“Any formal attack on ignorance is bound to fail because the masses are always ready to defend their most precious possession – their ignorance.” - Hendrik Willem van Loon
The levels of ignorance are multi-dimensional and diverse, crossing all educational, income, and professional ranks. The stench of ignorance has settled like Chinese toxic smog over our country, as various constituents have chosen comforting ignorance over disconcerting knowledge.
They have been taught to feel rather than think critically. They have been programmed to believe rather than question and explore. Slogans and memes have replaced knowledge and understanding.
Author James Quinn points out America's culture of ignorance in his article. Understanding more about a larger demographic shift can help us understand the markets. Currently there are more people receiving government benefits in the US than are working. Previously, the US was looked at by other economies as a superb example of how to run a capitalist economy. Somehow it has decayed into what it is now, a waning power with increasing debts and economy in shambles. Some key facts:
- It took 192 years for the country to accumulate $1 trillion in debt. It has taken us 30 years to accumulate the next $16 trillion of debt. We now add $1 trillion of debt per year.
- If the Federal government was required to use GAAP accounting, the annual deficit would amount to $6.7 trillion per year.
- The fiscal gap of unfunded future liabilities for Social Security, Medicare, Medicaid, and government pensions is $200 trillion.
- Using realistic growth assumptions adds another $6 trillion of state and local government unfunded pension benefits to the equation.
- The Federal government has increased their annual spending from $1.8 trillion during Bill Clinton’s last year in office to $3.8 trillion today, a 110% increase. The population has increased by 12% over that same time frame, and real GDP has advanced by 25% since 2000.
- Defense spending has increased from $358 billion in 2000 to $831 billion today, despite the fact that no country on earth can challenge us militarily.
- The average Baby Boomer will receive $300,000 more than they contributed to Social Security and Medicare over their lifetime. Over 10,000 Boomers per day will turn 65 for the next 17 years.
- The Social Security lockbox is filled with IOUs. The funds collected from paychecks over the last 80 years were spent by Congress on wars of choice, bridges to nowhere, and thousands of other vote buying ventures.
- A normalization of interest rates to long-term averages would double or triple the interest on the national debt and increase our annual deficits by at least 30%.
- Obamacare and the unintended consequences of Obamacare will add tens of trillions to our national debt. The initial budget projections for Medicare and Medicaid showed only a modest financial impact on the financial situation of the country. How did that work out?
- Entitlement spending in 2003 was $1.3 trillion. Entitlement spending in 2008 was $1.7 trillion. Entitlement spending in 2013 was $2.2 trillion. Entitlement spending in 2018 will be $2.8 trillion, as these programs are on automatic pilot.