Wednesday, July 23, 2014
PLACERVILLE, CALIFORNIA
99 CENTS

Stimulus

By
From page A5 | January 23, 2013 |

EDITOR:

I am very glad that Mr. Longhofer responded to my letter because nothing can show the bankruptcy of what what passes for thinking in the liberal world better than a liberal. One fascinating excerpt from his letter: “$425 billion surely some good came from it.” Mr. Longhofer obviously couldn’t think of anything positive accomplished by throwing almost a half trillion dollars borrowed from our grandchildren at the economy so he hopefully states that something good must have come from it. An unknown something good is the best you can do for a half trillion dollars? I’d say something here but it would be hard to improve on the mindless statement of Mr. Longhofer. Maybe he thinks the half billion wasted on Solyndra was a good idea. By the way it’s good to note here that the Solyndra loan was modified by the administration to put Obama’s fat cat buddy George Kaiser, a big Solyndra investor, ahead of taxpayers for any money recovered from the Solyndra bankruptcy.

Mr. Longhofer goes on to state that my analogy of having your credit card nearly at its limit and therefore limiting your ability to stimulate is bogus because the government has no credit limit. That may be technically true, but as Greece is finding out limits exist. You see the recession is trivial compared to our debt situation. Recessions usually last for a fairly short number of years and then there is a recovery. The depression our debt is heading us for could easily take decades to reverse. Recently the Sacramento paper had an article that said the Fed would keep interest rates low until unemployment reached 6.5 percent. That made me laugh. The Fed will keep rates low as long as it can because if they go up this country will circle the liberal drain at amazing speed. Let me illustrate. Our debt is on track to reach 20 trillion dollars by 2016. Since Obama is steadfastly opposed to cuts in entitlements, discretionary and almost any other area of spending we should have no problem reaching that $20 trillion in debt by the forcast date. In fact there is nothing to indicate that the debt won’t continue to expand at the rate it is now past that date to $25 trillion, $30 trillion? Who knows? Now let me tie this together for you. Four percent is historically not an unusual interest rate. Four percent of 20 trillion dollars is $800 billion. That is almost a third of the approximately $2.5 trillion that the government takes in each year. Anybody can look at that and see that it is unsustainable. You would either dafault or print money like it’s going out of style at that point. You can argue the interest rate but also easily see that 2 or 3 percent would lead to similar problems especially when you conider that nothing on the horizon is to slow the increase of debt past 2016. At a certain point with the printing presses churning out money by the ton our foreign creditors that are bankrolling our insanity, most importantly the Chinese, will become concerned as to our ability to repay especially considering the value of our inflated dollars that they would be recieving. How does a foreign lender make up for recieving inflated dollars of lesser value? By raising interest rates. Refer to what has happened recently in Greece, Italy and Spain to see how this works. It’s useful to remember at this point that there is nobody big enough to bail us out as some of the smaller countries like Greece are temporarily being bailed out of their big spending mess.

Make no mistake, the stimulus that Mr. Longhofer wants to help us, he knows not how, will come out of the pockets of your grandchildren. The left often characterizes the right as selfish. What could be more selfish than to continue a level of spending that will condemn today’s grandchildren to living under crushing debt in an impoverished country so that you can have more now?

GEORGE ALGER
Placerville

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