Chapter 7 - Inflation

In his book, Bankruptcy of our Nation, Jerry Robinson starts chapter 7 with a "time is money" illustration to help us grasp how big is our country's national debt of approximately $59 trillion.

1 million seconds = approx. 12 days
59 million seconds = 708 days
59 billion seconds = 1,870 years
59 trillion seconds = 1,888,000 years (almost 1.9 million years)

That helps to see how much moving from millions to billions to trillions changes an amount, now doesn't it?

Of course, our national debt continues to grow astronomically, not only due to continued spending but also due to compound interest. A fact from Robinson's book: "Every 13 hours our government spends over $600 million on INTEREST on the national debt." So, I'm not sure how big it is now but I am fairly confident that it is quite a bit larger than it was when Robinson wrote his book, which was printed in March of 2009.

Robinson then summarizes the social security and medicare crisis that is facing our country and goes on to say that two answers to this problem are cutting benefits and increasing taxes. "Both of these are easier said then done. This is because our current generation is notoriously for its intolerance for any -- and all -- types of economic pain."

Robinson goes on to note a third solution that our government will likely turn to first, which is more borrowing. He points out that by looking at our national debt and also the combined debt of our citizens, it is clear this is the path both have all turned to when faced with financial challenges.

Then he discusses each of the three options one at a time:

Increase Taxes: We are an entitlement generation who likes to keep our paychecks so we most often vote for those politicians who promise not to raise our taxes.
Cut Spending and Benefits: We are an entitlement generation who continues to demand more and more benefits, not less. Politicians know this and tend to stay away from talk about cutting benefits; those who suggest this generally don't last long and they all know this. "...any suggestions to cut spending for entitlements will be met by a formidable boomer voting bloc." ("boomer", meaning baby boomer).
Continue Borrowing: Robinson says, "Creating debt is what Americans do best. Why would it apply any other logic to the looming entitlement crisis?"

In the last section of this chapter, Robinson explains why he believes inflation is coming.

Robinson explains, "One of the most important functions of the Federal Reserve is its role as the "lender of last resort" to the federal government. What this means is the U.S. government always has a buyer for its debt. This is because the Federal Reserve is obligated to step in and buy government debt when public interest in that debt wanes. As of this writing, the Federal Reserve holds approximately 45 percent of the $9 trillion national debt."


Chapter 7 - to be continued. Sorry but it is getting late, I'm tired, and the rest of this chapter requires a bit more thinking then I am capable of at this moment;).