'Tis Only My Opinion!™August 2015 - Volume 35, Number 8"Does it matter who is elected?"There appears to be a plethora of Republican candidates standing for election of the President of the U.S. in 2016 and about three Democrats as I write this article. Citizens are going to be hearing thousands of sound-bites and very little about real issues and programs to attack them. While the insertion of Donald Trump into the Republican campaign may have infused the conservative base and caused consternation among the Republican establishment, will this election really change the course of our nation? Is there really much difference between a Congress controlled by Democrats or Republicans? Neither group really has given anything but lip-service to the idea that actual spending is out-of-control and future liabilities can not be sustained. Important Issues given lip-service by politiciansIt is my belief that there are certain issues that must be addressed or we will lose the constitutional republic which was founded in 1776. In no particular order, they include:
The U.S. is no longer a creditor nation!The U.S. has a Gross Domestic Product of about $17 trillion yearly and a GAAP debt that is in excess of $100 trillion. In reality, the U.S. can only continue without a major financial crisis until like Lehman Brothers someone says ... "the king has no clothes." During the past decade, the role of the U.S. dollar as the world's reserve currency has been shrinking. That role has enabled the U.S. Treasury to borrow efficiently. If it no longer continues in that role, the cost of financing the nation's debt will materially increase. "Not on my watch!"A few central bankers i.e., Ben Bernanke of the U.S. Federal Reserve, Mervyn King of the Bank of England and Jean-Claude Trichet of the European Central Bank, breathed a sigh of relief when their term of office expired so that the demise of the U.S. and world economy did not occur during their watch. Since 1913 when the U.S. Federal Reserve Bank came into being, the institution has been led by individuals who were largely beholden to the big bank interests both here and overseas. In almost every major decision, the overriding concern was to keep the large banks from failing and not necessarily in the interest of the depositors and creditors of the financial institutions. Keeping the TBTF alive --The bailouts of 2008 and the payment of interest on deposits by banks at the Federal Reserve were just another example of keeping the TBTF institutions alive. As a result of Dodd-Frank's regulations and the Consumer Finance Agency, the regulatory requirements placed upon smaller and community banks has resulted in a serious reduction in the number of banks in the U.S. since 2008. As of December 31, 2008, the FDIC reported that there were 8,305 insured financial institutions. As of December 31, 2014, those had decreased to 6,799. Concentration of banking assets in the U.S. continues to grow into the five largest banks, JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs. With interest rates at historic lows and credit derivatives at historic highs, a faltering world economy could generate havoc in a cascading series of liquidity defaults. Prior to the 2007-2008 financial meltdown, nominal world-wide credit derivatives stood at about $750 trillion. Despite all the hand-wringing of the last few years, today world-wide credit derivatives are about $1,500 trillion, or nearly double. Watch out for Black Swans!The risk to the world with a faltering economy seen throughout the emerging markets, a slowing of the China engine which has always been less than officially reported, and no resolution to the Eurozone debt picture other than kicking the can further down the road has not abated. Yet there are those who actually believe that it matters who is elected President in the U.S. With the current slate of candidates with the possible exception of Donald Trump, it would appear that the continued growth of the national debt and bureaucracy is almost assured irrespective of the ultimate winner. What the black swan event will be cannot be stated but be assured there are many potential black swan's swimming around the planet. The Presidency might set the tone but the real problem lies in the judiciary and the bureaucracy.The U.S. has become a country where exceptionalism and self-reliance has given way to a different culture where those qualities are no longer admired. But irrespective of who wins the next Presidential election, the real problem remains a federal-tenured judicial system and the bloated and unresponsive bureaucracy. Congress has written laws but has enabled many agencies assisted by special interest groups to write regulations which have gone far beyond the intent of the enabling legal language itself. The recent interpretation of the "Clean Water Act" regarding navigable waters is an example of the ambitious overreach of activist groups. The EPA in conjuncton with the Bureau of Land Management has in recent years attempted to place millions of publicly-owned land off-limits to both commerical and recreational use. When regulations are questioned as in Obamacare and the National Labor Relations Board, the U.S. Supreme Court writes opinions which overwrite the Constitution wording and the common English language usage definitions. Words no longer mean what is clearly stated in the Constitution, in Congressional committee hearings and within debate on the floor of Congress but now mean whatever five Supreme Court justices decide. The number of government employees is only part of the problem.The growth of the federal, state and local governments as programs have been added has increased the number of employees no longer employed in the private and/or non-profit sectors. The following graph shows non-farm payroll data since 1939 for the U.S. which includes government employees.
The following graph shows the total number of government employees at all levels during the same period.
While the percentage of "government" employees has grown from about 4.5% in 1939 to today's 7%, the data is misleading as a substantial number of non-government employees work on projects funded by the various governmental agencies. Thanks to the federal civil service laws, it is almost impossible to terminate federal government employees including those in the post office. As a result, within 75 miles of Washington, D.C., we have six of the ten counties with the highest average per capita income in the U.S. During the past 70 years, the number of activist-led programs has multiplied. As a result, these organizations have become dominated by individuals who have agendas and like the power their Civil Service position provides. Squeezing the Golden GooseWith the skewing of income tax receipts and almost 50% of U.S. citizens paying no tax, the tax-the-rich ploy is about to kill the golden goose. The growing number of U.S. citizens giving up their citizenship should serve as a wake-up call to our politicians but I doubt if they really understand the frustrations of the productive self-employed citizens. Free-trade pacts have seen the shuttering of many industrial plants in the U.S. and the destruction of highly-skilled, well-paying manufacturing positions throughout the U.S. While the tech sector has provided jobs, the skills of many of those in manufacturing jobs can not be easily retrained. ConclusionIrrespective of who wins the Presidency and/or which party controls Congress unless major changes are made to the regulatory and financial framework of the country, there is little hope for the retention of the constitutional republic. There are simply too many low-information voters receiving governmental assistance that make it difficult to address problems in the economic fabric. The U.S. is on its way to becoming a third-world country without a major change of direction. Whether any candidate can exert sufficient change to make a difference is unknown. Realistically, do we really believe that any bureaucrat will want to reduce the number of employees and programs under his/her direction. So how do you really solve the problem without putting the citizens back to Pavlov's Level 1? But then - 'Tis Only My Opinion!Fred Richards www.adrich.com Corruptisima republica plurimae leges. [The more corrupt a republic, the more laws.] -- Tacitus, Annals III 27 'Tis only My Opinion! Archive Menu, click here. This
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