In Government We Trust??? – Miller on the Money

With a big grin, former colleague Doug Casey told me, “Sure, you can trust the government!” I raised my eyebrows. He continued. “In the event of a crisis, you can not only trust the government to NOT do the right thing but also to do the exact wrong thing.”

Remember the Karma law of Humility; “You can’t change something if you refuse to accept it.” Accept the truth about government and you can reduce the frustration of trying to change what cannot be changed.

A recent example

Chuck Butler shared a quote about the entire charade:

“Biden and McCarthy are set to resume “Debt Ceiling” talks.

It’s all Kabuki theater, because whatever they “agree” on…. Out-of-control money printing and insane spending will continue.

And the destruction of the US dollar will continue. …. And it’s clear the worst financial disaster in history is upon us.”

Dictionary.com defines Kabuki theatre:

“The word kabuki combines the Japanese words ka (“song”), bu (“dance”), and ki (“skill”).

…. The phrase…is used in political discourse to describe an event characterized more by showmanship than by content.”

Insane spending….

Wolf Richter explains the never-ending song and dance:

“Periodically, we get to watch our favorite farce, played out in Washington DC in front of a bedazzled world, a product of true creative genius that only American politicians could ever come up with: the Debt Ceiling Farce. This one is the Debt Ceiling Farce of 2023. We’re (at)…the point where the plot starts getting funny.

…. The ending of the farce is already known: Congress will agree on a deal at the last minute, as it has done around 79 times since 1960, and seven times over the past decade.

…. It’s a farce because Congress already appropriated the funds to be spent, telling the Administration in detail via legislation how to spend those funds, and then Congress tells the Administration that it cannot borrow the funds that Congress told it to spend. This whole process is accompanied by all kinds of hilarious rhetoric for the entertainment of us all.”

It’s really NOT FUNNY. Our government continues insane spending, borrowing to make up the shortfall. Major creditors, China, Russia, and Japan stopped lending us money; reducing their debt holdings. What happens when our credit runs dry?

America is headed for financial disaster; while our government does the exact wrong thing – singing and dancing while spending billions we don’t have.

Current projections show government debt nearing $43 trillion by 2027. ZeroHedge explains the unpleasant result:

“The US government now has to spend more each year on servicing its immense debt burden than it spent on national defense in 2022.

…. Estimated annualized debt-servicing costs are about 90% higher than they were back in 2011.”

Rising interest rates, coupled with “Debt out the Wazoo” costs taxpayers billions, while Congress continues the Kabuki Theatre.

When I first heard Kabuki Theatre, I didn’t know what it meant. I sat next to a prominent US Senator; the keynote luncheon speaker. He explained why the minimum wage should NOT be raised. He used a set of charts showing minimum wage increases lead to higher layoffs and unemployment; bad for everyone.

When he finished, I asked, “If it is bad for those they are trying to help, and bad for taxpayers, why are members of Congress screaming for increases?” He calmly said, “Kabuki Theatre”. I was puzzled. He said, “It’s called politics, do what it takes to get elected.” My naïve bubble burst; I’d been fool enough to believe the political class had our best interest at heart.

Kabuki theatre galore!

Ron Paul tells us:

“If two parties with two sets of bad ideas cooperate, the result is not good policy, but policy that is extremely bad.”

Scary Songs

Much of the recent song and dance is centered around cutting social security benefits. Democrats wanted the debt ceiling raised with no spending restraints; while screaming that Republicans will cut social security and Medicare benefits…which they quickly, and vehemently denied.

Social security was sold as an insurance policy. The politicians told us they would take part of OUR salary and “save” it for OUR retirement; an honorable and worthy cause. Saving meant setting aside money to be used in the future. Pure song and dance, no money was saved, the government spent OUR money and put government IOUs (political promises) into a mythical trust fund.

In 2016 Yahoo Finance published the First Draft of the GOP’s Plan to Overhaul Social Security, including:

• Eliminate COLA increases for wealthier individuals.

• Increasing the minimum benefit for lower-income workers.

• Adopting a less generous Cost of Living Adjustment Formula (COLA).

• Means testing, reducing benefit payments to wealthier retirees.

• Gradually increasing the retirement age for full benefits from age 67 to 69.

As expected, nothing happened. The Debt Ceiling Kabuki Theatre ignores the $188 trillion in “unfunded” political promises; predominantly Social Security and Medicare benefits.

The 2023 Social Security Annual Report projects the Medicare Trust Fund to run out of money in 2031. At that point income will only cover 89% of promised benefits.

The Social Security Trust Fund will make it until 2033; then the income will only cover 77% of promised benefits.

Some interesting notes in the report:

By law, there are six Trustees. Four of them serve by virtue of their positions in the Federal Government:

• the Secretary of the Treasury, who is the Managing Trustee,

• the Secretary of Health and Human Services, and

• the Commissioner of Social Security.

The President also appoints two other Trustees as public representatives, and their appointments are subject to confirmation by the Senate. The two Public Trustee positions have been vacant since July 2015.

The current trustees are political hacks; while politicians refuse to add two “public” trustees who might actually represent our best interests.

The report continues, in bold type:

“The Implication of High Levels of General Fund Transfer Funding for Medicare

The Law requires the Trustees to determine each year whether the proportion of annual Medicare costs funded…is expected to exceed 45 percent in any of the next 7 fiscal years. ….

Making such a determination triggers a statutory “Medicare funding warning,” which requires that the President submit to Congress proposed legislation to respond to the warning within 15 days after submitting the budget (for FY2025 due to this year’s warning). The law then requires Congress to consider the legislation on an expedited basis.”

Continual song and dance, while Congress does nothing, wasting billions on their pet projects.

Want more? Birch Gold Group further explains:

“Here’s their great idea – their amazing plan to solve the Social Security crisis boils down to convincing Americans to:

• Wait until you’re 70 to claim your Social Security benefits

…. Ultimately, this plan to save Social Security from insolvency is a marketing scheme based on simple math. The average life expectancy in the U.S. is currently 77. …. A retiree who makes a typical wage and retires at age 62 costs the Social Security Administration 16% more than the same retiree who claims a higher benefit at age 70.

That’s it. That’s the whole plan! Convincing retirees to delay claiming their benefits means paying less benefits which means Social Security goes bankrupt more slowly.

…. Folks, we are in trouble if the best ideas we have for saving Social Security are a marketing scheme to convince Americans who’ve worked their whole lives to accept a smaller piece of their own money.”

Readers ask me when they should file for Social Security. Forget the fancy math formulas; the Social Security Trustees make it clear. The system will go broke in a decade, then benefits will be cut…and likely will be means tested.

If you are eligible, claim your social security benefits as soon as you can. Expect them to be cut and means-tested in the future

Kabuki Motivation

Former colleague John Mauldin, one of the more politically connected experts I know, told me, “There will never be any more Quantitative Easing (QE) programs. His contacts report Congress is not opposed to more bank bailouts with tax dollars, just call it something else.” I asked, “In other words, it’s OK to do the wrong thing as long as you don’t get blamed?” John simply grinned.

Understanding the government will try to inflate away the impossible debt, friend Chuck Butler says, “Got Gold?” Inflation is inevitable.

The Kabuki Theatre is getting old, reality is setting in. Pundit Bill Bonner calls it, “Controlled demolition of the middle class.” For those who are unprepared, it may be true.

The curtain has come down on the current act, congress approved the increase in national debt. Reckless spending will continue. Bonner adds:

“Republicans and Democrats have come to a deal. They’ve both agreed that it is in their interests to spend more of your money.”

Too much Kabuki Theatre, political song and dance while Congress ignores our country’s problems.

I agree with Doug Casey, you can trust the government to do the exact wrong thing. When my wife Jo commented, “It almost looks like the government is doing this on purpose.” I sighed….

Maybe tar and feathers will come back in style!

On The Lighter Side

I just love small-town America. Jo is from New Harmony, Indiana, a small farming community at the southern tip of Indiana where the Wabash River flows into the Ohio River. If you stood on the bank and threw a rock south over the Ohio it would land in Kentucky. If you threw it west over the Wabash, it would land in Illinois. It’s a neat little town with lots of history.

Every Memorial Day weekend, her high school has an alumni banquet for all graduating classes; many times, three generations of family attend. Tables are aligned by graduating classes.

One tradition, I find very moving. The youngest graduates, at the head table, present a flower to the oldest graduates.

The lady Caroline S., graduated in 1948, and was a music teacher. Most of the musicians in town speak of her glowingly. At age 93, she still plays the piano in church. This was her 75th reunion…and she has not missed a single one.

Jo’s class was well represented; plenty of hugs, laughs and no lulls in the conversation. As expected, dinner was buffet style; southern fried chicken, mashed potatoes, green beans, corn, salad – what was the normal family Sunday meal in Jo’s childhood.

Carlene V. organized a Sunday morning brunch at the Red Geranium Restaurant (which was the house Jo lived in as a young girl). We then drove a mile to the town cemetery. I was surprised how crowded it was; flowers and flags everywhere, alive with color. Jo made a nice arrangement on her parent’s stone.

We trudged back down the hill, passing others on their way up. Sure enough, Jo stopped, and looked at another lady…. “Jo Ellen?” Oh my, smiles, laughs and Jo introduces me to more old friends. We can’t go back to New Harmony without that happening at least once. Small-town America is alive and well.

Quote of the week…

“Youth is not entirely a time of life; it is a state of mind. Nobody grows old by merely living a number of years. People grow old by deserting their ideals. You are as young as your faith, and as old as your doubts; as young as your self-confidence, as old as your fear; as young as your hope as old as your despair.”

— General Douglas McArthur

And Finally…

Jo has shared some “farmers’ wisdom” for our enjoyment:

• Lettin’ the cat outta the bag is a whole lot easier than puttin’ it back in.

• Always drink upstream from the herd.

• Your fences need to be horse-high, pig-tight and bull-strong.

• Keep skunks and bankers at a distance.

• When you wallow with pigs, expect to get dirty.

• A bumble bee is considerably faster than a John Deere tractor.

• Sometimes you get, and sometimes you get got.

And my favorite:

• Every path has a few puddles.

Until next time…

Dennis Miller

“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken

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