“The fact that so many successful politicians are such shameless liars is not only a reflection on them, it is also a reflection on us. When the people want the impossible, only liars can satisfy.” Thomas Sowell
If the specter of debt, whether it’s the nation’s, your town’s or your own (inevitably all the same thing) has you stressed then ask yourself if you believed the lie rather than the reality. If you believed the lie like the proverbial free lunch, yet voted based on your desire for what you knew deep down was really “impossible”, then perhaps Sowell’s quote above applies. But you’re not alone, not in an America drunk on debt that has just had the sobering cold shower of inflation and rising prices, high interest rates and falling real wages. If you buy the lie that it’s the greed of business that makes the price of energy and food so high, and you continue to support politicians that spew that nonsense, then the shame of the lie is yours because when you kill the truth, all that remains are lies.
Recently, the reality of the fact that the Fed is actually bankrupt has hit the financial news because you really can’t hide something like that. The Fed’s own balance sheet exposes that fact as its assets are less than its liabilities. When that occurred, the Fed quickly moved to actually violate its own stress test protocols, including GAAP (Generally Accepted Accounting Procedures) to make an entry it disingenuously called “Deferred Payments” for money it owes the US Treasury now; that’s a unilateral default on debt it passes off with an accounting gimmick that would have regulators in court with any bank or financial institution attempting such fraudulent behavior.
Why the Fed committed such a fraudulent act is explicable only as one may accept Madoff’s excuse for getting caught when his Ponzi scheme imploded – he ran out of money; the Fed simply fell into a scheme called Quantitative Easing (QE), which started back in 2008, and basically refers to the gimmick of the Fed “buying” UST bonds and MBS (Mortgage Backed Securities) with dollars printed as they ordered from the UST to create liquidity enabling expanded credit and therefore debt. It actually worked for a while, but like all Ponzi schemes you eventually get caught in your own devices. As inflation took off, the Fed had to raise rates, and that meant paying off a higher debt service as the value of your assets fell; the cost of bonds are the inverse of their yield, meaning interest, making the cure as bad as the disease.
Now to make matters worse, the administration went on a spending binge, which of course is contrary to the Fed’s attempt to rein in inflation. In effect, you have the right hand fighting what the left hand is attempting to do. As Sowell so eloquently put it “The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” Spending for that free lunch is what politicians do because that’s what gets votes from the very people that suffer the consequences.
The meaning of shame is the painful feeling of humiliation or distress caused by the consciousness of wrong or foolish behavior; however, as Sowell noted in the quote above, politicians can be shameless liars convincing the voters that they can give them what is impossible. While the media was filled with stories about FTX, focusing more on cryptocurrencies than the actual frauds committed, the government promised investigations and hearings, virtue signaling moral superiority while causing even more economic destruction with monetary corruption and irresponsible fiscal policies.
The Newspeak never stops as the focus now is on the debt ceiling, with the usual partisan hysteria about how the world will come to an end with an economic Armageddon if this isn’t resolved immediately. As usual, whoever is in power refuses to negotiate claiming how the other side wants to deprive Americans of all sorts of things, and whoever challenges accuses the other side of gross fiduciary negligence as custodians of the national pocketbook. Few talk to the issue of the glaring absence of an approved budget since Fiscal Year (FY) 2020. For FY 2021, what the Administration and Congress did was to pass a series of five continuing resolutions, which was really not a budget but more a running account of what they spent as they went along, accumulating at the end a deficit of $2.6T, equal to about 12.5% of the US GDP.
For FY 2022 we have record spending, but we are told the deficit for that period decreased to $1.4T; are we to believe that although more was spent the deficit fell year-over-year? Assuming that’s true how then did we hit the all-time high of $31.5T in debt? Well that simply attests to the fact that the government monetized much of it through a huge currency inflation causing a painful rise in prices, and now more pain with rising interest rates. Despite all this, we are told by the administration that the economy has never been better.
As far as the debt ceiling goes, why do we even have one if there is no ceiling on what we spend? Also, why are we told the ceiling has to be raised in order to pay the bills of what has already been spent? If it’s already spent, the money is gone, so why do we need the ceiling raised? The fact is it’s not money already spent; its money approved but yet to be appropriated, and in order to actually spend it the restriction known as the debt ceiling needs to go higher. Hearing all the partisan ranting about this brings to mind one of my favorite Chris Isaak songs called “Somebody’s Crying.” In it, there’s a refrain that goes “I know that somebody’s lying, I know that somebody’s lying.” That somebody who’s crying is the American people trying to follow this contorted litany of lying by our politicians. We all need to understand however that there’s nothing more shameful than the consent of the victim.
Libera Voce 