By J.D. Seagraves, on August 12th, 2008
The federal government’s debt will soon reach $10 trillion. That’s about $130,000 per family of four in the United States.
But if you think that’s bad, then consider the real national debt. After all, the phony $9+ trillion “debt” does not include any of the following:
- The Social Security deficit
- The Medicare budget shortfall
- The new Medicare Prescription Drug Benefit
- Unforeseen (but virtually guaranteed) future wars
According to Richard W. Fisher, president of the Dallas Federal Reserve Bank, the first three of the above account for $99.2 trillion. Of this, Medicare makes up 69%, Social Security 14%, and “conservative” President Bush’s Medicare Prescription Drug Benefit 17% (more than Social Security!).
But what about #4? The U.S. has been in a nearly perpetual state of war since Pearl Harbor, and we now have a “War on Terror,” the proponents of which admit has no end in sight and could last for 100 years. War is expensive, and yet government accounting doesn’t even consider it. We’re spending at least $6 billion per month in Iraq, and there are more (and bigger) wars on the horizon, if history is a reliable guide.
How do liberal and neoconservative economists – the ones who scoff at the gold standard and celebrate the Fed – respond to this? For the most part, they don’t. If they do, they make ridiculous claims that “enhanced productivity” will allow us to claw our way out of this hole. But for the most part, they ignore the matter and hope the monetary and fiscal facade can remain standing another day longer, hopefully until they’re in their graves from old age. Unless these economists are pushing 80, I fear they may not get their wishes.
The fact is that the U.S. is bankrupt. We’re just lucky that the rest of the world is still living the fantasy, pretending that the emperor (or in this case, the Empire) has clothes. Sooner or later, and I’m betting it’s sooner, the chickens will come home to roost. The U.S. dollar will follow all fiat currencies that came before it in reaching its intrinsic value of $0.
Or another way of looking at it, the Fed can simply print $1.3 million per family as part of a “national debt bailout” and call it even. I’m sure there would be plenty of court economists who would celebrate this as a majestic action by the U.S. economy’s central planners! But one way or another, Dollar Hegemony is coming to an end. The sensible thing to do is get prepared.
By Cheryl Grey, on August 12th, 2008
The Australian dollar reaching for parity with the U.S. dollar, marked by the horizontal green line near the top of the black screen. So close.  As the U.S. economy slowed during the fourth quarter of 2007 and the first quarter of 2008, everybody knew that Canada would, sooner or later, be dragged down along with it. The two economies are intimately entwined—around 80% of Canadian exports, both commodities and manufactured products, head due south, and their northern neighbor is a bigger market for U.S. goods than all 27 members of the Eurozone combined. With these two nations particularly sensitive to each other’s economic sneezes, when the Federal Reserve began chopping interest rates with an ax, the Bank of Canada stood right behind them and hewed their own rates by 33% between December 2007 and April 2008.
During that same period of time, however, the Reserve Bank of Australia was raising interest rates to battle surging inflation and contain the effects of a huge influx of capital from soaring commodities prices and a 20% increase in their terms of trade. Flooding in Queensland coke mines and steady demand in Japan, India, South Korea and Taiwan caused the price of coal, Australia’s top export, to triple this year as fresh Chinese demand made it a seller’s market. Negotiated prices of iron ore, their second most important export, nearly doubled, again with Chinese impetus, and there’s really no reason to mention what happened to the prices for Australia’s other commodity goods, such as gold, crude oil, beef and copper.
Asia and Australia
Although there were clear signs the economic slowdown in the U.S. and Canada was spreading to the UK, it seemed that it would make no mark on the Australian and Asian boom, which had seemingly “decoupled” from the Western hemisphere’s problems. The demand surge for commodities in Asia, led by the insatiable maw of that newest kid on the block—you know, the one hosting the Olympic games—turned Australia’s trade deficit into a surplus in June 2008 and looked set to keep it that way for a long time.
After all, the reasoning went, 68.7% of Australia’s exports went to nations in the Asia-Pacific Economic Cooperation and another 12.8% went to China. Only 7.3% of all Australia’s exports went to the U.S., and that share was falling anyways. So if it declined further, well, there would be another hungry nation ready to take up the slack.
This decoupling theory for Australia and Asia gained popularity among traders who liked the down-under markets. In the second quarter of 2008, while credit market losses sent depository and investment banks reeling in the U.S. and UK, the Australian dollar embarked on an unbroken nine-week climb against the greenback. It looked amazingly similar to the Canadian dollar’s 17% surge against the U.S. dollar in 2007 that took it to parity and beyond, and foreign exchange traders confidently predicted the same would happen for the Aussie.
But something funny happened on the way to parity.
That creeping economic malaise from the U.S., Canada and the UK spread to their immediate trading partners, including the Eurozone and Japan, and from there it spread further as that other economic theory—globalization—reasserted itself. It took months because the U.S. slowdown began in the housing market, generally a domestic-only sector (not counting imported building materials), but the erosion of discretionary funds ate away at U.S. imports while the weak greenback made U.S. exports more affordable overseas, shifting the balance of trade in ever-spreading ripples across the globe. Partly due to these ripples, gross domestic product for Japan and the Eurozone are both expected to be in red ink for the second quarter of 2008, a point passed by the U.S. in the fourth quarter of 2007.
With global demand starting to fall, commodity prices slid to follow, and with such a large percentage of the Australian economy dependent upon commodity exports, it followed suit. On July 15, the exchange rate between the Australian dollar and the greenback touched 0.9848, a penny and a half beneath parity. Then on August 5, the Reserve Bank of Australia reached for the ax and announced that soon it would need to cut interest rates, too, like almost every other central bank around the world. The Aussie fell off the table, decoupled no more.
In the modern small market world, one might say, no economy is an island—not even Australia.
By J.C., on August 12th, 2008
The hot topic for many physician practices is the creation of electronic medical records and charts. While these are great for making medical practices more efficient, one overlooked reason for using medical records and charts is for digital storage. One costly part of a physician’s practice is the storage of records. There are laws that vary according to state about how long records must be kept. However, in general, medical records must be kept for as long as possible. From a medicolegal perspective, failure to keep appropriate records and documentation of a visit or treatment that later becomes a patient grievance is a recipe for disaster. Thus most physicians archive and store their paper charts in storage facilities for an eternity. As you can image, these storage fees can add up over the practice of a physician.
Most physician’s store their electronic records in storage facilities that run several hundred dollars per month. Depending on the volume and size of records of a practice, this amounts to several thousand dollars per year. Digitizing these records does have a cost. However, once these files are digitized they are easily accessible by computer. They do not have to be physically stored nor does anybody have to physically go and retrieve the charts.
For those contemplating going digital, I’ll do a hypothetical calculation of the cost savings for a physician practice that has 12,000 charts costing $200 per month to store. Under that scenario a physician must spend $2400 per year or $24,000 per decade. Digitizaton of these charts is not cheap but in the long run can save good money. For example, for about $2000 you can get a high quality scanner and software. Scanning the charts is what costs the most as it probably takes 5 minutes to scan a chart. Thus it takes about one hour to scan 12 charts. Thus about 1000 hours is needed to scan 12,000 charts. Hiring someone $20 per hour would cost about $20,000, which is a lot of money but less than the $24,000 the practice spends per decade in storage.
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