CrushTheStreet.com is committed to its subscribers to expose the imbalances and the fraudulent actions the government dishes out to the world. Something we’ve been discussing for some time now because it has been on the minds of millions of Americans is the debt ceiling dilemma. The problem with the way the government calculates a savings is the same way typical consumer spenders go to department stores and purchase tons of items on sale and tell their friends how much money they saved because they didn’t pay full price for their purchases. Or it’s like planning on spending 5,000 dollars on a vacation and only spending 4,000 dollars and calling it a 20% savings. But the point that we are trying to make is that America is still going in the hole and our cash receipts are significantly less than our cash expenditures.
Talks about cutting approximately 1 trillion dollars from the military was thrown on the table recently. Sure, this sounds plausible and like a step in the right direction, but considering the president has already been planning on doing that and bringing back troops, where is the real budget cut? What they are doing is scrambling for numbers to report and looking anywhere and everywhere to cut things that will prolong the debt crisis to a later date.
Currently, we are witnessing sword on sword combat between democrats and republicans without any significant strides toward a temporary resolution. There are signs that there will be some sort of compromising on either side due to the August 2nd deadline, however, any sort of resolution will prolong the inevitable. Individuals advocating to raise the debt ceiling are concerned about undisbursed social security checks, military pay that won’t go out, and many other government funded programs that will lose their funding in the event of a budget failure. Regardless of what government does over the next few weeks, the slightest idea that we are by any means close to a credible borrower is preposterous. The U.S. still has a AAA credit rating believe it or not which actually reminds us of a program instituted a while back called, “no country left behind.” Truthfully though, in all seriousness, how bad do things need to get for people to realize that we aren’t going to be able to fulfill our obligations, and if we do, it’s going to be with inflated currency. Either scenario is inflationary because both will lead to dumping of dollars. We have been spot on with our calls on calling for silver and gold appreciation because in our heads, we’ve rated America’s credit “F” status and are playing our cards accordingly.
Help wanted signs!
Currently, individuals who are unemployed are on average taking about 9 months to find a job, which is currently at a record high. Employers are at the control point with the current economy favoring employers making it a buyer’s market for them in terms of hiring. In most circumstances, a resume for someone who hasn’t worked for an extended period of time might be a potential red flag for the employer on whether or not this person would be a good potential candidate for the job. Questions might come around in a normal cyclical slowdown such as, if this person is so good, why aren’t they already working–especially after so long? Did they get let go because of poor performance? Is there a history of some sort that might be questionable? All of these questions may result in the minds of an employer for someone who hasn’t worked in a while. But now the economy is in a situation that is painting a gloomy picture for millions of Americans who have been unemployed because of the amount of time that these individuals are going without finding any work. There aren’t a whole lot of companies hiring and many qualified well educated individuals are out on their hands and feet looking for whatever they can find.
Of course, the watchful eye of the government has been on this issue and they are discussing ways for employers to not “discriminate” against those who are currently out of work and have been so for an extended period of time. The fear is that these individuals will be out of work even longer and fall into a deeper hole of despair that they won’t be able to climb out of because of an even longer history of unemployment, which only continues to escalate the situation. Of course, any sort of mandates on companies puts the pressure on them to hire individuals who potentially aren’t qualified for their position with the same similar consequences of affirmative action. The cold hard facts are that there are so many people looking for work now that employers are using individuals that are out of work to filter the actual resumes that they plan on reviewing. The Equal Employment Opportunity Commission is concerned that not doing something to aid the extended unemployed would result in adverse effects on blacks who have had a statistically higher unemployment rate. Currently, African Americans have an unemployment rate that is over 15%. We are curious to see if the government will meddle in these issues or not. For so many, it has come down to a game of survival that has been brought on by reckless government and incompetent decision making.
Throughout history, when the government needs money, they go out and tax. They target the higher income individuals because they feel like they can afford it and they get the biggest bang for their buck. Just looking at a few examples over the last bit of our country’s history, we saw a Federal Income tax during the Civil War to fund operations, huge income taxes during the Depression, and many other times when the government needed money. The highest income tax rate hike was in 1917 from 15% to 67% to pay for WWI. Congress raised taxes again in 1932 to “combat” the Great Depression from 25% to 63%. In 1944, the top rate taxpayers were in the 94% tax bracket to fund WWII. Throughout the 50s, 60s, and 70s, tax rates for high income earners remained above 70% which later came down in the 1980s. By the way things look and based on income tax history, the government reaching their hands into your pocket will soon become more of a reality. The government has done some pretty extreme things to get more from its citizens and there will be no surprise if we start to see things such as phasing out dependency exemptions, itemized deductions, and taxing savers and investors more through means of capital gains etc. The situation is too dire and bleak for our leaders to not salivate at the idea of taking money out of the pockets of hard working Americans and fund their circus in Washington.
Although the government has so much power to do what they need to get what they want from the citizens, we believe that the biggest tax hikes are yet to come. It’s going to be in the form of a stealth inflation tax that happens without approval or even much consideration by the American people. But if you consider food going up by 100%, that’s 100% increase in taxes for food. If oil continues to rise, taxes at the pump will go up accordingly. The more the government spends and prints, the more that this stealth inflation tax gets tacked on to our daily living. Of course we believe that there is going to be a little more than just your average run of the mill inflation, but rather, that there will be some serious hyper inflation that will hit this country and that we will see some of the greatest tax hikes this country has ever seen.
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