Reagan Renaissance

    I have already alluded to the fact that I suspect you are more optimistic about the future of America than can be justified under present law. The body of law on which your optimism would have been justified has been replaced by one that stifles initiative while fostering dependency and impoverishment. Government regulations replaced entrepreneurial efficiencies. Presidential Executive Orders bypassed private property rights. While government is the problem, the economic discussion that follows encompasses not only government, but the whole of the United States, America, Inc if you will including every Jane and John Doe. The four charts below and the Frank Shostak article frame the future under current law.

    For the past two years, unable to produce enough cash flow to pay for current consumption plus existing debt service, the United States has had to borrow almost $2.5 billion dollar every day from foreigners in order to pay the interest on our exponentially growing debt. The current total private net worth of the United States is estimated at $45 Trillion. Under existing law, the net present value of the unfunded liabilities of Social Security and Medicare as estimated by Gokhale and Smetters already equals or exceeds our total private net worth. The US Comptroller General is on record stating that is is not possible to grow the economy sufficiently to amortize the unfunded Gokhale-Smetters liabilities. A glance at the first chart is sufficient to confirm the validity of the Comptroller's conclusion and when you compare the growth of debt to the growth of income, we have already encountered the law of diminishing returns. Beginning in less than a decade, the maturing Gokhale-Smetters liabilities will have to be funded with actual cash.

    Given today's global economy, what technology, industrial, intellectual or service product on or over the horizon can best be competitively produced in America in sufficient amounts to meet our projected needs for cash? If there is a limit on the willingness of foreigners to extend credit or the willingness of not only foreigners, but also Americans to accept dollars printed on paper, then standards of living are certain to fall or our need for "real" cash will only be able to be met by transferring chunks of US real estate to foreigners in exchange for the cash. When our cash flow turns hopelessly red and we are hemorrhaging assets, how long will it be before there is blood in the streets?

    Frank Shostak's article, "The Subsistence Fund", explains why socialism is the economic equivalent of cancer. History is unequivocal, all democracies have ended in bankruptcy or hyperinflation whenever the public learns to vote itself benefits from the treasury. Just as Reagan warned in a "Time for Choosing", "Regardless of their sincerity, their humanitarian motives, those who would sacrifice freedom for security have embarked on this downward path. Plutarch warned, "The real destroyer of the liberties of the people is he who spreads among them bounties, donations and benefits." Under existing law, the United States is doomed. The next question is how long do we have. Since most parabolic growth curves, have near mirror images on the flip side, a look at our graphs would suggest that it might not be that much.

    The best reason to be optimistic is that understanding the problem is a very powerful motivator for finding the solution. Since socialism is the problem, it is self-evident that changing current law substantially is required if the United States is to survive. And that brings us to the heart of how Rush Limbaugh can be the catalyst for the Reagan Renaissance.