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The interest on the national debt is about 2 percent or $340 billion, a mere drop in the bucket for our spendthrift Congress. The stock market goes up and down based on rumors about what the Fed is going to do about interest rates.
If the rationale is that keeping interest rates low will force conservative investors away from government bids and AAA-rated corporate bonds, I then do agree. The problem is we’ve been doing this for years, plus buying back our bonds with money we do not have, and it hasn’t changed anything.
Maybe we should let interest rates float with the market. Maybe even re-examine the Federal Reserve System itself. It is, after all, a relatively new agency, celebrating its 100th year this year.
Our bonds are popular because of the stability of our government. It’s not like we have weekly revolutions. The Chinese, by the way, own about 10 percent of our bonds.
Suppose some entity like Standard and Poor’s downgrades our bonds to just above “junk”? Would we be able to sell them at 8 percent, as so many European countries have been forced to do (if they can sell them at all)? Then our debt service in interest alone would be $1.26 trillion.
How much is our total budget for “entitlements” or defense?
I vividly remember in the summer on 1982 we broke ground for a new building when business prime was 21.5 percent. Today it is 3.25 percent.
Inflation was in double digits, as was unemployment. Inflation has been nil or sustainable, but unemployment is still way too high. Ask any recent high school or college grad still living at home. Something is wrong with this picture.
Singapore, on the other hand, has the highest percent of billionaires on the planet, and not just because of low taxes. It’s the safety of a very low crime rate. It’s because they do not have a drug problem. They have random drug tests.
You have it in your system, and you go to jail for a year. You get caught trying to sell it, the death penalty. It is the law and it is enforced.
You try to get away you are history. My theory is you solve the drug problem you solve 90 percent of the crime. They also have a litter law strongly enforced with a $5,000 fine.
We were there a few years ago. Cleanest place I’ve ever seen.
Robert Pearce lives in Shelbyville.