Governmental Services Provision

The World continues to change, and We are not ready for it. The Ageing Syndrome has smashed into Northern cities and Regions, accompanied by the predictable shift of the Tax base away from the area. School systems are in decline, and Elderly Health Care is in the ascendancy. The Question is how to pay for the change. We are presently attempting to throw the entire Cost upon Medicare, Medicaid, and Insurance, but finding a tremendous hazard without adequate revenues to cover the Cost. The Deficit will not go away in the relative Future, and an alternate methodology of payment will have to be devised. There is a Time Constraint involved, as the Solution must be devised before We encounter a breakdown in State and Local services.

Chavez is still working to turn Venezuela into a Socialist State, but doing so in a more intelligent manner than expressed formerly. The United States has forwarded the Oil Dollars to pay for the Transfer, and Venezuela is achieving a decent growth rate, much as Western Economists would like to protest otherwise. The real Question becomes whether it will be sustainable. Both Iran and China, who are the major Lenders to the Chavez Government, are facing severe economic difficulties at the domestic level, and probably will not be able to fulfill their signed Commitments with Venezuela. Chavez will need the very Investment partners he is currently alienating. Again, We are back to the methodology of financing Government programs; one in which Venezuelan Oil will not foot the bill.

Here is an article which tells more than it expects, and contributes to the general argument of How to pay for Government Services. The standard Economic argument that a weak economy will slow the Inflation rate seems a lot weaker than the economy. Inflation will not slow as long as less Production conducts within an environment where Liquidity continues at the same level; a supposed Need of Federal Reserve policy. The Fed does not understand that unprofitable Production can be more Inflationary and destructive, than is shortage of Cash. The Call for the use of TIPS to counter Inflation is ludicrous, as the greatest majority of Portfolio Investment is not Inflation-adjusted, and if it were Inflation-adjusted, then the Fed itself would find a distinct shortage of Cash and central bank stability. This leads Us to the proposition that if the Investment portfolios fail, then Government Services will triple in Demand, coupled with a vast Inflationary Cost for that fulfillment. lgl