Everyday we hear that our government is spending more than it is taking in. Since all of us are really the government, it means "we" are spending more than we are earning. The government is not the problem, "we" are the problem. "We" elected the officials who represent us in "our" government at all levels. All we have to do is to look in the mirror and there we will find the person responsible for our situation. Democracy is really a system that responds like the "average" person. The fact is that the "average" person is dishonest and wants more out of the pie than they have put in. It is that simple. I know what you must be thinking. You are not "average", other people are the "average" ones. That might be true. Are you one of those who takes more than the "average" out of the pot and are you one of those who puts less than the average into the pot? You need to ask yourself this simple question and answer it honestly. Look at the math. If the "average" person is taking more out of the pot than they are putting in, then is clear that many more than the "average" are taking more out than they are putting in. This means that "most" of the people are not carrying their own weight in our society. I hate to paint all of those people with one wide brush, but you have to admit that "most" of our population are "losers". Those are the facts. I have been reading Blogs from other countries and notice that many do not have much respect for the people of the USA. They know that "most" of "us" are losers. Face it, it is a fact.
When you look as some other country and see that they have a lower standard of living, I know that the first thing "most" of you think is that you are better than them. What happens when you look a little deeper? What you will find is that the "average" person there does not take more out of the pie than they have put in. On "average" they take out only what they have put in. Are they the losers or are "we" the losers? That is how most of the world sees the USA. My Blog about how different Japan has dealt with their earth quake compared to how New Orleans dealt with their hurricane had drawn a lot of comments. Most can't understand why we have acted so irresponsibly while the Japanese have acted just the opposite. We have acted like children, waiting for government hand outs rather than cleaning up the mess as has Japan done. If we are really the "losers", how else would you have expected us to act?
This has been a little off the subject of the title, but it is a good set-up. This is about government accounting. You have heard very different statements about how social security is doing. Some say it is broke and others say that there is enough money in the social security account to cover cost for many more years. So what is the truth? They are both partially right. That is why it is so confusing. What I am about to describe applies to all kinds of government accounts and "trust funds". We know that our government is borrowing about 40 cents of every dollar that "we" spend. Didn't know that? If so, you are too dumb to be allowed to vote. The way our government borrows money is not like when you take out a loan. They sell bonds to people or governments and promise to pay back the bonds at some future date at some specified interest rate. It is like the savings bonds that you may have been given as a kid by your grand mother. Our government needs to borrow so much money, that they look every where for bond buyers. One of the best places to look is right under their noses. I'm talking about money that has been paid into the social security fund. The social security funds are not put in a regular bank, the funds are used to purchase government bonds. In affect, the government has borrowed from the social security fund and has promised to pay it back at some future date with interest. Two key points here. The interest rate on the government bonds are the lowest of any bonds in the world. That means the social security fund earns so little that it can hardly keep up with normal inflation. The other point is the fact that when it comes time to pay back the social security fund, it will have to be with borrowed money from places like China. It is not any different from charging on one credit card and then taking out a loan on another credit card to pay off the first. Hey, that is what is going on and it is standard accounting when it comes to our government.
I used the example of the social security fund, but it is the same with all of these types of special funds. How about the 20 billion from BP to take care of the expenses from the Gulf oil spill? Where is all that money now? It has been spent and there is a 20 billion dollar IOU in some file drawer in Washington DC. When the claims come in, our government will have to borrow the money from China just like they do every day. How about the 30 billion dollar fund set up when Johns-Manville went bankrupt over asbestos claims? Where do you think that money is today. It was not all used to pay claims. If anyone has a claim, our government will have to borrow the money from China to pay them.
Government accounting is not like your own personal accounting, like when you put your money in the bank or when you put those gold coins in your safe deposit box. Our government uses "Fancy Government Accounting" and then is able to talk out of both sides of their mouth as they have been doing.
