Good Morning Middle America, your King of Simple News is hot off the press.
U.S. NEWS: The economic news is getting worse as the days go on, with new home sales falling to a 13 year low. At the same time, oil prices are climbing, trips to the grocery are becoming more painful, and interest returns on savings and retirement accounts have hit bottom.
These are all bad indicators as to what we can expect for the remainder of the year, but not really important in the overall scheme of things. Residential housing is not, and cannot, be the basis for sustainable long term commerce; I pointed that out some 12 months prior to the beginning of the housing bust.
The real news yesterday was that Social Security and Medicare are in trouble. I know, I know, you already knew that. But current estimates as to just how much trouble have skyrocketed. Dallas Federal Reserve President Richard Fisher gave a scalding speech yesterday regarding the magnitude of the financial trouble that the twin programs represent.
Mr. Fisher told news reporters that he didn’t, “really believe that you got it, and so I will give you some numbers.” Those numbers given for the unfunded liabilities of Social Security and Medicare alone, now stand at $99.2 Trillion; if we paid them today!
I remind you that a trillion seconds represents 32,000,000 years.
Medicare will begin taking in less money than it pays out…this year of 2008. The prescription drug liability alone, that was passed on November 25, 2003, has already incurred greater liability than the entirety of Social Security.
Mr. Fisher went on to speak to a point very near and dear to my heart; inflation.
Mr. Fisher asked those in attendance to use caution when electing any politician by determining what their stance and plans were to address these liabilities. He stated that he was not a politician and that his concern was, “the mortgaging of our children and grandchildren’s future.”
In an earlier speech, he said, “One has to bear in mind that the seeds of inflation, once planted, can lie fallow for some time, then suddenly burst through the economic topsoil like kudzu, requiring a near toxic dose of countermeasures to overcome.”
He further described inflation as a, “dangerous elixir that ultimately proves debilitating” and “inculcates bad financial behavioral patterns in the young by encouraging spending rather than investment and saving.”
The Dallas Fed president also warned against taking the cheap and easy way of inflating our way out of this situation. He stated in an earlier speech that, “Inflation is bad for Main Street and Wall Street and even for Sesame Street.”
The most interesting part of Mr. Fisher’s speech is that I would wager that few of you have seen, read, or even heard mention of the content.
David Walker, the GAO Chief (who recently resigned), has made these same arguments for years. Ron Paul, has spent 20 years trying to get the attention of Congress. He continues to warn us and campaign daily on these issues.
So what do all of these men have in common? They are all telling the truth and after all, America wants nothing to do with men of such despicable character. It the truth is painful; by all means lie. The remaining presidential contenders understand this rule, oh so well.
Wake up Middle America, the liars are leading.