The United States: Too Big to Fail?

It was reported yesterday that the Federal Reserve will begin requiring the largest banks to hold additional levels of safe assets to avoid failure during future periods of market stress. If these banks do not currently have enough capital in reserve to withstand the next financial shock then the Fed’s action would seem to be a prudent thing.

But then, if this sort of good economic planning applies to the banking system, then why does it not apply to the public sector? Actually it does, so why don’t Americans demand it? The federal government now owes $17 trillion in debt and borrows about 40 cents of every dollar that it spends. At present, Americans are so confused by media propaganda that they do not seem willing to force the federal government to operate within its means. If this situation continues much longer it will spell sure disaster for our future.

As the federal government gets deeper and deeper into debt and as interest rates begin to rise, it will become increasingly difficult to fund the entitlement programs that Americans have become so dependent on, things  like Medicaid, Medicare, food stamps, Disability, Social Security and the like. These programs will have to be drastically reduced at some point in the not too distant future. This has already happened in many parts of Europe contra the will of the people. No matter how you look at it there will be a lot of pain to come and it will happen right here in the USA. Very few will escape it.

The Future: "They promised that if I voted for them that the government would take care of me..."

The Future:
“They promised that if I voted for them that the government would take care of me…”

At the micro level, mature adults understand that in order to run a sustainable household they have to live within their means and save for future emergencies. The Federal Reserve is applying this same good sense by requiring big banks to shore up their reserves so that they may survive the next financial shock. The bigger question is who is going to hold our bloated federal government to the same economic standard? Every time a patriot speaks out about fiscal irresponsibility in Washington, they are harassed by the IRS  or labeled a right-wing racist by the friends of big government.

Until average folks begin to face reality and muster the courage to stand up to these advocates of big government, America will continue on a path of decline. The media campaign that has been aimed at discrediting fiscal conservatives has done our country a great disservice. It’s not a Republican vs. Democrat issue. We are getting awfully close to the precipice.

If one is able to look beyond the inappropriately dry language of the Government Accountability Office’s 2012 report, it becomes very clear that our federal government’s future is in peril as will be the futures of everyone who depends on it:

“During the last 4 fiscal years, total federal debt has increased by $6,048 billion, or 60 percent….

“Increasing numbers of baby-boom generation members are becoming eligible for Social Security retirement benefits and for Medicare. In addition, although health care spending growth recently slowed, it has been growing faster than the overall economy and is expected to continue to grow at an increased rate as more members of the baby-boom generation retire and become eligible for federal health programs. The aging of the population and rising health care costs will continue to put upward pressure on spending and, absent action to address the growing imbalance between spending and revenue, the federal government faces an unsustainable growth in debt.” (GAO report number GAO-13-114 released November 8, 2012 – a publication of the U. S. Government)

GAO does not offer solutions. Friends of big government will continue to pretend that raising taxes will solve the problem. Government run schools will raise yet another generation that is ignorant of basic economics and continue to glorify a wasteful, corrupt government. The people with the foresight and courage to warn against the coming financial meltdown will continue to be called fools and racists.

While promises of government benevolence and the redistribution of private wealth enriches unscrupulous politicians, it will lead to disaster for everyone else.

Other than that; have a nice day!


PS This outcome is not pre-determined. Get involved in politics. Persuade your friends. Do it now.