Bacon's Rebellion

Democracy Thrives in Sunlight

Another victory like this and we are undone

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by

Norm Leahy
in

The great debt deal, which will save the Republic from… something… increasingly resembles a sad joke. Your morning chart, courtesy of Tad DeHaven, offers a sobering look at what the political class and its pilot fish consider a win on spending:

Somewhere, Pyrrhus of Epirus is smiling.

Now here’s another chart to ponder: It plots the price of gold versus hikes in the federal debt ceiling limit since 1994:


There are any number of reasons why gold has risen over the last 17 years — wars, uncertainty, demand, etc. The barbaric relic’s rise, though, does seem to fit neatly with the debt ceiling’s rise. Notice the long, flat period during the late 1990s for both gold and the debt? Those were the salad days, when the feds were running near or in the black. Not surprisingly, those were also the days of divided government, hyper-partisanship and the Clinton impeachment. And a tech bubble.

Oh Pets.com, how could you have gone so wrong?

It all falls apart during the Bush years, particularly in his second term, and becomes almost parabolic during the Obama years… which also coincide with the fed’s furious currency debasement.

Is it all a coincidence? Possibly. But this is the sort of chart that should make you wonder just how long the era of fiat currencies will last. Coupled with the first graph, it makes me wonder if that moment has already arrived.

(Cross-posted at Score Radio Network)

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7 responses to “Another victory like this and we are undone”

  1. James A. Bacon Avatar
    James A. Bacon

    Norm, you’re right, the budget deal is a sham. I think I heard that the first year of cuts amounts to $22 billion — about of a $3.7 trillion budget. What real cuts there are will be left to later years and represent nothing more than a slowdown in projected spending growth. The market knows it’s a sham, which is why there was no rebound. All we’ve done is put off a real reckoning until after the 2012 election. If we get more divided government, then we’re cooked — it’s just a matter of years before Boomergeddon. Even if serious budget cutters take over government, it may be too late. We may have passed the point of no return.

  2. TMT Avatar
    TMT

    We have reached a point in the country where every appropriation becomes an entitlement for perpetuity. In the past, spending went up in crisis situations, but fell when the crisis ended. For example, the feds always spent much, much more in times of war, but ratcheted down when peace came. Look at WWI or WWII for example. Now, we hear that defense spending and contracting just cannot end because many companies and their workers make a living from defense spending.

    I still say we need a super-majority to pass budget bills — say 55%. The conservatives would be able to kill or, at least, temper liberal programs and vice versa. More transparency in lobbying would help as well.

  3. Andrea Epps Avatar
    Andrea Epps

    I know this question shows I have not done my homework, but wasn’t there something about amending the Constitution to require a balanced budget?
    What happened to that?
    Although I agree with both of you, I was under the impression we were moving toward less transparency in lobbying?
    I think the reason I haven’t done my homework as I usually would, is the solid gut feeling that they would string out this crap like a political theater. Every last one of them…looking for an Oscar for this one. It makes me sick

  4. Andrea Epps Avatar
    Andrea Epps

    OK, silly questions answered…not so silly questions now added.

    http://www2.timesdispatch.com/news/2011/aug/02/tdmain04-va-house-delegation-splits-on-debt-ceilin-ar-1211757/?sc_cid=RTD-NEWS-12pmDlyNews

  5. larryg Avatar
    larryg

    ha ha ha. The Republicans HAVE performed EXACTLY as expected. When push comes to shove and we have to actually deal with the realities of the budget what did the Republicans REALLY DO?

    They ran away, that’s what they did.

    They want to blame entitlements but when entitlements are actually put on the table – and it still doesn’t balance the budget and then the military is pointed to – the Republicans…like those kids who don’t like bad choices… just run away…

    I’m more than willing to make the cuts in entitlements.. I think they ARE abused but cutting entitlements is not going to fix the military part of the deficit and when we get to that point – our “fiscal conservative” friends lose their beans.

  6. Darrell Avatar
    Darrell

    Did you really expect anything different out of the elitists?

  7. TMT Avatar
    TMT

    Here is a budget proposal. 1) Limit the deductibility of compensation paid to any employee, including sports and entertainment, to some amount — say for purposes of discussion $ 5 million, for any business. 2) Limit the amount of an estate that can be tax free for whatever purpose to some amount — let’s say $100 M – treat bequests to heirs and foundations alike – tax free to a total of the $100 M, taxable after that. 3) Limit the tax-free life of foundations to 25 years — bye-bye Ford Foundation. 4) Cut the capital gains tax to zero for investments held for five years or more, while taxing capital gains on investments held for six months or less at 80%. 5) Require a 55% majority to pass all spending bills. Conservatives can zap liberal programs and vice versa.

    Changes on the election side. Bar any campaign contributions except from individuals. No corporate, labor union, or nonprofit contributions. No bundling. No PACs. Limit self-funding to $1 million. Limit all other contributions to $10 K per candidate; $100 K total per year.

    Changes on the lobbying side. Any contact with a Member of Congress or staff must be reduced to writing and posted on the Internet. Members of Congress & their staff, the Administration and any political appointees cannot lobby for three years after leaving their position.

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