DownsizeDC.org
July 11, 2011
How Deficits Are Making You Poorer
By James Wilson

Quote of the Day: "The message from Washington – and from most pundits – is that if the debt ceiling is not raised, great catastrophe will befall the United States of America and its people. Is it true? Consider the source. The people telling us this are the same people who think government spending and tax revenues are never high enough." - Sheldon Richman

The government is making you poor, and making you poorer still as time passes by.

That's because Republican House Speaker Boehner is negotiating with the White House on how to make YOU pay high taxes, forever. If not through higher rates, than through an even more pernicious means... INFLATION.

The deficit makes you poorer.

Read that last sentence again, it's that important. And then ponder this FACT...

Both Democrats and Republicans want to add trillions of dollars to the national debt. They only disagree about how many trillions, and when we should schedule the next "debt limit" crisis.

Have you had enough? Or do you think we need Democrat tax rate hikes or Republican tax by inflation instead?

Do you believe we need...

* a smaller government
* a balanced budget
* and a strong economy

...ASAP?

These can ALL be achieved if Congress simply refuses to raise the debt limit. They don't even need to schedule a vote!

That's why I sent this letter to Congress using DownsizeDC.org's "Cap the Debt" campaign.

You may borrow from or copy this sample letter...

I believe government is too big and too costly. Capping the debt limit where it already is will force government to become smaller.

But there's another big reason why you must stop running budget deficits. The more Congress spends, the weaker my saved dollars become. This means I have to pay higher prices. It wipes out my savings. Deficits make me poorer!

Economist Christopher Lingle explains why this will happen. http://www.thefreemanonline.org/headline/the-threat-is-in-the-spending/

In the second round of Quantitative Easing (QE2) beginning in November, 2010 . . .

* the Federal Reserve created money out of thin air
* and used it to buy a whopping 85% of all government debt sold by the Treasury

In other words, your record-setting deficits aren't being financed through purchases of bonds by you and me, or even by China. Those dollars are being created out of thin air.

That means the value of those dollars falls, and then prices go up. The Consumer Price Index may not yet reveal it, but Americans see prices going up in the grocery aisles. 

Your deficit spending is being done through monetary inflation on the backs of the poor, the elderly on fixed incomes, and even the middle class you so claim to love.

Moreover, inflation . . .

* Creates uncertainty about future price increases...
* Leading investors to purchase assets and commodities as a hedge against inflation... 
* Instead of investing in new enterprises and business expansion...
* Which means stagnant growth, high unemployment, and depressed wages.

In other words, there is a direct relationship between inflation on the one hand, and slow economic growth and persistently high unemployment, on the other. Both are the fault of a Congress that refuses to make real, dramatic spending cuts. But the leadership of BOTH parties continues to sell Alice in Wonderland economics. They would have us believe that all this deficit spending is good for us.

Yet as Lingle points out, another increase in the debt limit will most likely mean a "QE3" where the Fed will create even more money to purchase even more federal debt.

Here's what's needed, NOW: A balanced budget. It will bring stability to the dollar's value. Stability will lead to a greater sense of certainty for investors and businesses, which will spur new investment and create jobs.

Stop inflation now. Stop deficits now. Do NOT increase the debt limit! And demonstrate political courage -- make the cuts.

END LETTER

You can send your letter using DownsizeDC.org's Educate the Powerful System.

Will the debt ceiling be increased? Keep in mind that you won't get anything CLOSE to what you want, unless you ask for exactly what you want, first. Our voice is needed in this debate, and you are that voice!

SECONDARY ACTIONS

Do you think your friends understand that the deficit makes them poorer? If not, please share this Dispatch with them! Go to the blog version of this Dispatch, and "like" and "tweet" this.

Thanks for taking action, and expanding the army!

Jim Babka
President
DownsizeDC.org, Inc.

Blog commenting is currently under construction. In the meantime, you can send an email if there's something you'd like to tell us.

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