost more. 

6.  This good news leads to my last part.  Take heed!  Do what you can to prepare your family for an economy that will continue a downward spiral.  We have all witnessed higher food prices.  Gas prices have been much higher this year.  BO promised that under his plan, "utility rates would necessarily skyrocket."  We are heading into harder times.  Nationally and internationally, there are signs that could lead to food shortages.  We are flooding our farm lands and those will not return to production next year.  Other countries are already having food shortages.  If you can, stock up on non-perishable food.  Try to have a supply of items you may need in case of an emergency. 

If the U.S. got to a point where there were some food shortages, there would be a run on the stores and riots in the streets.  During a situation like that, you should not expect the government to be there to supply your needs.  There will be many with no extra food on hand.  If you have more than enough for you and your family, then you will be able to help others who are desperate. 

What's the worst that can happen?  You did not do what was needed to prepare.  What's the best that can happen?  You prepared and we averted an emergency, setting you up to have food that you can eat without making a trip to the store to buy higher priced items. 

One last thing - Who is in charge?
God is in charge!  That does not mean that we will not suffer hard times, but it does mean that He will help you.  Be a light on a hill for those in darkness.  Many in our country have forsaken God.  If things get really bad, some will be seeking a source of hope.  Be ready to point them to God.