Growing up on a farm taught me quite a few values. Those conservative traditional values have become beliefs which are still woven into my adult and corporate life. Some of those beliefs are of the same nature that our country was founded upon. Free speech, free markets, and freedom to worship. Unfortunately, in many ways, our country has moved away from many core principles. History has proven that this will have a negative effect on our great nation.
Spending More To Get Out Of Debt
I can’t fathom the idea that you can get out of debt by spending more, and going further into debt. That is the belief and action of The Federal Reserve, our government, other Central Banks, and most of the countries around the world. Debt has become a good four letter word that has been propagated globally to create not only acceptance but a new norm.
Every nation that has fallen from its power fell for more than just one reason, yet every country had these two identical common challenges:
- These countries overspent and could not manage their debt
- There was a power struggle between the leader of that country and governing body. This creates a lack of leadership.
Let’s take a look at some examples of this happening in our country our central bank, and our world. The last bill that president Obama pushed while in office was a $1 trillion infrastructure spending bill. This was for fixing highways, bridges, subways, and infrastructure related items in our country which is much needed. At the time Democrats love the bill, Republicans hated it and voted it down. President Trump has picked up the baton. He is now pushing for the very same $1 trillion infrastructure spending bill, for the very same purposes that President Obama wanted previously.
The BCRA Will Fail
This time Republicans love the bill and Democrats hate it, which is why it has not passed. To keep gridlock at a higher level we do not have a unified Republican Party. There is deep division in the Republican Party especially when it comes to healthcare. Conservative senators want to repeal as much Obamacare regulations as possible, while moderate senators want to avoid steep coverage losses. This shows up in grid lock confirming why we don’t have a passed health care bill that actually works. The new bill created by a few Republicans behind closed doors, called “The Better Care Reconciliation Act” (BCRA), is destined to fail.
This bill demonstrates the hap hazard approach the Republicans have taken to design this bill. Under current regulations, the limit on out-of-pocket spending is $10,900, which is defined by a formula based upon national health care expenditures. Yet on page 8 of this bill, it makes changes to regulations that would cause annual deductibles for individual market health plans to skyrocket up to $13,000 in out-of-pocket spending. This is one of the most important points of a healthcare plan yet this was a complete oversight. It was brought to the attention of the Republican Party by the Congressional Budget Office (CBO) after their review. The Bill called the Obamacare Repeal Reconciliation Act, which would do what the President campaigned upon, repeal and replace the law known as Obamacare. Unfortunately, the CBO found that this bill, if passed, would leave 17 million more Americans without health care insurance in 2018 compared to the current system. Then would ramp up to 27 million more uninsured by 2020 and 32 million more insured by 2026. These are the numbers that were very similar to the projections the last time Republicans advanced the legislation in 2015. What is the Republican Party thinking? Whatever bill the Republicans pass they will own it. Unfortunately, all the bills presented have more severe financial problems with each one of them than the original Obamacare. It is almost like Congress just wants to get something done and go on vacation. President Trump told Congress at a recent luncheon that they should not go on vacation until they have a bill passed and on his desk. We will see soon how committed Congress is to the President and also revising the health care system they complained about for 7 years. In that period of 7 years, you would think they would have a workable plan. Where is that plan, or is it just all talk?
The Powerful Committees
Most people are unaware that the largest committee in the U.S. Senate is the Senate Appropriations Committee, with 31 members. Its role is defined by the US Constitution, which requires appropriations made by law prior to the expenditure of any money from the Treasury. Therefore it is known as one of the most powerful committees in the Senate first organized back on March 6, 1867. Every year this committee is responsible for passing 12 spending bills for the upcoming year for the budget of United States. This starts October 1st each year. They are required to pass these 12 spending bills by April 15th so that the budget can be formed and passed. Then it would be put into effect by September 30th for the start of the fiscal year on October 1st. This process has worked for the first 129 years of our government. Regretfully getting this work done has not happened for the last 20 years. Under both Republican and also a Democratic Congress, neither has been able to pass these bills which are required by law. To magnify this problem it has also happened when both the President and Congress were of the same party, and still couldn’t get this done. Under the current administration, April 15th came with not one bill being passed out of the twelve bills. What Congress did was vote to pass a blueprint by the end of June for the 12 bills to be formed. June came and went with no blueprint being drafted. In late June Congress determined they would pick this back up sometime in July before their summer break. As of this writing, not one out of the twelve appropriations bills were included on the House schedule for the work weeks between now and their summer break.
As a result of the lack of this and also grid lock in Washington, Steve Mnuchin, Secretary of the Treasury recently issued a stark warning that Congress must start to act and work together. Mnuchin fears we will be forced into a government shutdown in respect to Congress being unable to agree on raising the debt ceiling. Congress is riddled with debating about our debt and spending but lacks the ability to act. This behavior has caused $20 Trillion of national debt that at the turn of this century was manageable at $5.6 Trillion. Our country’s long term spending of unfunded liabilities is over $100 Trillion.
If Congress can’t agree on spending and health insurance, how will they agree on raising the debt ceiling? Not raising it this time would force a default for the first time in our history. This is Steve Mnuchin’s and many others concern.
Jamie Dimon, CEO of JPMorgan Chase
A highly successful chief executive, Jamie Dimon CEO of JPMorgan Chase, rang the alarm bell last week on all of this. He said this, “It’s almost an embarrassment being an American citizen, traveling around the world and listening to the stupid s_ _t. We have to deal with this in our country and at one point we all have to get our act together”. It triggered wide reactions from some being very supportive while a minor few have said he was unpatriotic. Unfortunately, in my outcry of the very same topic, I recently have been labeled by an individual as a “Financial Terrorist”, and that I am “Un-American” because of my speaking out on both radio and television about our government who can’t agree to get things done and stop spending. This person that labeled me as being Un-American and a Financial Terrorist believes that the government should pay off all of his student loans for him. He also believes he should have free healthcare. Since it is challenging for him to make a living he also probably believes the government should have more subsidized housing for him. I couldn’t find that part out since all that he wanted to do was yell and create labels that certainly don’t apply to me. Now back to Jamie Dimon, this is why he made his comments while traveling outside of the United States. Diamond and I might not see eye to eye on everything, yet we both support our President while each of us calls out the government’s inability to deal with financial problems and get things done. It is kind of like the recent joke I heard…”What is the difference between Santa Clause, the Easter Bunny, the Stork, and Republicans in Congress?…the first three can deliver!” When a country’s leaders, who are elected to “get the job done”, continue to fall short of what they were elected to do, that creates a reactive government society. This government society is created from the lack of leadership and a country that is divided. This has been happening now for decades and has escalated. It then creates turmoil and lives from one turmoil to the next, only to find when juggling too many balls one will eventually fall. When that happens this next time, we have a high chance of it triggering a financial crisis. Did “they” fix the financial system in the aftermath of 2008? Or did “they” just put a band aid on it and a bigger cataclysmic event has been brewing and is just waiting to happen?
Many are saying it is not a matter of if it happens, but when it happens. Being proactive always cost less in aggravation and also that actual cost of being reactive in life. This goes for investing and also securing your money from government seizures. When you invest in something, a stock, a bond, a mutual fund and even metals, you are being proactive. You are investing in that asset with the belief that in the future you will have a benefit in securing and growing your hard earned money. I will say this, our country has been highly proactive gearing up for the next financial crisis to be able to seize your money. Laws have already been passed, and entities have become operational to do just that. Don’t you think you should make preparations if you haven’t done so already? Get proactive. Call my team of professionals to help yourself get prepared in this environment that screams with uncertainty.