Now that aggregate government spending is approximately half of all spending in
the country, the major point of all the recent losses is the effect that
Florida, like many states, is discovering to its horror that tax revenues are
falling as the economy spirals down and down.
The governments are reacting as you would expect, initiating all kinds of tiny
spending cuts, massive stealth tax hikes, freezing of new hiring, new
borrowings (which has now reached 7% of annual tax revenue in Florida), and the
raiding of trust funds to "plug" budget gaps, which only get worse and worse
now that the predictable economic catastrophe of boom-turning-to-bust has, at
long last, started.
The St Petersburg Times reports that Amy Baker, the chief
economist for Florida's government, has discovered "a projected $3.5 billion
hole in the state's budget" and has now "sounded a series of alarm bells" that
have "added a new term to Florida's fiscal lexicon: a 'structural imbalance',
the gap between the growth in the state's revenues and its larger ongoing
expenses", which is, of course, wonderful news for those of us who desperately
yearn for yet another term that means "A government spending more than it
receives in the quest to give everyone a perpetual free lunch."
But you will be glad to know that Florida, like many states, is determined not
to let that happen, as the whole problem is immediately rendered insignificant
when, as Ms Baker is later quoted as saying, "The budget's going to grow,
independent of any revenue constraints."
At this, I laughed in a tentative, nervous way - "Hahaha" - at the prospect of
Ms Baker finding a way to let the state's budget grow forever, regardless of
how much money comes in. Again, her words echoed in my brain; "The budget's
going to grow, independent of any revenue constraints." I feel a cold chill.
Desperate for comic relief, I turn to the September 10 article in the Wall
Street Journal titled "Budget Deficit Likely Doubled for Fiscal '08", mostly
because I thought we WERE in fiscal 2008 already! Anyway, the new fiscal year
begins on October 1, less than a month away, and the Congressional Budget
Office's new calculation of the "budget deficit" is a terrible, and yet a
laughable, $407 billion.
Another reason that I am amused by the Journal article is that with all the
talk of a budget deficit, and previous budget deficits, and how calculating it
is such a difficulty, blah blah blah ... not once does the article mention the
size of the damned budget that produced the deficit! Not once! Therefore, I
laugh "Hahaha!" to indicate comic bemusement tinged with horror.
I assume, as I always assume since I am such a paranoid, suspicious and very
creepy little weirdo that correctly sees government as "goons with badges and
guns who are all out to get me", that the Journal is a co-conspirator with the
government in down-playing anything that might upset anyone, such as revealing
the gut-wrenching fact that the federal budget is now more than a staggering $3
trillion, which is a hefty $10,000 for every man, woman and child in the
country, and it's equivalent to $30,000 being spent by everybody who has a
non-government job!
Later on, we learn that the 2007 budget deficit is reported as being $161
billion, which makes me laugh again in derision and scorn, "Hahaha!" as my
initial reaction, of course, was to loudly heap scorn and ridicule on the
Congressional Budget Office, because I happen to know that the national debt is
$9,669.9 billion, whereas last year at this time it was $9,006.0, meaning that
in the last 12 months, the national debt increased $663 billion.
So, for the Congressional Budget Office to bring up the totally irrelevant 2007
fiscal budget deficit of $161 billion makes me yell, "Off with his head! Off
with his head!" with every bit of imperious Red Queen arrogance I can muster.
But the point is not that I look ridiculous dressed up as the Red Queen from
Alice in Wonderland, or that everybody is lying their heads off about the
government's spending deficits and ignoring the government's intellectual
deficits, but that all of this deficit spending means that more money has to be
created, which will create more inflation in prices, which means more money
must be created, which means more inflation in prices, around and around, which
is why everyone should be buying gold and silver, but nobody is, making
themselves look ridiculous, and then they turn around and say that I look
ridiculous in my wig and crown!
Ha! I say, "Off with their heads, severed with a golden sword!", which is so
deliciously ironic that they should plotz from it, and even if they don't, I
can get my revenge by getting stinking rich by buying gold and silver at these
lows, courtesy of them not driving the prices up by buying them, too.
I hope revenge is as sweet as they say it is! Whee!
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
Republished with permission from
The Daily Reckoning. Copyright 2008, The Daily Reckoning.
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