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57 lines
3.2 KiB
Plaintext
57 lines
3.2 KiB
Plaintext
How to Solve the Deficit and Debt Problems in One Easy Lesson
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In 1980, our total national debt, accumulated by ALL "tax and spend"
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Democrats and ALL "borrow and squander" Republicans in 200 years,
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stood at something like $ 0.7 Trillion. Today, only a dozen years
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later, total debt stands at more than $ 4 Trillion and it is
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increasing at the rate of another $ Trillion every three years or so.
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Even if President Clinton achieves what he is trying to do, the debt
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will climb to $ 5 to 6 Trillion before the deficit is eliminated. And
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there is another Trillion, hidden in our shift from biggest creditor
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to biggest debtor. And there may be yet another Trillion, if the
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rumored commercial bank and insurance scandals materialize. What a
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nightmare!
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There is no way to give an analogy to our situation in the realm of
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personal finance, but let's try anyway. Suppose that your salary is $
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60,000 and you live in a $ 200,000 house, on which you owe $ 10,500.
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One fine day, you find that your pay has been cut to $ 50,000. So, to
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cheer yourself up, you double what you have been spending on your
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favorite hobby, to $ 1,000 per month, and you start making monthly
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trips to the bank to increase your mortgage by $ 1,000 --- to keep the
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bill collectors at bay. After some years, your salary is only
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$ 48,000, but you now owe $ 60,000 and you are still going to the bank
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every month to borrow another $ 1,000. You haven't been able to
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maintain your house properly, so it is now worth only $ 120,000. Your
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banker is getting nervous and thinking of foreclosing. What are your
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options? Wouldn't it be absurd to speak of ``solving" this problem by
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trying to stop borrowing $1,000 more every month, within 4 or 5 years?
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Realistically, your only options are to declare bankruptcy or sell the
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house.
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What happened to all the Trillions, that Reagan and Bush borrowed and
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squandered? This money still exists in the form of T-Notes. Guys like
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you and me now owe it and those who have the T-Notes now own it. Thus,
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the practical result of Reagan-Bush economic policy was to effect the
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by-far greatest transfer of wealth in history. This is what Reagan set
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out to do, according to his first Budget Director Robert Stockman, but
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he also hoped that the resulting debt would end social programs
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forever. Nice fellow. Great Good Fortune was supposed to "trickle
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down" to you and me, but it didn't.
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The experiment failed, so why don't we just undo it? The deficit is
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just the amount by which taxes were reduced in 1981 and 1986, so that
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can be fixed by just restoring 1980 tax schedule. The debt can also be
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fixed, by just transferring the $ 3 or 4 Trillion, from those who
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received it back to those from whom it was taken (stolen??). All we
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have to do is cancel the T-Notes.
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"You can't do that," everybody will scream, "T-Notes are a contractual
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obligation that cannot be abrogated". Well, our Social Security
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Pensions are also a contractual obligation that cannot be abrogated.
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But that hasn't stopped politicians from calling them "entitlements"
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and "putting them on the table". And these same politicians speak of
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"fairly shared sacrifice". Cancelling the T-Notes IS fairly shared
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sacrifice: T-Notes also figure in the pension funds of ordinary
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people.
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