Using the young as a shield for hitting the deficit spending wall – the bill will come due for the young. Government spending prioritizes old American immediate needs and will send the bill to the young.

The level of government spending is mind boggling but has taken a backseat to the issues being experienced over in Europe.  We are running trillion dollar deficits as if this was somehow customary in our history.  For each dollar spent we are seeing less of a result in the real economy.  Part of the issue with the stimulus funding mechanism is that it disproportionately favors the financial industry.  The rhetoric being pushed out ignores the two-tier system in the US where older Americans have safety nets while the young are battling the fierce tiger of hungry capitalism.  Money knows no boundaries and has no national ties.  Just look at Facebook co-founder Eduardo Saverin renouncing his US citizenship in line with the IPO and his big payday.  The 2012 elections should be centered on the health and future of our economy.  Do we still feel that a middle class is central to the prosperity of the nation?  The fact that so much money is being spent with so little results is troubling on many fronts.

Increase in debt and GDP

The increase in government debt has not necessarily coincided with a proportionate increase in GDP:

government debt spending per gdp

Source:  TrimTabs

A chart like the above would resemble a world war yet that is not our current situation.  The massive spending is yielding weak results for the amount that is being funneled into the system.  The Federal Reserve has done an excellent job bailing out its member banks by shifting toxic assets onto their own balance sheet:

fed reserve balance sheet

These movements were intended to be temporary but just look at the above chart.  Since 2008 the Fed’s balance sheet has continually gone up and now remains near the peak.  In other words, the Federal Reserve without a vote in Congress completely bailed out the financial industry for the speculation that led to this market economic meltdown.  Then again, Congress is largely bought out by these same financial institutions and many members fight to sit on the Financial Services Committee just so they can boost their campaign bank accounts.

The government is redlining the budget deficits

It is incredible the size of the current budget deficits we are running.  Initially, the argument was that the government needed to step in to save the banks.  If you remember, Hank Paulson begged Congress for money for his fellow banking members.  Once that was accomplished, the rest of America was left to fend for itself at the teeth of fierce austerity.  It should be no surprise who won because of these bailouts when you look at the executive compensation being handed out at these large banking institutions.  Do you think the fear in Greece is about their 50+ percent unemployed youth?  Of course not.  The fear is the collateral pain that will be felt by giant banking bets that will go haywire if Greece is to exit and change the makeup of the Euro.

The bailouts and aid was supposed to be temporary.  Yet the summer of 2009 was supposedly the end of this economic recession for us.  So why are we spending even more in times of recovery?

government deficit

In fact, we continue to run very large budget deficits.  We are operating as if we are in recession yet all the rhetoric is centered on recovery.  Recovery for what segment of the economy?  You mean the millions being paid to JP Morgan Chase executives for allowing wild speculators to make insane bets?  So this was the “mission critical” reasons we needed to fund the banks so they could continue making the bets that led to this crisis.  What we have is a representative vacuum in D.C. and Wall Street for the working and middle class.  The mainstream press is largely beholden to the big interests in this country and fail to provide real journalism.  This is why you never hear about the $25,000 per capita wage for Americans or the stagnant household incomes for well over a decade.  Never mind the mention of the 46 million Americans on food stamps or even the record deficits.

If you look at our top spending sectors you realize we have some odd priorities:

government spending

Medicare and Social Security top the list.  These are largely services for older Americans.  Defense spending is also incredibly high and money spent servicing our debt is coming up right along.  Yet look at where education and transportation spending come in relation to all this.  What this budget shows is that we are more concerned with the priorities of older Americans while sacrificing younger generations.  If you hear people say the money isn’t there just look at the above chart.  We have plenty of money being spent but our allocations speak loud for what we currently value.

The language in the US is very similar to what I see in Greece or Spain about their high youth unemployment.  That somehow youth are not as motivated as they were but just look at the 1970s movements in the US and you will realize that this is not the case.  In fact, we have one of the highest college-educated rates in our history if we look at college graduates.  The problem of course is how much debt these graduates are carrying and their inability to find suitable work in this weak environment.  To blame the young for the housing and debt bubble is incredible.  What a troubling sign that people value their immediate needs and are willing to sacrifice the young.

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5 Comments on this post

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  1. Dave said:

    same thing is happening in New Zealand, headline could read “Using the young as a shield for hitting the deficit spending wall – the bill will come due for the young. Government spending prioritizes old New Zealanders immediate needs and will send the bill to the kiwi young. interesting.

    May 21st, 2012 at 2:15 am
  2. sheldor said:

    look at 1990

    bush-regan presidency started getting involved in iran-iraq war

    then Clinton came along and its started going down

    and then BOOM 9/11

    May 27th, 2012 at 12:43 am
  3. sheldor said:

    look at 1980

    bush-regan presidency started getting involved in iran-iraq war

    then Clinton came along and its started going down

    and then BOOM 9/11

    May 27th, 2012 at 12:43 am
  4. sheldor said:

    DIDNT MEAN TO SAY 1990

    May 27th, 2012 at 12:44 am
  5. Hillary said:

    I agree, it isn’t an secret that when our parents were growing up companies took care of their employees with pensions and benefits, now those are a thing of the past. They have social security which won’t be around by the time we get to it. The thing that really gets me is the stimulus payouts that have been made. What ever happened to the days where if a group of people royally messed things up they were given the boot and not a boat load of money and told to fix it. If they didn’t get it right the first time what makes them think they will do with a second chance. people need to realize it isn’t the governments responsibility to take care of everyone. We left England for less Government not more.

    May 28th, 2012 at 7:05 am

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