Sunday, August 4, 2013

Burning Money: How The DoD Lost 15% of the USA's GDP

Burning Money: How The DoD Lost 15% of the USA's GDP

Brett Bogus

8/3/2013 12:00:00 AM

One of the major complaints I hear consistently about our government's economics is on the topic of quantitative easing and how the endless printing of money is going to be completely detrimental to our country and economy.  While I agree with that, part of the reason we're not seeing any of the expected hyperinflation is due, in large part, to the fact that the newly added money isn't actually making it to the general economy.  Unfortunately, it doesn't appear to be making it to where it should be going, either; endless printing is worrisome,  but fiscal irresponsibility is even worse.
For example: did you know that the Department of Defense hasn't been able to pass an audit in 16 years?  The GAO hasn't been able to accurately audit the DOD due to "widespread material internal control weaknesses, significant uncertainties, and other limitations" including the inability of the DOD's internal computer systems to communicate with one another.  While this might have been excusable 20 years ago, the DOD has an annual IT budget that's around $37 billion dollars.  That means in the last 16 years, the DOD has spent almost $600 billion dollars on computers that still can't communicate with one another well enough to accurately record the department's transactions and workings - and they don't believe that they'll be able to even implement such a system until 2017.  This might not be so mind-boggling from a government that has become increasingly known for an inability to rein in spending and fiscally irresponsibility - but it becomes particularly mind blowing when you realize exactly how much money has actually gone missing.
According to former Secretary of Defense Donald Rumsfeld, that number was approximately $2.3 trillion dollars - enough to give every man, woman, and child in the United States $8,000, or in larger terms, 15% of the USA's total estimated GDP.  This is money which may or may not still be there, may or may not have been spent, or may or may not be sitting in a broom closet somewhere.  This isn't fictional money that was printed by Ben Bernanke to make up a budgetary deficit; this is actual tax payer dollars disappearing into thin air with no way to account for their use.  Enough money that if you stacked it in $100 bills, it would weigh 11,000 pounds and have to be moved by crane.  Perhaps this is the biggest concern: not that the government is spending too much money on programs which are bloated, but that the actual "bloat" by the Department of Defense and other departments isn't due to anything other than mismanagement.
Imagine for a moment if the government was forced to do a full audit of itself, much like we have to do every year at tax time, and had to provide a line item exact cost for every tax dollar spent and had to account for every tax dollar lost.  Imagine if members of the General Accounting Office had to go before Congress and the American people and say "Well, this is what we're spending our money on...and this is how much has just gone missing."  At a minimum, I'd imagine we'd hear calls for arrests and impeachments, if not outright protesting and riots.
The United States government has proven, over and over again, that it isn't trustworthy and it isn't financially responsible.  This is why we, as American citizens, have to demand financial responsibility not just from our government, but also from ourselves.  We have to query our representatives and senators for answers and we have to do the work to make sure that what they're telling us is the truth.  Even more important is that we take the time to be responsible for ourselves and our families by investing wisely and by playing not just for short term gains but with the intention of long term profits that can help our families and ourselves through retirement.  This is why I recommend a diversified portfolio that includes rare coins and precious metals; a wisely chosen portfolio that includes a mix of rare numismatics and precious metals can greatly enhance opportunities for both long term investment and short term gains.  The people running the show today don't care about what they do with your money - you have to be the one who cares and invests wisely.  Rare numismatics and precious metals are an excellent starting point.

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