Several Inconvenient Truths About The Debt Ceiling And "Deficit Reduction"

Tyler Durden's picture

Bill Buckler presents an amusing compendium of facts, let us call them inconvenient truths, in the latest edition of his newsletter, some of which would make for entertaining anecdotes if presented at the Biden "deficit cutting" talks, which also, and very paradoxically, aim to cut US debt by increasing it.

  • Not one penny of US debt has been repaid for 51 years: the last time US government funded debt actually decresed on a year-over-year basis was 1960
  • 97% of today's funded debt has been accumulated since August 1971 - the end of the Bretton Woods era by Nixon, and the terminal delinking of all fiat currencies from any and all hard assets, ushered in the era of modern-day hyper-debt insolvency
  • Obama projects 2.5% Fed Funds rate in budget calculations through 2020. Average Fed Funds rate since 1980: 5.7%; Since 2008: 0.00%, If average 5.7% rate was used, projected US deficit would increase by another $4.9 trillion by 2020
  • Obama projects 4.2% growth rate over next 3 years. If a normal growth rate of 2.5% is used, deficits would increase by another $4 trillion by 2020
  • The US government borrows 40-50 cents for every dollar it spends. A balanced budget would mean cutting government spending in half.
  • Implementing a balanced budget would not reduce current debt outstanding. It would merely stop it from growing.
  • Over the past three fiscal years US debt grew by over $1.5 trillion per year: this is more than three times the record annual debt increase in any previous year in US history
  • Last night deficit reduction targets were cut from $4 trillion to $2 trillion over the next decade, in exchange for a $2.4 trillion debt ceiling hike, which will last the Treasury until the next presidential election. Said otherwise, the Treasury needs to fund a $2.4 trillion hold over the next 15 months. Over a decade this come to $20 trillion: ten times more than the proposed deficit reduction.

And the most inconvenient truth of all:

The Global Financial Crisis (GFC) is said to have been precipitated by the Lehman failure in 2008 which froze inter-bank lending on a global basis and almost brought down the system. It is said to have been prevented by a massive and global increase in new money creation. In reality, had economic nature been left alone to take its course, there is a good chance that the world would be fast emerging from its financial black hole by now. At a minimum, most of the malinvestments would have been discounted to the point where they would no longer act as a dead weight on future savings and investment.

Economic “miracles” (so-called) have happened before. The US emerged from a deep recession in 1920-21 because the government and the central bank did NOT interfere. Germany emerged from the actual physical rubble of WW II for exactly the same reason. So, to a lesser extent, did Japan. In all these cases, debts which could not be repaid were not held on life support by central banks, they were written off. In all these cases, creditors took very severe “haircuts” indeed while many debtors literally had to start again from scratch. In all these cases, the LACK of government impediments or government largesse meant that a recovery took place in a much shorter time frame than would otherwise have been the case.

Economic distortions today are HUGELY bigger than they were then. That means that the recession will be deeper and the recovery phase possibly longer. But until it is allowed to begin, there is no way out.

None of the above will be noted anywhere by the great diversionary media spin machine over the next two weeks, since July 22 is the date by which Congress says it needs to pass the debt ceiling legislation so it can get it to Obama's desk for his signature by August 2.


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Grimbaldus The Norman's picture

You gotta spend money to... Erm... Spend money. Yeah, that's it.

Fish Gone Bad's picture

This one is actually quite frightening:

Not one penny of US debt has been repaid for 51 years: the last time US government funded debt actually decresed on a year-over-year basis was 1960.

I am sure there is a reason for this, perhaps not a very good reason, but a reason none the less. 


mt paul's picture

your last 3 words ...


"none the less"


pointed to say the least

JW n FL's picture


Brother, Can You Spare A Trillion?: Government Gone Wild!


Interest payments on the U.S. Debt.



TheTmfreak's picture

It can be pretty much said that if one had to look at one chart, or one video to really get an understanding of how fucked up things, are or will become, THAT is the video. Very simple, very straight forward. No need to look at anything else.

Mr Lennon Hendrix's picture

Possibly the worst trick played by a politician recently has been Billy Clinton's supposed balancing of his budget.  The trick has duped lame ass Democrats to believe he balanced his budget, and the lame asses like to bring it up when defending their Demo Dictators. 

Not only was it only one year out of eight that he did so, and that the other seven were hugely in the red, but he had to shut the government down to finish even.

Guy Fawkes Mulder's picture

I am sure there is a reason for this, perhaps not a very good reason, but a reason none the less.

This has been explained by Paul Grignon, Chris Martenson, Peter Joseph, Damon Vrable, and probably many more... those are the first four names that came to my head. If anyone still doesn't understand how credit money ("debt money") works, then probably the most important thing you can do is go figure it out.

Everything else will make sense, thereafter.

Juan Wild's picture

This video helped me to understand how "debt money" works. The animation is awful but the info is outstanding. Better make some coffee and watch it during a quiet time of the day.


"If the people understood the rank injustice of our money and banking system, there would be a revolution before morning" -- President Andrew Jackson



It's hard to understand. That's why all people of all nations are slaves. Slaves to the Debt Machine.


pods's picture

I actually burn this (Money as debt) for those who start to ask me questions.  Those that sense something just ain't right.

I tell them to watch it over and over again until they feel like they want to hurl.  Only then they get how well designed this is.  To extract labor to pay for interest on nothing.  


Camtender's picture

I have always said that if currency theory is not understood first, then any economic theory is useless (money is the basis of all financial transactions).  I agree that this video, if watched diligently - or enough times- would explain why the debt based system that has to rely on continued debt growth would fail.

Has any one been successful in showing others this video and getting them to understand why the current monetary system will fail? 

MsCreant's picture

Yes, I am a professor and I have assigned it to my classes for at least the past year and a half. They are stunned and it is usually good for an entire 1:30 class period of discussion. The students are more vital and alive for much of this stuff than they are for quite a bit of the regular course content. I have ways of sneaking it in that look pretty legit. I teach in the social sciences.

Rick64's picture

 Happy to hear that at least one professor is informing.

WaterWings's picture

Glad to see you are fighting the good fight, as always.

Mr Lennon Hendrix's picture


I can just imagine the class you talk about Fight Club.

"Yes, Fight Club is real.  We...I mean they...discuss all sorts of interesting topics, from debt-money, to geo-politics.  Today we..I mean they...discussed the sillyness of the debt ceiling debate, for if it is raised, the dollar continues losing it's supposed worth to inflation by the M2 metric, and if it isn't then investment will run from the dollar like a steer from a cowboy.  Are there any questions?"

Blank stares and blinks fill the room.

"Very well, and next time please bring your copy of The House of Rotheschilde:  The World's Banker.  We will be discussing how it is that everyone can let one family run the banking industry.  Thank you; class dismissed."

Eternal Student's picture

I'm glad to hear it; you've made my day. Thanks.

Republi-Ken's picture

But the more important fact is that a



Hurray for those 2000 Bush Tax Cuts!

Took a surplus and made more debt shit.

sun tzu's picture

Wow you really are a fucking imbecile

sun tzu's picture


If not the $140 BILLION Bush tax cuts, there would be no $1.7 TRILLION deficit right now. Yaahaw you stupid cunt.


How about this:




Republi-Ken's picture

NAME 1 REPUBLICAN President in 100 years who balanced a budget...

Still waiting.

Still waiting.

Still waiting.

Still waiting.

...Say Trickle-Down Supply-Side Laffer-Curve Bull-Shitters really fast

sun tzu's picture

Name one Republican President who ever had $1 trillion annual deficits

Still waiting.

Still waiting.

Still waiting.

Still waiting.

Mr Lennon Hendrix's picture

Cut the Hegelian bullshit.  Clinton shut down the government to do so.  I am not giving him a pass.  Do not participate in their lies.  You are trying to perpetuate the feudal system, you slave, you.

TaxSlave's picture

It's not my debt.  And I'm not paying it.

They don't own me or the output of my work.

The debt will not be paid back, because it is impossible to be paid back.  I will not toil away only to have my labor stolen by money-printers.  So when the default comes, I won't be under the lash to compensate for it.  Let them come after me with pistol and whip, they will never collect enough to pay the tax collector. 

TheTmfreak's picture

Well said.

No questions asked I've decided to go galt here in a few years (if its still possible). I'm in a period of transitioning to make that possible with my girlfriend.  There is no way I will be able to live my life knowing that somebody has laid claim to my work and body. No thanks. I decide that one. Stop buying into their system, and take what was stolen from you in the process. Real simple.

Without a consumer middle class willing to put itself further into debt, the thieves at the top don't stand a chance.

NuckingFuts's picture

DO IT!  I sold the 5bdrm 3 bath, 5 years ago (at a profit no less, remember those glorious days?  /part sarc/). Now on 100+ acres growing vegetables.  Working my ass off.....but a slave to no one. 

NuckingFuts's picture

I agree with PODS comment below..........but although difficult and not sustainable for the majority of the population, it can be done.  Debt free, produce very tangible goods (food) and am willing to barter for damn near anything......and do.

pods's picture

That is a good attitude to have.  But it is not correct.
They DO own you.  Through the 14th amendment trust.  

If you use FRNs, or any other benefit of the trust, you are a party to the debts that the trust racks up.

And if the exchange rate for your labor is quoted in USD, they own you again, as THEY control the value of what you exchange your labor for.

As for the system, the system does not want the debt to be paid back.  Only ever increasing amounts of debt will allow the system to function.

And if they actually pay off any debt, it would drop the money supply so much that it would be crashed anyways.



traderjoe's picture

Once again - they miss THE real issue - why does a sovereign country borrow it's own money from private corporations at interest?

The debt is odious. We must repudiate. Paying interest is the scam of the century...

Rick64's picture

Yes, and this subject will never be touched on by congress, media, monetary wizards or economists.

JW n FL's picture

Not why.. But How? How in the FUCK! can people just Fucking Ignore the FACT! that whatever the Federal Reserve Prints out of thin Air.. "We the People" pay 6% interest on..


The FED Prints money out of thin air.. to loan to the Goobermint Lobby Whores.. and "We the People" end up paying 6% on what ever was printed out of thin air.


How can "We the Sheepeople" be so fucking stupid?

newworldorder's picture

We are not stupid but are uninformed. As to the reasons why we allow this to happen - We do so because we have not been asked.

Every time the Congress or the Executive Branch want to spend money, they simply instruct the treasury to sell bonds to the FED. The FED then gives the country money, printed out thin air.

The debt money thus created, become the repayment responsibility of we the sheeple. This is how "representative government" has absolved itself of responsibility to those it governs by not asking for additional taxes.

Most of  "We the sheeple" are none the wiser for the experience and we keep electing the same officials who enslave us. The only difference is that our officials, (democrat or republican,) are better than the other guys officials. Divide and conquer at its best practice.

pods's picture

JW, be ready for the standard reply from FED supporters who say that any profit the FED makes is promptly returned to the treasury.

That is mostly correct.  The FED would pay 10x that to keep their owners able to print money (loans) out of thin air.  



CompassionateFascist's picture

Here's the why, in US's case: Rothschild, Warburg and Co. bought themselves a Prez named Wilson. Since then, pols sign on because it's an EZ way to finance their warfare/welfare state, and rake off big for themselves along the way. LBJ: penniless schoolteacher when he first went to Congress. By 1960, multimillionaire. Pelosi: $40 million in '08. Now, after 2+ years of rake-offs from bailouts etc.: $60 million.   

JW n FL's picture

Aztlan! BITCHEZ!!


White people arent fucking anymore the Brown Man will rule America in 5 years time!! Keep making them babies!

CompassionateFascist's picture

Mestizos will never rule anything. They're just cannon fodder for the Zionist-Globalists who mean to Rule All.

cosmictrainwreck's picture

Many years ago (early 80's) I went to meeting held by my US Rep. A hot topic back then was the budget & interest on the debt (imagine that). I asked the dude "Everybody talks about interest..... are there any plans to actually pay the principle?" To his credit - after a pause, he looked me right in the eye and said "no".

HungrySeagull's picture



And the sins of the fathers continue down the tree to the children. They don't pay principal, Interest or anything at all.

Sudden Debt's picture

I had a semiliar meeting in 2000.

I didn't get the no answer.

It was: The principal is being inflated away!

At least they where honest :)


At this rate, the debts will be inflated to the value of a donut in 1 decade from now.



MrSteve's picture

see the last cent repaid by Uncle Sam at


1959 was the year the cent lost the wheatie back and the Lincoln Memorial appeared on the reverse. Honest Abe would not be pleased to see what has happened to the value of his one red cent.

bernanke al-sahaf's picture

So they'll inflate the debt away with more debt? Ah that makes sense.

JW n FL's picture

Shut Up!


Now go make that 6% Interest Payment of Paper Money Printed Out of Thin Air!



fallout11's picture

Of course. See also "The 11th Round", "Money as Debt", "The Mandrake Mechanism", and a host of other short, easily understood but profound explanations of this basic concept. Money creation, with interest, is usury and requires a ponzi scheme to work, and the confiscation of one's labor to finance (at terms controlled by the same ponzi).

Eternal Student's picture

"I am sure there is a reason for this, perhaps not a very good reason, but a reason none the less. "

Of course there is. There's an old saying:

I'd rather owe it to you forever, rather than cheat you out of it.

And note that Germany just recently finished paying off its obligations from the Versailles treaty of WWI. What was a big sum then is a pittance now.


HungrySeagull's picture


All those sums a pittiance?

A 1925 built house for a few thousand would require well over half a million today's dollars for the same level of craftmanship that possibly no longer exists in bulk.

Don Keot's picture

An amazing perspective is that the Empire State Building was built for one million dollars.  Today they can't build a grammer school for five million.  How's that for inflation?