Spending Our Way Out Of Indebtedness?!

The theory: If I spend more money I don't have, my life will get better.

US Consumer Confidence just took another hit.
US Consumer Confidence just took another hit. | Source

Now we have two Obamas instead of just one....


I don't know about you, but the idea of the unbalanced Obama budget which plans to put America further in debt by another trillion dollars or more (not less) just got escalated by Federal Reserve Chairman Bernanke! He maintains that the Federal Reserve, by his orders, will buy up mortgages by spending $40,000,000,000.00 every month for as far as Bernanke can see into the future and that will create more jobs! Jobs for government employees who hand out the money?

My 2nd Grade arithmetic tells me that will mean the US Treasury will have to add almost another half a trillion dollars to the National Debt each year for as far as Bernanke can see! (We can wish he was as shortsighted as this latest "policy"!)

Where have I heard those "tax and spend" lyrics before?

Don't for one moment think that the American Government can overspend by another trillion and one half dollars without the tax part of "tax and spend" hitting our wallets and family budgets in the future, just as the supposedly "free money" from our government is supposed to aid the states in handling Medicaid costs. There is no such thing as "free money!"

There is no such thing as "free money!" (It deserved saying again.) Has anyone given you some lately?

President Obama is campaigning on the premise that the last President Bush left Obama with an impossible hand to play "in just four years." Now President Obama and Chairman Bernanke are leaving America with an increasingly hard hand to play in the next four years.

That's not going "Forward!" That's doing the very thing President Obama is himself trying to blame his predecessor for doing!

I guess the Obama/Bernanke Theory is political. It goes like this: if it works, it's great, if not, then let's see future presidents dig us out of an even deeper hole; and make us look good!

No Sale! "Keeping interest rates low" doesn't seem to apply to the credit cards so many Americans are living on today. "Buying up mortgages" doesn't mean that homeowners no longer owe those mortgages. And having the Department of the Treasury print more money isn't going to mean that "trickle down economics" is suddenly going to work to create new jobs.

I recently heard of a proposal to demand an audit of the Federal Reserve.

"Bare Bones Economics" suggests that we find out where the skeletons are buried...before they are our own.


_______

Copyright 2012 Demas W. Jasper All rights reserved.

What do YOU think?

Was the announcement of more Federal Reserve spending of $20 Billion a month

  • Good policy
  • Bad policy
  • Just more of the same policy
See results without voting

The Federal Reserve and Control of the US Currency:

More by this Author


Comments 52 comments

carol7777 profile image

carol7777 4 years ago from Arizona

What amazes me is the lack of concern about this huge debt. Won't we be going through another downgrade? What is going on..and I am serious when I really don't know what is going on..


Wayne Brown profile image

Wayne Brown 4 years ago from Texas

Obama is using flawed Keynesian economic theory which purports that that government spending can stimulate an economy back to health. Unfortunately the money being spent is borrowed to a great degree....nuts! It reminds me of the two clowns I saw on Bill O'Reilly last night who were hawking a book which promotes the raising of the minimum wage to between 16 and 21 dollars to cure all the ills of the poor. What it fails to recognize is that the businesses employing such wages would have to raise the price of their goods and services so much higher that the "circular" effect would simply make these folks poor once again in relative affordability sense. Along with those higher wages, they wanted daycare for single moms as well as job training. Basically the entire model was built on the idea of a welfare state. Amazingly, these guys are looked upon as having some level of intelligence....one actually holds a Phd. from God knows where. Obama's plan has little or nothing to do with fixing America economically...it never has. It has everything to do with transforming America into a different nation with a totally new government, etc., etc. That is the reason that he cannot discuss his plan in detail....too many Americans want nothing to do with such changes on either side of the aisle. This guy is hugely bad for America...a disaster at best. ~WB


peanutroaster profile image

peanutroaster 4 years ago from New England

Debt goes up in times of war and recession. Duh.


cleaner3 profile image

cleaner3 4 years ago from Pueblo, Colorado

a failure is how you can describe him. Wake up america , if you can't see what the obama left is trying to do by now you are delusional. this printing of huge amounts of money will make our money worth as much as 1/10 what it is now . this is making oil spike and will bring down the dollar, leading to inflation and worse. Gold will soon start rising again. bet on it! this is how the left is going to crash our economy, this is the final desperate step that will give obama the leeway to declare a crisis and take over . we need to get rid of this failure now while we have a chance. why hasn't obama stopped this man . ? they have already tried this twice and it has not worked .

Now will America open its eyes to this madness .. if we don't we will be sorry. !


peanutroaster profile image

peanutroaster 4 years ago from New England

Tax cuts for the rich - $1.1 trillion and that's only on what they haven't hidden in offshore accounts.


rfmoran profile image

rfmoran 4 years ago from Long Island, New York

The interest on our debt, combined with entitlement payments will crush this country like a soda can in a few years. You are right. Each president kicks the can down the road to let the long term unsustainability be another president's problem.


sportsfather profile image

sportsfather 4 years ago

The problem is the Fed is running out of options. From a monetary policy standpoint, they're essentially tied into a complete knot. I just don't see how it can have an immediate impact on employment although stocks and commodities will love it. The root of the problem still lies in the hands of the president and Congress. We need a long term solution to the deficit problem. The problem is we're still trying to claw out of one of the deepest recessions in our history and cutting the deficit is all good rhetoric, but doesn't get us out of the recession. But hey.....maybe QE3 will actually work, we'll start to see true economic growth, the employment rate will rapidly decline, and we can actually be in a position about getting serious about this deficit.


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

peanutroaster: Look at what Romney did to get rid of corporate loopsholes in Massachusetts and expect him to do the same at the federal level. The National Debt went up by $6 trillion, and what do we have to show for it? "Four more years of this?" At this rate, the corner we want to turn is getting further and further away...or it's the wrong corner.


Old Poolman profile image

Old Poolman 4 years ago from Rural Arizona

peanutroaster seems to think this is a great idea. That alone should tell us everything we need to know about this horrible plan.


Mr. Happy profile image

Mr. Happy 4 years ago from Toronto, Canada

The quantitative easing which Bernanke is up to (it is notable to mention that this is being done "once again"), simply means that the bankers can keep their borrowing costs low, while the United States dollar continues its devaluation.

This will result in further inflation and no decrease in the number of those who are unemployed. So, bankers get a deal and the common man gets ... austerity measures, I guess?

I wonder when will most people realize that the Federal Reserve Bank is a private establishment, which only cares to make more profit for bankers, while regular people will further sink in the mud, losing everything from savings, to homes and finally their dignity.

All the best!


aviannovice profile image

aviannovice 4 years ago from Stillwater, OK

Here, here!


cleaner3 profile image

cleaner3 4 years ago from Pueblo, Colorado

sportsfather, maybe it will work?.... maybe ??? it hasn't worked in the other two instances .!!! why would it work now . So what if it makes the stock market go up ? that does nothing for the economy. it does nothing for the middle class. it only leads to the dollar eventually crashing . Yours is a pipe dream .. MAYBE....??? Get in the line of delusionists with peanutroaster..!


sportsfather profile image

sportsfather 4 years ago

QE3 is in fact different than QE1 & QE2 because it was open ended. 3 Months after QE1, the stock market was down 13% and consumer confidence dropped in similar fashion. And pretty much the same thing happened after QE2. It was like when the defense already knows the play before the huddle even breaks. The shorts and speculators reared their ugly heads and killed the momentum that QE1 and QE2 had. Now, the Fed has essentially said, "screw you guys, we aren't telling you when it will end this time because then we'll have the same result as we saw in QE1 and QE2. Two MAJOR corrections that killed consumer confidence.

Moreover, it does do something for the middle class. I'm about $5,000 richer today because my retirement account(s) and investment account are both up substantially 24 hours after QE3 was announced. Note, I don't make more than $100,000/year. Also, employment is a lagging indicator. Of course actions today won't put people back to work today. It will take 12 months or more to see a sustained effect from QE3 (assuming it does have an effect).

Disclaimer. I am a Republican. I did not vote for Obama the first time.....I don't plan on voting for him a second time.


cleaner3 profile image

cleaner3 4 years ago from Pueblo, Colorado

QE 3...this is the worst thing that could happen to our economy! I suggest you take your profits because it won't last long my friend. you may have made money but when the dollar crashes your profits will be spit.!!


Old Poolman profile image

Old Poolman 4 years ago from Rural Arizona

As Mr. Happy pointed out, the bankers will profit but QE 3 will do nothing for those of us not included in that group. This is an outrageous plan designed to benefit a few and further destroy our economy. As pointed out in another comment those who saw an increase in their investments better pull their money out before it is worthless.


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

There has to be a very good reason gold price is jumping. That usually happens when folks are jittery. The uncertainties created by neither Obama nor Romney talking specifics about the way forward is certainly partly to blame, but there are major problems everyone can see, and for which they anticipate we are not likely to hear concrete solutions. The only "Wish List" longer than the public's are the wish lists of the two parties and their standard bearers. October 3 can show us whether or not that is likely to change before the election a month later. Meanwhile dissatisfaction here and abroad says that s o m e t h i n g has to happen.


Old Poolman profile image

Old Poolman 4 years ago from Rural Arizona

I have never met a single person who was able to borrow or spend their way out of debt. If they are out there I would sure like to meet one of them and get the details on exactly how they pulled it off. I hate to say it, but I think we are in deep trouble and sinking deeper all the time. We will never be able to recover from stupid bandaid moves like this one.


cleaner3 4 years ago

old poolman , you may be old but the knowledge you impart should be used by the politicians . both sides . they don't care about the regular guy. they are bringing us down.!


Old Poolman profile image

Old Poolman 4 years ago from Rural Arizona

cleaner3 - Most of us know that regardless of party quit worrying about us little people years ago. There are still a great many party loyal people out there on both sides who have not yet figured that out.


sportsfather profile image

sportsfather 4 years ago

I'm not too worried about the dollar crashing. As rough as things are here domestically, it's just as bad or worse in the majority of developed nations around the globe. We might see a weakened dollar over the near term, but not a crashing dollar.


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

A weakened dollar, savings which essentially earn no interest, rising prices squeezing the elderly whose savings cannot earn enugh (if they have any) to cope with inflation, taxes bound to go up to pay the current National Debt plus the growing interest, gas at $4/gallon, and the Baby Boomers retiring to the same fix! Where did the dream go?


cleaner3 4 years ago

Don't worry Perspy, it's worse somewhere else , as if you didn't know that .... what an absolute inane statemant.! when you have to take out your money and use a wheelbarrow full of it to buy gas. maybe then you will understand what a weak dollar does.


sportsfather profile image

sportsfather 4 years ago

So you don't think it's worse in the EU? Are you serious? It's an accurate statement. We have our problems. But the EU has been standing on the brink of collapse for the last couple of years with not much end in sight.

Moreover, savings hasn't earned interest for some time. I'm not sure how QE3 is going to change that. Instead of a 1 year CD earning .50%, it will earn .40%. Not sure how that's going to change much. But bonds (corps) and defensive stocks can still earn you 3-5% comfortably.

Gas prices are obviously a key issue. They drive everything else in terms of inflation. But that's as more of a political issue than a fed issue. Why we aren't ramping up production domestically boggles the mind. You want to end the issues now? Open up all the S.O.R.'s, and ramp up domestic oil production by 200%. The Fed has no control over that......the president and Congress do. But the liberal agenda in the White House and Congress will NEVER let that happen under their watch. They will just tell us to carpool and inflate our tires and that will resolve the gas price issue....yeah right.

You guys seem to be in the same boat with "the sky is falling" folks that believe the republic is on the brink of destruction. Guys, things really aren't as bad as the media makes it out to be. We've had higher unemployment. We've had WAY higher inflation (does anyone remember the early 80's?).

But that doesn't mean we're in the clear. Two issues need to be resolved in the next 5-10 years. #1 The deficit. Our deficit spending is an abomination. It's reckless and stupid. #2 We have to get energy prices down. You want sustained growth? Put Americans in an environment where they don't have shoppers guilt after they just put gas in their mid-sized sedan.


peanutroaster profile image

peanutroaster 4 years ago from New England

Reagan raised debt ceiling 18 times; George W. Bush seven times.


sportsfather profile image

sportsfather 4 years ago

Also, the Euro is at $1.31 compared to the dollar. That's 17% lower than it was in early 2008 and roughly the same as it was in 2006 (when gas prices were in the $2-$3 range. And roughly the same as it was in the late 90's when it wasn't uncommon to see gas prices near $1.

Now, if we're talking about exchange rates MUCH higher than $1.31 compared to the Euro, then there are some long term issues. But that will only happen if the Euro strengthens much faster than the dollar. And that likely isn't going to happen because of the aftershocks of a global recession. Even China is falling off a bit. I'd be more worried about the dollar if other sovereigns weren't having their own issues. We will likely see a short-term increase in the exchange rate with the euro but I'll be surprised if we test the highs we saw in 2008.


peanutroaster profile image

peanutroaster 4 years ago from New England

Energy costs are what exposed the Wall St. shell game and American's living beyond their means.

We have an economy that was built on cheap oil and that cheap oil found by hillbilly's firing a stray bullet into the ground (pardon my Bev. Hillbilly's reference) is gone. Now we are trying to squeeze it out of the frozen tundra.

When energy costs go up it touches off another round of recession. Economy improves, gas goes up. Economy dives, gas goes down. We'll be in this cycle forever unless we serious invest in alternative energy.


sportsfather profile image

sportsfather 4 years ago

Alternative energy is certainly something that needs to be focused on. Oil needs to be an option, not a necessity for the long-run. But it's a pie in the sky thought to think by investing in alternative energy today, it will pull us out of the recession.

Personally, I think it's possible to do both. But liberal politicians aren't willing to do that because many of them are bankrolled by liberal groups who would crucify them if they voted in ANY WAY to bring gas prices down (high gas prices equals greater interest in alternative energy). They are just as bad as the conservative politicians who won't vote against anything that is bad for the big oil companies.


peanutroaster profile image

peanutroaster 4 years ago from New England

Gas prices are based on supply and demand. The stupidest arguments are for more drilling for a product that will be sold to the highest bidder on the open market.

The Baby Boomers enjoyed a nice ride off cheap oil and can't grasp that things have changed. You can't go back to the "good old days", we need forward thinking and new ideas.


sportsfather profile image

sportsfather 4 years ago

I don't disagree. But true alternative energy is well over 10 years out. You can't force people to change consumption habits overnight (well, you can, but then we might as well call ourselves China). Long-term, we need to have more options than oil. I'm not sure many people will argue that other than oil executives and a few members of Congress.


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

When did Americans ever console themselves with the fact that "things are worse [somewhere else]"? Natural gas is now abundant and reasonably priced, so get your vehicle converted to use it. As for Reagan and Bush raising the debt ceiling, Congress does that and has done it routinely to our national detriment. Perot was villified in 1992 for wanting to put a 45-cents additional tax per gallon of gas and put that toward the Natonal Debt. Now look at the price of gas! and realize that we are merely paying more and more interest on the rapidly growing National Debt. That interest will escalate the next time our credit rating gets zonked. Neither party is acting responsibly in that regard, and it looks as if voters will not be acting responsibly a little over 50 days from now. The Gimme Crowd is marching and the Gimme Congress is scattering goodies on the way to the cliff.


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

If you haven't seen this one yet, it deserves a thoughtful reading: http://picklyman.wordpress.com/2010/12/12/from-the...


peanutroaster profile image

peanutroaster 4 years ago from New England

If cheap gas is your main concern here are few places to move to:

Venezuela

$0.08 per gallon

Iran

$1.44 per gallon

Saudi Arabia

$0.61 per gallon


Old Poolman profile image

Old Poolman 4 years ago from Rural Arizona

peanutroaster - Those are great prices, does that mean you are leaving the country?


sportsfather profile image

sportsfather 4 years ago

Who said I'm "consoling myself" Perspycacious? I was just giving an argument as to why the dollar will not tank against the Euro. Nice spin though.


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

I am watching to see how soon those backing the presumptive winner begin to gloat, and those backing the presumptive loser begin to blame.

If the odds have shifted, then it is neither time to gloat nor blame, but to shift the greater focus to the congressional races and the desired results there.


peanutroaster profile image

peanutroaster 4 years ago from New England

Perspycacious, you're a day late. Romney just lost the race when he wrote off half of the country as people he could care less about.


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

Frankly, the presidential race was lost "by the numbers" as I wrote about some time ago. So, I'm sorry, but I wish I was only a day late.

I persist in the hope that the debates can still alert both sides that America is in a lot of serious trouble, with many very real problems in need of urgent attention and resolution. If President Obama has more leadership than he has shown so far, he will challenge us to sacrifice and patch the leaks in the ship of state.


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

The damage and costs of Hurricane Sandy are currently set at $10-$20 Billion for this "once in a century Super Storm." Bernanke is spending that same amount every month on these Federal Reserve purchases. That kind of puts his spending into perspective, doesn't it? Another interesting government activity in the past month has been federal government hiring! Granted, the people who were hired benefited, but is someone else benefiting, if the last unemployment figures before the voting get skewed?


cleaner3 4 years ago

you know the democrats, ie ; Obama will do anything to keep his hold onto power . he is the most dangerous man in America right now . Americans be wary of all he does from here on out, he is going to lose and when he fully realizes that, he and his cronies will stoop to anything .


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

cleaner3 : The present party "in power" is not the only one to ever have used its incumbency to try to slant things as voting approaches. These are just the steps being taken by these current incumbents. There are no term limits, so cleaning out a deadbeat Congress has to be accomplished on November 6, 2012 by American voters. Power is addictive, money to buy power is too plentiful, and it is average Americans who are paying the price for an ineffective government more focused on power than on solutions.


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

I have to correct myself: the monthly Federal Reserve Banks' purchases I cited are actually $40 Billion a month, or twice the estimated damages from Hurricane Sandy!


peanutroaster profile image

peanutroaster 4 years ago from New England

Obama even created a hurricane! Such evil!

You might not like Obama but at least he stands by what he believes in, unlike the flip flop.


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

peanutroaster: I think I might know how to solve my neighbor's problems, but until they are my own problems and I know and have access to all my options, it may be useless to think of applying them to my neighbor's situation. It is easy, to contrast Obama to Romney, when Obama can look (even sound) presidential, while he still carries with him all the trappings of the office's pomp and circumstance and easily makes his own news for the nightly news. His one disadvantage is that he is stuck with his own record. Blaming others doesn't change the fact that it IS his own record. Now the Hurricane Sandy cost estimate is up to $40 Billion (possibly higher) while the Federal Reserve Bank is spending that every month just buying up bad mortgages. We still cannot spend our way out of indebtedness by adding on more debt...the equivalent of a Hurricane Sandy every month (and such spending is the actual subject of this Hub)!


Old Poolman profile image

Old Poolman 4 years ago from Rural Arizona

Peanutroaster - I don't dislike Obama, but I do dislike what he believes in. I don't have any desire to be a socialist.


cleaner3 4 years ago

old poolman , you might be old but you are wise and i'm sure that you sure know what you are talking about . you have been there and done that so when these pups should listen they want to talk. when will they learn that the wise old men know better than the young who think they know it all


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

This is worth repeating for anyone who comes here late and didn't bother to read it the first time: A weakened dollar, savings which essentially earn no interest, rising prices squeezing the elderly whose savings cannot earn enough (if they have any) to cope with inflation, taxes bound to go up to pay the current National Debt plus the growing interest, gas at $4/gallon, and the Baby Boomers retiring to the same fix! Where did the dream go?


cleaner3 4 years ago

So perspy you tell us what our problems are , but you fail to mention that we need a dramatic change, which you know is true but don't want to say it for alienating your many followers??? Obama is a failure . the American people know it and I have said it and only the nieve and people who are scared of change and fail to see reality are the one's who won't vote for the change we need!Wake up America do you want 2% growth for 4 more years. ? Stagnation , high unemployment ??


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

I recently posed a Hub question about how voters are researching the candidates. I was not surprised that it prompted a few good answers, but only a very few. I suspect that on November 6, 2012 most voters will never have researched the candidates they are voting for, and that the only informed choices will be made by the very few who did, while we will get a "popularity vote" once again based on bluster, bluff, and blarney! What can we expect, when even the candidates rely on those three b's to win the highest office in the USA, and arguably the most powerful position in the world. Wise leadership? Moral leadership? Sound leadership? Independent leadership? Can we even hope for a new and bipartisan Congress after such a demeaning, destructive campaign of blame throwing? I can wish, but realistically....I think not. The purpose of political campaigns is to get elected, and if possible to have a clear mandate. Neither Obama nor Romney is likely to have a clear mandate from so politically divided an electorate. I prefer Romney for good reasons the campaigning has not made apparent.


cleaner3 profile image

cleaner3 4 years ago from Pueblo, Colorado

" I prefer Romney for good reasons " Thank you sir !


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

cleaner3: I also stated back in July that the Electoral College votes were already against Romney's winning due to the "winner takes all" nature of how most states designate their electors (effectually disenfranchising in-state voters of the opposing party.) Had the Romney campaign not ignored that reality, Governor Romeny and the nation would have been better served had he campaigned by spelling out the actual sacrifices Americans are facing and why there is a desperate need for substantive changes to the present system of taxing, spending, and entitlements, as well as to the approach of the government in building the "jobs available pool" for the nation's poorly employed and unemployed workforce. Lots of World War II bomber crews went down in flames for a righteous cause, and we honor them still. Romney and Ryan may go down in flames but never truly defined their cause, other than that it was to defeat Obama. The nation deserved a better, "blood, sweat, and tears" straight talking to, which future Americans could look back on and recognize for its wisdom, if not for its politics.


cleaner3 profile image

cleaner3 4 years ago from Pueblo, Colorado

Your explanations of why Romney wll lose fall on my deaf ears , you and others will be shocked .. shocked I say that he will win a biger margin than you think . Mitt Romney explained in great detail what his plans are but you want just to know what the media spin has brainwashed you into thinking is not what the reality of America is . Come to the present and know t5he truth that the obama reelection will destroy America with his liberal agenda that has not and will never will work in America


Perspycacious profile image

Perspycacious 4 years ago from Today's America and The World Beyond Author

Colorado is a swing state, so even within your state's boundaries there is widespread debate over who can best lead America. If Obama wins there by the skin of his teeth, what happens to all of Colorado's electoral votes? What would have been any different, were Otama to win by a landslide in Colorado? The fact that under either scenario the results in terms of Colorado's electoral votes would look exactly the same is the point I am making. Obama can lose, even sizably, in the popular vote. He can lose a big majority of the states. and still win with the "winner takes all" votes from a relatively few large population liberal states in the Electoral College! That's been a known fact since the Democrats first realized it long ago, and that has been their strategy this time around. Refer us all to where we can go to see the details of how "Romney's Plan" for the future of America is to be implemented, and I will be even happier to cast my ballot for him.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working