Guest Post: There Is No Shortcut, But All We Have Are Shortcuts

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

There Is No Shortcut, But All We Have Are Shortcuts

Cheating on the final exam to get an A doesn't mean you mastered the subject. Yet cheating is all we have in America because sacrifice and adult trade-offs are too painful.

We all know there is no shortcut to anything worth having--mastery, security, wealth-- yet all we have in America is another useless, doomed shortcut. Insolvency is scale-invariant, meaning that being unable to live within your means leads to insolvency for households, towns, corporations, states and national governments.

There is no shortcut to living within one's means. Expenses must align with revenues or the debt taken on to fill the gap will eventually bankrupt the entity--even an Empire.

We know this, but all we have in America is the shortcut of borrowing more to fill the gap between revenues and expenses. The Federal government is borrowing a staggering 40% of its budget this year--and it has done so for the past three years. Despite all the fantastic predictions of future solvency, the cold reality is that no plausible level of "growth" will close the gap: either expenses must be cut by $1.5 trillion or tax revenues raised by $1.5 trillion or some combination of those realities.

The Keynesian Cargo Cult (TM) would have us believe that if we keep pursuing the easy shortcut of massive borrowing, eventually "growth" (in what, the Cargo Culters never say) will magically outrace the soaring costs of servicing all this debt they assure us is "necessary."

We've already borrowed and squandered over $6 trillion of future citizens' money in deficit spending over four years, 40% of the entire Federal budget. Is the current tepid "recovery" all we got for the shortcut of massive deficit spending? Is there any rational reason to believe that borrowing and blowing another $6 trillion will generate anything other than the same flatline we "bought" with the first $6 trillion?

We all like shortcuts because they minimize the pain and sacrifice required to reach a destination. But there is no shortcut to mastery of a difficult skill or subject; cheating on the final exam to get an A doesn't mean you mastered the subject. Yet cheating is all we have in America because sacrifice and adult trade-offs are too painful.

Shortcuts are a way of avoiding the risks and costs of innovation. Rather than face up to the reality that the way we "do business" on a national scale is broken, we just borrow another $1.5 trillion from future citizens every year.

Does anyone really think we can afford thousands of fighter aircraft that cost $300 million a piece? Does anyone really think we as a nation are "on the right track" when our sickcare system sucks up 18% of our entire GDP of $15 trillion, double the percentage expended by other developed economies? Does anyone really think burdening students with $100,000 for four years of university (the equivalent of a home mortgage) is sustainable?

No one who looks at any of these programs, the demographics of the nation and the scale of the gap between expenses and revenues can reach any other conclusion but bankruptcy: bankruptcy via currency failure (hyper-inflation or a "new dollar") that wipes out the financial wealth of the nation or plain old default, or the renunciation of unpayable debts and obligations.

Allow me to repeat the salient point: Shortcuts are a way of avoiding the risks and costs of innovation. What we desperately need is a military machine that innovates away from weapons systems the nation simply can't afford, not one that relentlessly pursues the "shortcut" of borrowing to pay for what is unaffordable.

What we desperately need is an education complex that innovates away from a bloated, unaffordable system of higher education that is living off the shortcut provided by subprime student loans, a system the nation simply can't afford. Where is our shame in turning students into debt-serfs to support what is clearly unaffordable? Student loans are just another shortcut, which is all America has the stomach for now: push the problem into the future with "cheap" debt.

Debt is never cheap. Debt is a shortcut.

What we desperately need is a healthcare system that innovates away from an out-of-control system the nation simply can't afford, not one that relentlessly pursues the "shortcut" of borrowing to pay for what is unaffordable so the Status Quo can avoid any sacrifice or change.

We have fallen so far from an adult understanding of the world that we cannot even dare to speak the truth about our shortcuts and about reality: we need to cut Federal spending by a third, or raise tax revenues from $2.5 trillion to $3.5 trillion: a 40% increase. Yes, the top 1/10th of 1% should pay at least what we self-employed people pay, 40% rather than the Mitt-Romney rate of 17%--but anyone looking at the data knows that raising taxes on the top 1% will notgenerate $1 trillion more annually. That is just another "shortcut" fantasy in which someone else makes the sacrifice so nothing has to be cut.

We need a healthcare complex that cost 50% less--yes, half, so it aligns with the percentage of GDP nations like Japan, Australia, etc. spend on healthcare, i.e. 9% of GDP rather than the 18% of GDP we pay.

The entire higher education "industry" has to innovate to the point that people can afford a university education without obscene subprime loans.

I know, I know--it's all "impossible." It was also "impossible" that the Titanic could sink, but sink it did. What's impossible is "borrowing our way to prosperity" and avoiding any innovation, pain and sacrifice by borrowing trillions and trillions of dollars each and every year, with no yield other than sustaining a bloated, failed unsustainable Status Quo for another year.

We as a nation are in effect cheating on the exam: yea, we got an A. But we've learned nothing, and have no stomach for the risks of real innovation. It doesn't take a genius to see our real grade: F.

Posts will be sporadic this week as I'm taking some time away from the machine.

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LawsofPhysics's picture

...and the capital mis-allocation and mal-investment continue.  Get physical when you can, you'll sleep at night and stay healthy too.

WestVillageIdiot's picture

That is the ultimate in not taking a shortcut.  It takes patience and discipline.  That is why we are so far from a bubble.

I have seen good things onZH on the AU discussion these past few days and they have helped to solidify my thinking on the subject.  The majority of sheep that I talk to are very nervous about buying AU, even as their 401k is loaded with crap.  They fear that it could pull back from these "historically high levels".  Amazingly they have no worry about the stock or bond market.

I do believe, more than ever, that we will have a huge pullback in the price of silver and gold.  It will be just like 2008.  The only question is, "at what level will this pullback take place?"  Will it be $1,700?  Will it be $3,000?  Will it be $5,000? 

Now more than ever you need a plan, not a prayer, not a shortcut.  Keep moving in on a regular basis with powder on the side.  When that inevitable pullback takes place buy in multiples of your ordinary "investing", even though buying AU and AG are not investing. 

That is what my mind tells me.

After watching the "lottery fever" that swept through our office last week I can assure you that we have a "lottery bubble" and are nowhere near a "gold bubble".  I can reasonably assure the world that not one of the, "what are you going to do if you win" crowd owns a single oucne of AU. 

malek's picture

waiting for a "huge pullback" = hoping for a shortcut to (get rich?) buying gold and silver "cheap", after one missed previous opportunities

AlvarezEarnestine7's picture

my best friend's sister makes $63/hr on the computer. She has been out of work for eight months but last month her pay was $18250 just working on the computer for a few hours. Read more on this site...

STP's picture

my best friend's sister makes $63/hr laying on her back. She has been out of work for eight months but last month her pay was $182.50 just working on the john's for ten hours a day. Read more on this site...

MissCellany's picture

Ah, but think of how much phyzz you could buy with those lottery winnings!

newworldorder's picture

Short cuts are the ONLY option left for the Western world to continue its present course of debt financial inovation. There is no turning back. Most of the US and European populations do not know the extent of the problem, nor do they want to know. It is easier not to know and hope for the best.

Gazooks's picture

we should fuckin' know.

stupidity, ignorance, arrogance, squander, hate and violence

we get exactly what we deserve

myth, delusion and mayhem of global dystopia 

WestVillageIdiot's picture

I touched on this in a post above but the lottery mania that swept this country was particularly ugly and indicative of the complete stupidity of the vast majority of this nation's people.  I heard things that just embarrassed me.  The dreams of instant wealth were so intense that I was actually frightened.

As usual, I was in the bare minority when I said I would never want to "win" that amount of money.  That led to raised eyebrows and laughter.  They asked me why.  I told them that any person that suddenly won $500 million would certainly have their life turned completely upside down.  You would never be abe to trust anybody.  Not only because you now have money but because everybody would know that you didn't earn it.  They would have no respect for your right to keep that money.  They would assume that you should share it with them since it was nothing more than a windfall.

I have long thought that the best way to destroy a person is to suddenly dump a huge sume of unearned money in their lap.  And all around me are legions of juvenile minded adults that dream of nothing but having a huge sum of money dumped in their lap. 

Fucking sick is what it is. 

John Law Lives's picture

It is apparently getting ugly for one apparent winner in Maryland:

'Md. woman won't share $105M lotto jackpot with McD's co-workers'


When someone does win a payday of these proportions, relatives and "friends" come with hands extended and ask for a piece of the pie.  For those who won the lottery, I would suggest waiting a little while to redeem the ticket and then redeeming the ticket in as much obscurity as possible without telling anyone until absolutely necessary.  I would then FAX my immediate resignation to my boss and move to a new location.  Coming into this kind of money makes the winners a huge target by money hounds, and people don't exactly play nice these days.

WestVillageIdiot's picture

Disgusting but predictable.

"Single mother of seven" and she is playing the lottery.  WTF? 

John Law Lives's picture

Think about all the people in situations like hers who buy lottery tickets and never win.  They are spending their money chasing a dream with a reported 1-in-nearly 176,000,000 odds of winning the Mega Millions Jackpot.  Those odds are almost as bad as trying to short this market whilst the Great Chairsatan tries to prop it up.  I sure would like to see a live webcam view of his face if Obumble still loses the election in November.

blunderdog's picture

The "WTF?" part is actually the half-billion dollar lottery.

A lot of people played that shit.

BudFox2012's picture

Sadly, if we don't find a way to turn things around soon (if that is even possible), many American's "shortcut" will mean finding a dumpster closer to home to scavenge for food, or maybe it will be their home.

WestVillageIdiot's picture

From what I've seen of our fellow "Americans" many deserve nothing more than a dumpster.  Maybe that, and only that, would wake them up. 

We have another (former) friend not paying their mortgage.  But they sure lived it up and are still living it up, as far as I'm concerned.  They've even managed to convince themselves that they are victims.  I guess somebody forced them to take all of those trips and buy all of those cars. 

BudFox2012's picture

I agree that many people need to be slapped up alongside the head, and a collapse is the only thing that may finally wake them up.  Things could get out of hand fast, however, and it will bring us all down, even those of us who are frugal and have lived within our means.

Ripped Chunk's picture

Getting closer to that reality. Should be a great holiday season 2012....................................

Mtn_Wolf's picture

Finally, a Great Post of "What Really Is"!!

The question I would have is TIME? How long

can the "Borrowing/Printing Machine" go on

before the upcoming "IMPLOSION"?

PicassoInActions's picture

little bit of topic.. Does any have an idea what is BitCoin is and how to use it?

Read an article today on gizmodo and trying to figure out.



PS. shortcuts is what we learned in school and if there is any loopholes - its human natures to take advantage.


earleflorida's picture

'a shortcut well worn is naught a shortcut never more - but a truncated paradox where the mare's-nest harbors but such ilk as insidious atrophied-protean's ?'

"Spending beyond your Means" 

ebworthen's picture

Shortcuts seem o.k. for malfeasant banks, corporations, and insurance companies with the logic that they can fail and be bailed out yet the individual can have their investments, assets, and rights stolen and/or debased at will with supposedly no consequences.

This moral shortcut is the biggest, fastest road to Hell ever constructed.

Ripped Chunk's picture

"We see now, when it is too late what we are up against"

William S Burroughs - "The Ticket That Exploded" 1962

aerojet's picture

Skynet won't let you cut government in any real way--it perceives cuts as damage and makesit too painful to continue, so all we get are meager little changes here and there.  Imagine the riots when 1/3 to 1/2 of all government employees get let go.  We'll drown in a massive pool of debt before that happens.  Imagine the outcry from the big-military statist idiots if we were to cut the military by 1/2.  There's just too many entrenched interests--we're riding this one in for sure.


WestVillageIdiot's picture

Mish had a pretty good post on Detroit yesterday.  I don't read him as much as I used to but he still does a good job of calling the public unions what they are, a massive patronage system with the purpose of destroying democracy, not serving the public. 

John Law Lives's picture

"There Is No Shortcut, But All We Have Are Shortcuts"


The Great Chairsatan knows Congress is engaging in massive deficit spending, and he subsidizes it with ZIRP...

The Great Chairsatan knows that savers in the US are getting raped on fixed-income investment vehicles...

The Great Chairsatan is openly devaluing the US Dollar...

The Great Chairsatan is promoting inflation whilst hiding behind a misleading CPI formula...

The Great Chairsatan openly contends that the Fed should not be audited...

Gee, the Great Chairsatan is about as rotten as they come.  I guess that is why he is the Great Chairsatan.

WestVillageIdiot's picture

I wish they had proof-read the headline and used "Our".  It is always kind of hard to take something seriously when there is such a glaring mistake in the first sentence. 

Even still, I enjoyed reading it and I agree.  There are no shortcuts to living a decent life.

Life is hard.  It requires work.  Anybody that tells you otherwise is selling something and most likely something you don't need.  Now, if you will forgive me, I need to go take my Prozac. 

harmonymonkey's picture

<It is always kind of hard to take something seriously when there is such a glaring mistake in the first sentence.>

Agreed.  But I fail to see the problem in the headline.


morning_glory's picture

With all this debt we must be purchasing and investing in loads of great stuff to pass on to the next generation.

Boy they are going to be so grateful for our wisdom and foresight!

WestVillageIdiot's picture

From what I see we will be leaving them burritos and yoga pants. 

Havana White's picture

Speaking of... hey, how's the push to fully audit the Fed coming along?  Any new developments on that?  Big groundswell?  No?

SheepDog-One's picture

Even if the FED was audited, would you believe their books? What would be the point of auditing the FED? Just hang them from lamp posts.

WestVillageIdiot's picture

Just what they've had to admit so far should have led to them being shut down and all of their officers being prosecuted under the RICO statutes. 

We don't even need a full audit at this point to understand the massive criminality of the organization.  And where is Congress?  They are probably having a hearing on the signing of Peyton Manning and the subesquent trade of Tim Tebow to the Jets. 

suckerfishzilla's picture

Uncle Ben is printing the money for Uncle Timmy's debts.  Maybe Mr Hu Jintao is upset with the practice.  I can let it ride. 

dontgoforit's picture

Get out of debt.  If you own anything, pay if off - mortgage too - as quickly as you can.  That being said, whatcha gonna do if things ever really fall apart?  What would you do?  Survival would almost become pointless; but, we would nearly all try.  What a mess that would be.

WestVillageIdiot's picture

Pay off your mortgage?  What kind of fucking communist are you?


undercover brother's picture

The deeper issues is that the borrowing is fake too.  The federal reserve bank buying debt from the US treasury is simply a means to an end, which allows the fed to move the money it has created into the system.   The US T-bonds owned by the Fed can simply be retired at any if they never even existed. 

SheepDog-One's picture

Right! All theyve been doing is a 1 sided equation....theyve pumped, now they need to dump, because they can pump all they want but its totaly meaningless unless they can sell it to SOMEONE and theyre hoping retail will show up any minute in a new bubble stock buying mania....and retail is dead broke, unemployed, foreclosed on, bankrupt. 


SheepDog-One's picture

These clowns have actually pinned EVERYTHING on retail swarming in to greedily buy the top of all their pumping festivites off their hands?

More popcorn and sodas needed....this show is going to be a blockbuster!

SheepDog-One's picture

The Federal Gubment is 'borrowing' from who? Nonsense, theyre not borrowing anything this is 'Continuity of Gubment' and theyre just monetizing the debt.

undercover brother's picture

Retail will never come in to buy this market.  Everyone knows the only reason the market is up is because of Tarp, QE1, QE2 and operation Twist along with whatever algorithms the fed and/or primary dealers are using to reprice assets.  The problem for bears is Bernanke never has to stop using QE and can continue it as long as needed because the US debt owned by the fed can simply be recycled and never has to be resold in the open market.  It can be retired and made to disappear, like a cross trade.  Sure, the national debt number will continue to ratchet up, but that's more like a conspiracy theory and not real either.   Chances are when operation twist ends, bernanke will let the markets tank so he'll have an easy time selling desperate idiot politicians on QE3 in the 3rd quarter not-so-coincidentally coinciding with the run up to the presidential election.  the bernanke is no idiot. even he knows his best chance to remain employed is if the present administration is reelected. 

blunderdog's picture

There's the company auto-enrolls for 401K programs.  They're like the bottom of the barrel "retail pump."

Most people lack the wherewithal to cancel their contribution.  They may cut it to whatever the minimum is (1%?) but they probably won't send a letter asking to stop the contribution altogether.

There's a kind of nominal "paper-market" inflow as long as there's any real market of low- to marginal-paying corporate jobs.

Seasmoke's picture

pump and dump is not going to work this time as it did in 2000

Sudden Debt's picture

On most corporate levels, all we have are "quick wins"

vh070's picture

It hasn't even begun to get real ugly yet but it's starting to stink something awful now.

newworldorder's picture

What I find disheartening is that most of our financial ailments are well known and that the arguably smartest people on our planet "have known these knowns" for a long time. In fact for a variety of reasons, they have created these problems. But where does this end. If our problems are not "fixable" or we are unwilling to fix them - how far back on the economic timeline do we go? 19th, 18th or 17th centuries. Anyone remember the Middle Ages of Western civilization after approx., 450 A.D. ??

Die Weiße Rose's picture

There Is No Shortcut!

But All We Have Are Shortcuts.....

and by taking All the Shortcuts, we have gone a very long way

to kick the Can as far as we could....


Schacht Mat's picture

Today's cycle of indebtedness is the first to occur after the advent of the global information era, yet we are as dumb as ever.  Today there really is no excuse.  It apears that we now have experimental proof to validate the hypothesis that "information is not wisdom, and wisdom is most certainly not information".  Given that the average baby boomer has just turned 55, perhaps it is finally time to take the "baby" out of the "baby boomer".  That would certainly go a long way towards addressing this isue.  If all you have is cheating, then all you have is nothing.  And that should tell you something.