Recently by Simon Black: Bankrupt Nations Try to Stop the Future From Happening, Fail
On the rare occasion that I’m bored, I like to watch 24-hour news television for entertainment. It’s hilarious watching the talking heads spin out of control in apoplectic fits when they’re essentially arguing the same point; they might be from different parties, but they’re merely battling over small details of the same government-sponsored solution.
Recently I caught one of these talking head financial experts on TV arguing about debt levels in the United States. He was saying that the US debt doesn’t matter all that much because the US government has so many assets to offset its debt.
For example, he suggested that things like the highway system, national parks, and strategic petroleum reserve would more than offset America’s liabilities, so the looming national debt isn’t such a big deal after all.
He couldn’t have been more wrong.
The Government Accounting Office (GAO) puts out an annual financial report that looks and feels like corporate financial statements… of course, the US government doesn’t have to abide by the same accounting principles as the private sector, so they get to cheat quite a bit in overstating their position.
The most recent report is signed off by Tim Geithner and includes oodles of newspeak from the Ministry of Plenty about how dazzling their economic recovery measures have been. Needless to say, the numbers paint a different picture.
Even when you add up -all- of the assets, right down to every desk, chair, and lifeguard stand, and even if you throw in a healthy boost to the asset column to account for premiums in the market value for land and “gold” in Fort Knox, the government is still in the hole to the tune of over $10 trillion. It would take more than 300,000 years to count that high.
And yet, the fake recovery is vanishing, the dollar keeps falling against anything of real value, and the average guy on the street is realizing limited benefit for his share of the debt and inflation burdens. How is this possible?
I’ve often said that bureaucrats and politicians have an extremely limited playbook consisting of taxation, regulation, and inflation. These three ugly sisters of bureaucracy effectively serve to steal from people, make things more difficult for them, and rob them of their purchasing power… and yet they’re dressed up as solutions instead of problems.
Consider the case of Illinois – the state is completely insolvent and running out of cash quickly. It doesn’t have the luxury of printing its own currency, and is thus being forced to deal with its fiscal reality… much like Greece.