Letters to the Editor

Tuesday, Feb 26 2013 11:00 PM

Institutionalized fraud

By The Bakersfield Californian

Mark Martinez has found another tree while missing the forest, which, in terms of federal government scale, has and is growing mightily.

The closing argument of Martinez's Feb. 25 Community Voices article, "All hail the GOP's stunning sequestration chutzpah," invites a reply. That is, "We have to ask why we're here," discussing "another fiscal cliff," which brings to mind recent comments by author/social critic James Howard Kunstler: "I characterize this as the 'great period of America lying to itself' ... (A)ccounting fraud is now the basic mechanism for running most of the important things in American life. Accounting fraud is now the basis for banking and finance, and it's certainly the basis for government, and certainly for its fiscal role."

To put some meat on these bones, the U.S. Treasury paid $362 billion interest expense on debt outstanding for fiscal year 2000. Treasury debt outstanding at the time was $5,750 billion. For fiscal year 2012, the interest paid was $360 billion on $16,160 billion debt outstanding.

I will leave to the reader's imagination what happens when the rates paid on Treasury debt normalize. Hopefully, readers will recognize that a tripling of this amount renders "sequester" as currently described, pointless, which it is. Delving deeper, the cumulative rate normalization considering several years of bailout/stimulus policies will be an impressive figure. A process I suspect will lay bare the fraud Kunstler describes. Unless, of course, you are the sort -- think D.C. -- that believes artificial interest rate levels are costless and without consequence.

Andy Wahrenbrock

Bakersfield

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