Across the landscape of government finance, glaring contradictions unfold that are both startling and ludicrous. We witness opposing forces clashing, leading to consequences that affect nearly everyone. The crux of the matter lies in the illusion of prosperity fueled by public spending, which stands in stark contrast to the unyielding truth of arithmetic.
The climax of this conflict is inevitable; once we hit the tipping point, chaos and disorder will ensue. This unsettling scenario is the reality faced by citizens in many Western nations today.
British mathematician Godfrey Hardy remarked in 1941, “Beauty is the first test: there is no permanent place in this world for ugly mathematics.” His observation clearly wasn’t aimed at a fiat money system, where governments borrow funds created by central banks to finance expenditures beyond the actual economic capacity.
If Hardy were to assess the substantial gap between government revenues and obligations as of 2012, he would likely conclude that the Treasury is entangled in what can only be termed “ugly mathematics.” This is particularly alarming, as such mathematical chaos has no sustainable future.
Ultimately, a moment of reckoning will arrive. The harsh reality of arithmetic will inevitably dismantle the Treasury’s flawed calculations. Until that occurs, however, it appears the government’s financial situation will only deteriorate further.
Spending Money on Stuff
The last time Congress successfully passed a budget was on April 29, 2009. The Congressional Budget Act of 1974 stipulates that Congress is required to adopt annual budget resolutions to control revenues and expenditures. Yet, without a coherent budget, the government operates aimlessly, lacking direction in its financial endeavors.
In reality, Congress continues to spend recklessly. They delight in unlimited expenditure without regard for fiscal responsibility, prioritizing their own re-election over the nation’s affordability. This behavior has led to a precarious dependency, with nearly half of the population relying on government assistance.
The government funds these benefits by borrowing newly minted money from the Federal Reserve, with tax revenue covering only about half of its expenditures; the remaining balance is addressed through accumulating debt.
Year after year, growing deficits pile atop the national debt like a precarious game of Jenga. What fate awaits the 49 percent of American households reliant on government aid when this structure eventually topples?
When government checks cease, the consequences will be dire. The 46.6 million individuals enrolled in the Supplemental Nutrition Assistance Program will undoubtedly feel the impact of hunger. At that moment, will they find a way to contribute meaningfully to society, or will the extensive reliance on government support drive them toward desperation?
This uncertainty looms large…and one truth remains unmistakable.
The Temporary Madness of an Ugly Mathematics World
It appears that Congress and the President have lost touch with reality. Did you know that the federal government has posted 6,125 proposed regulations and notifications in the past 90 days—an average of 68 daily—on its regulations.gov website?
Why are so many regulations necessary? Is there anyone in government who comprehends the implications of these new laws? What effects will they have on the economy?
Every new regulation necessitates funding—your funding—to enact. They will require a workforce of bureaucrats for enforcement, along with time wasted on paperwork, each incurring fees.
Clearly, the federal government has developed a compulsive fixation on spending and regulation. The more they spend and legislate, the weaker the economy becomes.
Government expenditures don’t typically promote productive outcomes; they primarily allocate resources to dependents and bureaucrats who do not contribute to economic value. Instead, they consume capital, further necessitating additional funds from elsewhere.
Moreover, we must consider the escalating unfunded liabilities from Social Security, Medicare, and Medicaid—all of which are in distress. Presently, the Treasury attempts to manage these burdens by issuing treasury notes, which only results in compounding debt. Can you identify the issue here?
In summation, we find ourselves entrenched in the temporary madness of a world defined by ugly mathematics.
Sincerely,
MN Gordon
for Economic Prism
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