Answers to the Second Short Quiz

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johnkarls
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Joined: Fri Jun 29, 2007 8:43 pm

Answers to the Second Short Quiz

Post by johnkarls »

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Question 1

Why did our author pick his five categories (health, education, safety, democracy and equality) for comparing the U.S. to 13 other wealthy nations?

Answer 1

Who knows???

As is obvious from the following Q&A’s, it is the opinion of Yours Truly that America’s Permanent Under-Caste and our Failure To Deal With Our Annual Deficits and Accumulated Debt are both much more important than any of the five categories that were chosen.

Question 2

Isn’t it true that America’s Permanent Under-Caste is a much more important category than any of the five chosen by him?

Answer 2

Of course!!!

Question 3

And, indeed, that America’s Permanent Under-Caste has, apparently unbeknownst to him, a devastating impact on all of the five categories he did choose?

Answer 3

Of course!!!

Question 4

Isn’t it also true that if the implications of America’s Permanent Under-Caste are not the most important issue facing America, then its federal-governmental annual deficits and accumulated debt are?

Answer 4

Yes.

Question 5

Can anyone (much less President Obama or Federal Reserve Chair Ben Bernanke) offer any dependable reassurance regarding the point at which federal-governmental debt will achieve junk-bond status?

Answer 5

Every one of Europe’s problem-children governments was “caught with its pants down” when the markets suddenly shunned its sovereign-governmental debt.

Question 6

If federal-governmental debt achieves junk-bond status, would the U.S. government be lucky to find lenders at any interest rate, much less 24% (the current share of Gross Domestic Product to which federal-governmental spending has risen from the historic norm of 20%)?

Answer 6

The short answer = how much do you pay if you run up too much credit-card debt??? Probably 30% if you can find another financial institution willing to issue you another credit card.

The only reason why Europe’s problem-children governments have not seen this happen is that Ben Bernanke and the relatively-sane European governments were able to provide sufficient guarantees to keep European’s problem-children governments afloat.

[In this regard, please see our Six-Degrees-Of-Separation E-Mail campaign following our 12/14/2011 meeting to have Ben Bernanke, Chairman of the U.S. Federal Reserve, and the other Federal Reserve Governors prosecuted criminally for exceeding their authority under the Federal Reserve Act by printing enough U.S. Dollars -- (1) to purchase any debt to be issued or previously issued by the governments of Italy and Spain before 12/31/2011, and (2) to bail out for 14 months ending 2/1/2013 all European commercial banks, not just those in Italy and Spain.]

[Please also see Q&A-12 for how the U.S. ranks with European countries vis-à-vis governmental debt as a percentage of Gross Domestic Product.]

When the proverbial Shit Hits The Fan for the U.S. (please pardon my French), the current unemployment rates of 27% for Greece and 26% for Spain (both according to the U.S. Bureau of Labor Statistics) will look like Nirvana because there will be no Big Ben Bernanke In The Sky large enough to bail out the U.S.

Question 7

And if the U.S. government was forced to pay 24% interest on its debt, would that mean that expenditures for everything else (social security, Medicare, defense, etc.) would be 100% replaced by paying interest?

Answer 7

Of course.

Unless the U.S. decides to default on its sovereign debt -- which includes its currency which, as we have studied many times in the past, comprises nothing more than zero-coupon infinite-maturity debt obligations.

And if we were forced to abandon the U.S. dollar as worthless and operate on a foreign currency (similarly to Germany in the 1930’s operating on the British Pound Sterling and Russia in the 1990’s operating on the U.S. Dollar), then as we have studied many times in the past, a 25% unemployment rate à la modern-day Greece and Spain would be the least of our problems.

Question 8

And, accordingly, the impact on the Middle Class would be cataclysmic? [NB: President Obama only focuses on the Middle Class because he believes the nation’s poor have no place else to go – for example, Obamacare did nothing for the nation’s poor who were already covered by Medicaid.]

Answer 8

Of course cataclysmic vis-à-vis the Middle Class.

Ironically, the nation’s poor have virtually nothing to lose.

Question 9

Did the irresponsibility of our pols stem from the Reagan era when Republicans refused to continue being the chumps who always raised taxes in order to balance federal budgets?

Answer 9

Yes.

Except for 1995-1998 when Newt Gingrich and his Conservative Republicans swept to power following the 1994 mid-term elections on the basis of his famous Contract With America which called for balanced federal budgets.

Newt Gingrich was deposed as Speaker on 11/6/1998 following the 1998 mid-term elections.

Question 10

In other words, didn’t the Reagan mantra of Starve The Beast meaning hold the line on taxes and forget about balancing budgets, herald the New Era of nobody caring about balanced budgets?

Answer 10

Absolutely.

Question 11

So if we have a perpetual tug-of-war where the primary objective of Democrats is social spending and the primary objective of Republicans is holding the line on taxes, why are our creditors so certifiably insane as to believe that America will ever balance its budgets? And that its national debt will ever be a sane investment?

Answer 11

Who knows???
Who knows???

Question 12

If our author had selected Governmental Fiscal Responsibility as a category, how would the U.S. compare with the 13 other wealthy nations?

Answer 12

Per the CIA’s World Factbook (http://www.cia.gov. > library > publications > the world factbook), the U.S. and the 13 other wealthy nations selected by our author for comparison vis-à-vis the five categories he chose, would have the following percentages of National Debt to Gross Domestic Product --

South Korea – 33.7%
Netherlands – 68.7%
Germany – 80.5%
Spain – 83.2%
Canada – 84.1%
United Kingdom – 88.7%
France – 89.1%
Belgium – 101.1%
United States – 106.1%* and growing at more than 6%/year!!!
Portugal – 119.7%
Italy – 126.1%
Greece – 161.3%
Japan – 218.9%

**********
Reading Liberally General Notes =

Portugal, Italy and Greece (3 of the 4 countries ranking below the U.S.) have been in trouble for quite some time and are only still afloat courtesy of U.S. Federal Reserve Chairman Ben Bernanke (please see Q&A-6).

Japan’s debt is widely expected to be under attack in the near future, since its percentage is predicted by the International Monetary Fund to balloon to 237% by the end of the year (per Time Magazine 12/17/2012).

The fact that Spain’s governmental debt has been under attack despite a percentage of only 83.2% shows how unpredictable investor behavior is and, therefore, how not even President Obama and Federal Reserve Chairman Bernanke can predict when U.S. governmental debt will come under attack.

**********

* Reading Liberally Notes Re The U.S. Percentage =

During the last few months, the Obama Administration’s CIA has stopped computing total U.S. governmental debt as a percentage of U.S. GDP!!!

Instead, it only computes the percentage for U.S. debt that is NOT held by U.S. governmental trust funds, such as the social security trust fund.

This is in line with President Obama’s announcement during the debt-ceiling negotiations of July 2011 that if House Republicans refused to raise the debt ceiling, President Obama would refuse to send out social security checks!!!

[Ignoring, of course, that the Social Security Trust Fund contains zillions of dollars of U.S. governmental debt and its trustees would have no excuse for a failure to make Social Security payments.]

It is also interesting to note that Canada also has a significant percentage of its national debt held by other national-governmental organizations.

However, the Obama Administration’s CIA has continued to calculate the percentage of Canadian National Debt to Canadian Gross Domestic Product on the basis of total Canadian governmental debt!!!

Since the Obama Administration’s CIA has stopped computing total governmental debt as a percentage of GDP, the U.S. percentage set forth above was computed taking U.S. GDP from the CIA’s World Factbook and taking total U.S. debt from http://www.usdebtclock.org.

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