The Economic Ruin of America

Submitted as an Op-ed

When confronted with a problem the rational thing to do is define it, look for its root cause, and work to solve it. Yet in the United States we seem to be ignoring the certain economic death spin that we are in as we rapidly approach a point of no return. Successive administrations in Washington and Congress, both parties, are failing to take the necessary action to stop our certain economic ruin. Politics, not what is best for our country, rules. Yet the sad and disturbing fact is that it is a correctable situation if only we wake up and take the necessary action.

Here are the facts:

* Our current national debt is $15.3 trillion. A new request to raise our debt by $1.2 trillion is on the horizon that will drive it to $16.5 trillion over night. In just a few short years our debt will be over $25 trillion. Currently our debt is increasing by $4 billion per day. These facts alone will lead to the economic ruin of America. Communist China, unfriendly to America, holds over $1.1 trillion of our debt and it is increasing.

* The states are not only broke but deeply in debt. They are forced to balance a budget, contrary to the federal government. They do this by increasing dependency on the federal government for money and by manipulating financing, gimmicks, and borrowing money. This all has been reported by CNN Money, and by a CBS 60 Minutes program on the subject. Respected economist, Meredith Whitney, who was one of the few to forecast our current financial crisis is now bringing to light the financial crisis of the states. All you have to do is read reports from Meredith, or watch the You Tube video, "the states are broke.wmv" and it will scare the hell out of you. Yet it is factual.

* We have essentially given up manufacturing in the United States, our core strength as a nation. The AFL-CIO has reported that over 3 million manufacturing jobs have been lost since 2001. What this means is that we are becoming a dependent nation for manufactured goods. In addition this will lead to giving up research, process technology, and manufacturing know how. All this is not only devastating to our economy, but is a threat to our national security.

* The current reported unemployment in America is 8.5%, but it is much worse than that. The US Bureau of Labor Statistics latest report shows that there are 241 million people in the civilian non institutional population (total potential workforce). There are 13.1 million unemployed (5.6 million out of work for 27 weeks or longer), 8.1 million in part time work, and 2.5 million who have given up looking for a job. This totals 23.7 million people who are unemployed, working part time in order to survive, or who have given up looking for work. In these same Bureau of Labor Statistics numbers, however, it shows that there are 141 million employed people, out of a total potential workforce of 241 million...or 100 million people who are not working even if for legitimate reasons. This needs further understanding.

* There is widespread welfare and social security disability fraud. There are people who have nothing wrong with them and are able to work, yet chose not to. They are actually encouraged not to! As one example, if you go into any Social Security building in any city in America you would expect to see mostly seniors. Yet what you see are predominately people in their 30's, 40's, and early 50's. The reason, and there is no secret about it, is that many have learned how to cheat the system and receive social security disability benefits. This not only hurts America, but hurts those who have a legitimate need for assistance. Nothing is being done to address this issue today as well as other widespread fraud.

* Including all categories of jobs, as well as manufacturing, CNN Money reported on July 2, 2010 that 7.9 million jobs have been lost during the recent recession and they may be lost forever. Many of the lost jobs were in industries that most likely will not recover their former strength.

* Energy, and energy dependence is intimately and significantly tied into the current and future economy of the United States. Yet we have no comprehensive plan for energy independence even though all the pieces of accomplishing this are readily available to us. The failure of an energy independence plan will have a major negative impact on our economy, drive us more toward becoming a dependent nation, and prevent us from adding millions of jobs. This is still another threat to our national security.

* Reality Trac has reported that 70% of current mortgage defaults were not listed in MLS (Multiple Listing Service), but kept off the books in 2011 because it would have impacted the economy with a major negative impact on the stock market and our dollar. This manipulation means that a lot of the foreclosures that would have happened in 2011 have been pushed to 2012. There are some who are trying to paint the housing market positive, it is not. We did not learn much from the housing crisis since we are doing the same thing all over again. Fannie Mae has asked for another $7.8 billion in bail out for losses in the 3rd quarter of 2011, and Freddie Mac $6 billion.

* The U.S. Trade deficit increased by $47.8 billion in November 2011 as reported by the U.S. Census Bureau on January 13, 2011. This is a continuing sign of the loss of manufacturing in America driving us more and more into becoming a dependent nation for goods and services. Not only is this destructive to our economy and jobs, as previously mentioned it is a threat to our national security.

* Social Security and Medicare are already bankrupt and are being called the twin disasters. The unfunded liability of the two programs is now about $84 trillion. These 2 programs, along with Medicaid, consume about 50 % of the U.S. budget. This has been covered by Professor Kent Smetters at the Wharton School of Finance at the University of Pennsylvania, and by a USA Today front page article as far back as November 15, 2005 detailing the crisis. Yet we do nothing.

* In a Rasmussen Report issued January 12, 2012 66% of those polled were not confident, or not at all confident, in the U.S. banking industry.

* There is a huge bubble forming that will lead to still another economic disaster in our country due to artificially depressed interest rates and real inflation. Although it is generally good for low interest rates in order to encourage investment and to minimize debt burden, a dramatic and continual artificial suppression of interest rates during inflation is a recipe for disaster. Even before the bubble bursts, and it will, there is a downside to artificially forcing down interest rates. Many people who have savings and CDs, especially the growing senior population, get almost no return on their savings, therefore there is much less consumer spending. In addition very low interest rates significantly hurts the profitability of banks since their profit margin is squeezed. In addition, there is little incentive for banks to issue loans. Yet all this is occurring when the "real inflation" is running around 10 to 15%. Real inflation is defined as what it really costs people to live including food, clothing, utilities costs, healthcare costs, all sorts of taxes, household goods, fuel costs, etc. Real inflation will only increase over time.

The Federal Reserve's answer to this is to print more money, yet today there is no anchor, no gold standard, therefore the dollar increasingly becomes less valuable "paper". We are headed toward a dollar that won't be worth much and it will no longer be considered the international standard for currency. When you do not face reality; when you dramatically suppress or force economic factors artificially, you are inviting disaster. This will become a huge, huge problem for the United States and could in itself destroy our economy. This issue coupled with all the items listed above confronting us could lead to a situation worse than the Great Depression. We are headed in that direction.

* Instead of offering incentives to business in the Untitled States they are faced with increasing uncertainty, heavier costs and taxes, and major over regulation that essentially amounts to "handcuffs". This is just the opposite of what is needed.

* Immigration anarchy, as well as a host of other problems, is severely affecting the economy of our country as well as individual states. There is no logical, legal, enforced process of immigration.

There is even more, but any or all of the above should be enough to show the deep, deep, crisis that we are in and where we are headed as a nation. A "kick the can down the road" approach by Washington (and the states) will not prevent the disaster, it will only add to it. It will become worse.

Yet the saving part of this is that each and every one of the problems identified above is solvable. All it takes is openly recognizing the problem, defining the root cause, and having the guts to come up with a plan to deal with it. This takes leadership, not politics. It takes logical and common sense planning, not short term pacifying delays that accomplish nothing and only make matters worse. It takes action, not just words. It takes courage.

There needs to be a sense of urgency created BY THE PEOPLE of America in order to prevent a crisis like we have never before seen in our country. We are already on a path toward severe economic ruin that will affect all people in our country in a dramatic negative manner. Not only will our standard of living be severely affected but we will be left grasping for the bare essentials of life itself. It is that serious. The people of our country need to wake up, speak up, and act. This is our only hope. It is time to take our heads out of the sand.