Brother (Baby Boomer) Can You Spare a Dime?

Take a few moments to listen to Bing Crosby sing the song “Brother Can You Spare A Dime?” We are doomed to repeat history if we don’t learn from it. As in war the victors write the history books and so it is with the Great Depression. It’s only now there are doubt being cast about how well FDR actually managed the depression. Read the article, FDR’s policies prolonged Depression by 7 years, UCLA economists calculate.

Here’s two extracts that make important points;

“After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

“Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. “We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.””

“The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. “Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”

It seems we are doomed to repeat it. So, Brother can you spare a dime?

That song title could also read “Baby Boomer can you spare a dime?” Baby Boomers are the first generation to save for their own retirement. As such many have money in private accounts. It may well be those of you that still have decent retirement nest eggs will be helping out those that don’t in any new  FDR-style “New Deal“.

Enough of the emotion let’s look at some facts. The Peter G. Peterson Foundation puts together a Citizen’s Guide to the “State of the Union’s Finances” each year after the budget is presented.

Download your copy and read it. It doesn’t matter where you are from. Where goes the USA so goes the world, at least in the immediately foreseeable future. The US economy and it’s momentum or lack of it are just far to big to be stopped by any other single nation yet.

Here are some highlights;

  • $56.4 TRILLION in Current Liabilities & Unfunded Promises
    • $36.3 TRILLION in Promised Medicare Benefits not covered by taxes
    • $6.6 TRILLION in Promised Social Security Benefits not covered either
    • $13.5 Trillion in other Federal Liabilities
  • $11 TRILLION in Current US National Debt
    • 49% of the debt is held by foreign countries (CHINA 🙁 )
  • $1.7 TRILLION in Projected Deficits for 2009
    • 50% of this is spent on Social Security, Medicare, Medicaid and Interest

The Report calls this an unsustainable fiscal trajectory.

What can you do about it America?

On page 25 of the Citizens Guide there is  a list of things you can do to as citizens and as individuals.

It wasn’t the US citizens that got the world into this mess. It was governments around the world taking windfall taxes receipts without question, and bankers giving themselves huge bonuses. Both thought the good times would go on for ever without them ever having to pay the piper.

The Piper wants paying and now. If the US and the world don’t bite the bullet and start making fiscally responsible decisions, we’ll all be singing “Brother can you spare a dime”.

Over the weekend why not watch the 30 minute version of I.O.U.S.A.

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