The 21st Century Monolith

Tyler Durden's picture

From William Buckler, Author of The Privateer

The 21st Century Monolith

For all intents and purposes, there have been two US Presidents thus far in the 21st century - George Bush (the younger) and Barack Obama. If we take Mr Bush’s two terms to cover fiscal 2001 to fiscal 2008, the total rise in official Treasury funded debt over that period was $US 4.350 TRILLION. If we take Mr Obama’s first term to cover fiscal 2009 to fiscal 2012, the rise over four years was $US 6.050 TRILLION. Add the two together and you get a grand total of $US 10.4 TRILLION. That’s almost two thirds (65 percent) of the total funded debt of $US 16.066 TRILLION as of September 28, 2012.

An American celebrating his or her 100th birthday this year - and quite a few will be - was born at a time when the TOTAL debt of the US Treasury was $US 2.8 Billion. In fiscal 2012, the US Treasury borrowed that amount in about 19 hours. An American celebrating his or her 50th birthday was born at a time when the funded debt of the US Treasury was $US 300 Billion. In fiscal 2012, the Treasury borrowed that amount in less than three months. An American celebrating his or her 12th birthday today was born at the beginning of the 21st century. That person doesn’t have much to celebrate, given the fact that almost twothirds (65 percent) of the total funded debt of the US Treasury has been amassed in their lifetime.

Here is a very simple observation which goes to the root of the entire global monetary morass of the 21st century. An American celebrating their centenary in 2012 was born into a nation of just over 95 million people. A newborn American is being born into a nation of just under 313 million people. One hundred years ago, the US had a bit less than one-third of its current population. How did it function with a TOTAL government debt of $US 2.8 Billion? Today, that same government is running a funded “tab” of more than $US 16,000 Billion and a total “tab” (including UNFUNDED liabilities) of well over $US 200,000 Billion? In fiscal 1912, total Treasury debt increased by $US 10 million or a bit less than ten cents per capita. In fiscal 2012, funded Treasury debt alone increased by $US 1,276,000 million or a bit less than $4,100 per capita. The unfunded debt increased much more than that. These numbers are grotesque.

Forget any questions about how is this possible. The relevant question is why is this deemed “necessary”. The US and every other government in the world has been building its “fiscal cliff” for 100 years. Its face has been steadily steepening all that time. But in the 21st century, what was a mere mountain has become a monolith of almost incalculable proportions. In less than three presidential terms of office, $US 10.4 TRILLION has been added to the Treasury’s funded “tab”. At the rate of expansion over the 12 years since the turn of the century, another 12 years would see the funded debt blow out to $US 26.5 TRILLION by 2024. If we project the rate of expansion over Mr Obama’s one term as president for the next 12 years, the total by 2024 would be $US 34.2 TRILLION.

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Muppet of the Universe's picture

TO INFINITY AND BEYOND!

 

http://www.youtube.com/watch?v=oo1ZZlvT2LQ

Second video comment down:  "Finally understand how to e" <-  I really wish this was written in japanese...  T minus 10 years to 200+% Debt to GDPeee ftw! 

TruthInSunshine's picture

3rd time I'm posting this, and it's OT (I really try not to go OT lately, and haven't been posting much), but it's pretty interesting, IMO; Jim Rickards is claiming LIBORgate is on the cusp of bringing down the global banking system (I've never, ever heard of Rickards making wild claims or engaging in hyperbole before, he's not some lunatic fringe 'type,' and he's actually well-credentialed- in fact, I never recall Rickards making any sort of "major imminent crisis unfolding" claim before, period). I don't know if he's correct or not, but there have been some very bizarre & momentous meetings and scrambling by and of the IMF and other entities lately, as a result of some allegedly ominous alarm bells being sounded about financial systemic risk the world over:

 

Saturday, October 13, 2012

LIBOR Could Destroy the Banking System  

"Investment banker and Wall Street insider James Rickards says the Libor rate rigging scandal "is the greatest fraud and greatest potential liability in history." He thinks rate rigging banks could be on the hook for "$2.5 trillion," and "The potential damages could destroy the banking system."

Muppet of the Universe's picture

As in 2.5 trillion in fines?  Or as in what??  Dude they are already bust... They are solely comprised of toxic debt and rated by people they pay to rate them.  So I'm not seeing how libor rigging changes anything, unless, for some crazy reason, they would actually ALLOW a international court to sue the banks...  I think I'm misunderstanding what you're writing.

-don't get me wrong, I'm all for bloody pitchfork murdering, but in the land o muppet? 

A, ur kinda fucked if the power elite lose, cus muppets fucking suck.

B, ur kinda fucked if the power elite win, cus they are stupid, greedy, and short sighted.

C: C.r.e.a.m. your way to victory and move somewhere where there are no muppets to own.

^ choose C.  <-- remember system = unsustainable.  Either mass deaths or systemic failure = evolution the hard way.

 

www.youtube.com/watch?v=Nq0slraEExU <-- +1

markmotive's picture

That's what happens when you build a system dependant on growth.

Growth is over but debt will continue to pile up in an effort to revitalize something that can't be revitalized.

http://www.planbeconomics.com/2012/05/24/in-depth-with-jeff-rubin-on-oil...

redpill's picture

For all incense and porpoises, we've not had any prescience in the 21st century.

 

Really we haven't had any Presidents either.  We've had suits.  Campaigners who know how to work the mob to get elected, but are nothing but puppets when in office.

 

Don't blame me, I voted for Ron Paul.

CrockettAlmanac.com's picture

Incense and porpoises? I love the Strawberry Alarm Clock!

 

http://www.youtube.com/watch?v=_9qo8XWz4co

old naughty's picture

no precedent; no follow-er (likely)...And it's still growing.

no wonder he won the Nobel.

THX 1178's picture

I'm shocked that people still don't seem to realize that the debt as presently packaged is a good thing. I wish it was higher. We're not going to pay it off in purchasing power. We're going to hyperinflate to pay it off. Thats the plan-- that's always been the plan. This is part of Bertil Naslund's "On the Road to the Golden Age" treatise.

1. When you transition from a fiat system to a gold-standard, you need to hyperinflat to get rid of people's addiction to the currency itself.

2. When a hyperinflation occurs, there is a debt jubilee.

3. If you know WHEN a debt jubilee will occur, it is very wise to leverage yourself in the preceding months/years. This way you get more bang for your buck.

4. This is what we have done. 16 trillion?

 

GOOD! Hyperinflation ahoy!

Temporalist's picture
Greece Will Probably Leave Euro Within Six Months, Borg Says

"Swedish Finance Minister Anders Borg said Greece may quit the common currency within the next six months.

“It’s most probable that they will leave,” Borg said today on a conference call from Tokyo, where global finance officials have gathered for the annual meetings of the International Monetary Fund. “We shouldn’t rule out this happening in the next half-year.”"

http://www.bloomberg.com/news/2012-10-13/greece-will-probably-leave-euro...

RaymondKHessel's picture

@THX
We do but do not discuss as per the FC rulebook. We have a very good idea of who will be at the front of the line on D day.

cranky-old-geezer's picture

 

 

I don't see debt jubilee in the future.  No historical precedent, and this time ain't different.

I see hyperinflation and currency collapse in the future.  (Hyperbolically growing) US government debt alone will make it happen, not counting all the bank bailouts (aka securites laundering). 

When Fed prints and buys treasuries (directly or via proxies) those dollars go right into the circulating money supply as they're spent by the government, not into some non-circulating "reserve account" at the Fed.

Yes debtors benefit from hyperinflation and currency collapse.  Currency gets so plentiful and worth so little they can walk around picking it up off the street to pay off their debt.  They pay back far less real value than they borrowed.

Yes the federal debt will be hyperinflated away so to speak.  They'd pay back far less real value than they borrowed, if they ever pay it back, likely not, there's no "deadline" in the future to pay it back, treasury bond maturities don't matter, they just roll it over into new t-bonds with new maturities, just shuffling paper.

"Full faith and credit of the US government" is a sick joke. No way could they cut spending and raise taxes enough to make a dent in the debt.

"Full faith and credit of the Fed" is the new paradigm.  Long as Fed keeps rolling over the debt and printing to fund new debt, the game could go on longer than we'll live theoretically.

But hperbolically increasing printing to fund hyperbolically increasing debt will bring on hyperinflation.   When the rest of the world says "enough" and torpedoes the US dollar, it's currency collapse and game over.

...and all those dollars in those "reserve accounts" will be worthless too, keep that in mind Wall Street.

...but I suspect they have contingency plans, like putting those "reserve account" dollars into gold

...you know, that "barbarous relic" Wall Street thumbs their noses at

...which might just be where all that "Fort Knox gold" ends up, owned by Wall Street banks

...the coup de grace topping off their looting of America

...via the Fed of course.

putaipan's picture

old naughty regional indian- i doo too! 

http://www.youtube.com/watch?v=CK2i3Cls2YU

inscence and happy mouth... da da da danh

SafelyGraze's picture

"Campaigners who know how to work the mob to get elected, but are nothing but puppets when in office."

of the various impossible-to-implement but interesting-to-consider propositions, one super-fun head-scratcher is: ok, so what if the notion of a "corporation' were eliminated?

that's right.

totally eliminated. 

hugh hendry, I know you're reading. 

speak up, man.

Mediocritas's picture

At the very least, if corporations are going to be legally viewed as people, (as they are to a large extent, with similar rights), then Corporate Personhood should be properly extended to criminal law. Imagine BP doing 20 years in prison with all its assets confiscated or iced for the duration, as punishment for trashing the Gulf of Mexico. If a single person had done the crime, that would be the penalty, why is it not so for BP?

The justice system isn't supposed to be influenced by the power, wealth or fame of a criminal, so let's see some corporations given the virtual equivalent of prison time and a criminal record that affects future activity the same way a person would. Either that or revoke their Personhood status and re-expose employees of the corporation to litigation.

That would clean things up pretty fast. Large corporations would have no choice but to break up into smaller units. Global economic risks would dilute.

Parrotile's picture

Well seeing as Halliburton were the "Professionals" doing the drilling, I'd suggest it should be Halliburton (and I note their rather well connected CEO . . .) who should be doing time in Sing Sing??

AMERICA wanted the oil, AMERICA was happy to get BP (incidentally 40% US owned anyway) to PAY for the licences, and now you people want to shove the blame (and conveniently ALL the costs) on someone else.

The REST of the PLANET regards what's happening to you as a spot of karma, divine payback for the pollution and ecological vandalism inflicted everywhere else by the USA in pursuit of your "Profit at All Costs" mindset. You've got a spot of pollution? get used to it. After all you all expect everyone else to "get used to" the pollution YOU cause and the deaths YOU cause Worldwide, year on year.

 

MiltonFriedmansNightmare's picture

Yeah, but everyone is forgetting that the rule of law has been torn to shreds; game, set match.....

MachoMan's picture

It should be.  The complexity of the business environment and various organizational structures is simply untenable.  There needs to be a return to the basic forms of business organization, i.e. sole proprietorship, general partnership, and limited partnership.  Anything else is an abomination...  too complex to control.  If this happened, an incredible amount of the legal code and regulatory environment would be dramatically simplified instantly...

Of course, any of these prospective changes would likely require an agreement among the world's major economies to do likewise...  If I can get limited liability protection in country x, but not country y, then I'll be going to country y all else equal.

It's also a decision for the states, given our constitutional structure.  You'll need all states to be on board for constitutional amendments... 

In the end, if you want limited liability protection, then don't fuck up or, alternatively, pay up for some good insurance.

mercy's picture

Not even.

I doubt Bush could work his own dinner table.

Zadok's picture

Speaking of suits for the Idiocracy...

http://www.prisonplanet.com/threats-to-riot-if-obama-loses-flood-interne...

Directed events to drive the desired outcome.

Best wishes

hawk nation's picture

Come to my neighborhood and they will be climbing over bodies to get to my house

producers versus takers would require affirmative action to even make it somewhat fair

Gully Foyle's picture

redpill

Presidents are empty suits.

But you voted for Paul.

But this is only October.

Was that absentee?

By the way, nice Leo Gorcey dialogue.

Seer's picture

Whenever I read posts such as yours I feel better... BUT then I realize that once more people understand the true underlying elements that we'll all be subjected to that Wiley Coyote moment (which, I see plenty of people thinking that if we just don't speak it that that we'll manage to defy gravity).

Yup, LIBOR or something else will eventually be seen as the final straw.  It's a fucking pile of straw, what did we expect?  Making a bigger pile still presents my fundamental equation: BIG = FAIL!

Monedas's picture

Canadofuck geezer/twat environmental circle didle kumbaya jerk off !   Don't need to buy Rubin's book @ $29 Canadian .... hmmm .... about the price of another ounce of silver .... thank you very very much !   Hey, housing bubble baby .... I'm the pin .... and I'm gonna "prick" you !

Lore's picture

Rickards is very hard to understand in this vid, but several people are warning of some horrific ripple effect of LIBOR and Interest Rate Swaps...

Seer's picture

Claw-backs will run back along this path.  When you look at all the various pension funds lashing out over their "losses" due to the obvious fraud of MBSes then it should be pretty clear that the rats will eventually rat out the rats and that LIBOR will be found to be the heart of the rats' nest.

But... it's the System.  It was rotten even before it became ripe...

True.North's picture

Not sure I'm seeing this through all the way, but there are two ways the banks will be 'held accountable' (I use that phrase loosely) --

1) The regulators. Since we know the Fed was aware of LIBOR manipulation back to 2007, this would probably have to come from the SEC or NY AG. Either way, its going to be a quick nine figure settlement where no fault and no blame are assigned (See: Standard Chartered, Goldman Sachs, etc).

2) The institutional investors. Pensions, sovereign wealth, insurance companies and investment managers wield real power with the banks. They are the only ones that could put together a class action lawsuit with any teeth, but you're talking 3-5 years out minimum.

Neither of these options can cost the industry trillions, much less a few billion. It might be the booze talking, but the following just popped into my head --

Jessup: You can't handle the truth! Son, we live in a world that has rates. And those rates have to be guarded by traders with lies. Who's gonna do it? You? You, Lt. Weinberg? I have a greater responsibility than you can possibly fathom. You weep for LIBOR and you curse the banks. You have that luxury. You have the luxury of not knowing what I know: that LIBOR's death, while tragic, probably saved rates. And my existence, while grotesque and incomprehensible to you, saves rates...You don't want the truth. Because deep down, in places you don't talk about at parties, you want me on that desk. You need me on that desk. -- We use words like hedge, vol, leverage...we use these words as the backbone to a life spent trading something. You use 'em as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of structured products I provide, then questions the manner in which I provide them! I'd rather you just said thank you and went on your way. Otherwise, I suggest you find a Muppet and start trading. Either way, I don't give a damn what you think you're entitled to!

Kaffee: Did you order the rates fixed?

Jessep: (quietly) I did the job you sent me to do.

Kaffee: Did you order the rates fixed?

Jessep: You're goddamn right I did!

TruthInSunshine's picture

You're good. I'll give you that.

Damn good.

 

But a 3rd category, and this is just a SWAG on my part, is the Big Enchilada that is city/state pension fund vehicles, which play directly into institutional funds, which have seen negative real returns as of late (while ones like calPERS are being mocked- rightfully so- for claiming they'll achieve 7% to 8% per annum returns perpetually, which is NEVER going to happen, but is the amount they need to achieve/rack up in order to come close to delivering on their existing promises to retirees).

A 4th possible category would be muni bonds, but let me chew on that, because intuitively, if LIBOR fixing held rates at an artificial level.....hmmm.  I seem to recall reading something about how this may have had an adverse affect on muni bond offerings (from the perspective of the municipalities), but need to do more research to avoid misconstruing this...

 

Seer's picture

The banks cannot dodge physical reality.

Eventually there will HAVE to be payments based on tangible elements.

Sadly, I see the youth as being the ultimate losers (though, if they are smart they'll jump ship NOW).  Pension pressures will have to win out as this is the the mechanism by which TPTB have made it all work; to trash pensioners would mean a death sentence to the entire system.

A while back I was talking to someone who was/is/will be getting govt money from taking a bullet for the empire (in one of the empire's stupid-assed wars).  He came across quite certain that he'd always be getting that money.  Not like I think breaking a "promise" is a good thing, but I cautioned him that one should not assume that something will necessarily be a particular way just because it was "promised" (proper risk assessment and all that).

Disclaimer: I have no real pension, and I'm not basing my future on any such (I plan on working/being productive until I drop).

Bicycle Repairman's picture

"to trash pensioners would mean a death sentence to the entire system."

This applies to SS as well.  So how to take people's eye off of the ball and save the system?

hadriansnightmare's picture

Rickards also claims that the Feds will cap the damages to save the system once again......

Harbanger's picture

There a few things about Jim Rickards that leave me with a question mark ..Maybe someone can shed some light. 1) He was a CIA "consultant“, 2) He supports the European Union and 3) he was involved in Long Term Capital Management which went bust.

Duke of Con Dao's picture

ok, not my best vid mash...

but at least I'm not trashing mein Fuhrer for once!

YouTube - Corporations are the Luckiest People! Obama bitch slaps Mitt for being Ridiculous!

if you like Babs, well.... "People...."

mendigo's picture

proves all those doubters wrong - those who claimed that our government was incapable of bipartison cooperation

The Shootist's picture

I hate it when people talk about past debts and high current debts, compare them, and don't mention inflation. It's not debts in the same money terms.

 

They're still large but you've got to understand the huge factor of monetary inflation.

Muppet of the Universe's picture

There's no printing away the debt at this point.  All that can be done is reduce debt load by temporary printing.  To print to remove the debt would send gold to... see first comment.  Although I'm quite sure this is a bet many people are willing to take.

Seer's picture

Sadly, the System NEEDS for there to be debts.  Problem is is that the physical world cannot support exponential growth.  The "books" WILL zero out.

It's not so much that gold will go to the moon, rather, it's that fiat will sink lower than whale shit...

Pareto's picture

+1 for referencing whale shit as a measure of weight.

Zadok's picture

Too true Shootist! Something that sounds little but is actually huge. Debt is simply going asymptotic, it was and is a mathematical guarantee. The one question was if they could get people to buy in to the fraud at the beginning an protect the conspiracy until it is self sustaining and self perpetuating. At this point it is nearly finished, with a VERY short time to go. Hyperinflation will be the way for the simple reason that deflation would end the fraud and no one in any sort of power will commit that form of professional suicide (self perpetuating).
At the end, after sufficient suffering, a new fraud will be introduced, but this one won't last a new presidents term. The self sustaining and perpetuating aspects are inherently also self destructive.
Best wishes. It will be interesting!

machineh's picture

If Bill Buckler had bothered to convert his figures into real terms, his essay might have been useful.

By equating today's nominal dollars with 100-year-ago dollars that were worth 20 times more, his conclusion that Bush and Obama ran up two-thirds of all U.S. debt is simply wrong.

This is not to defend Bush and Obama, only to point out that Buckler lies the same way they do with false premises and fraudulent numbers. MISERABLE FAIL.

Sean7k's picture

What I have difficulty with is the PURPOSE of money inflation and why it exists in the first place.

Central banking and fractional reserve banking are essential to the creation of monetary inflation and to fund the current level of fascism in all western governments. You cannot buy the loyalty of the populace without funding. You cannot afford to fund crony capitalism. You cannot afford punishing global warfare without funding.

Since existing wealth and the ability to seize all of that wealth through taxation are presently impossible, the only means of funding is debt financing. Debt financing is what central banks do in collusion with the politicians they manage and purchase to control the governments that make the laws that keep them untouchable. 

Central banks need UNSOUND money. Central banking results in economic tyranny, political tyranny, death, debt and destruction just so a few well placed elites can live as they damn well please. 

The debt has consequences ONLY if the populace accepts it. Once the people refuse to accept responsibility for the debt, once the people are willing to give up the free gifts (some will never get off that gravy train), once the people begin to practice sound money economics through the creation of new markets (black as the gov would say), the People can begin to create new production with profit, investment and savings. 

As long as banks can create false value and give it a face (currency), ever larger degrees of debt will follow.

toady's picture

Dolla dolla bill yo

ebworthen's picture

Right.

Because when the ponzi of fucking over the middle class, sending our kids to die for the military/industrial complex, and the elites raking it in was threatened; the oligarchs and kleptocrats doubled-down on the debt ponzi.

To hell with the rule of law, consequences, and future generations; they want their gravy NOW.

Duke of Con Dao's picture

that's only assuming they get their mash potatoes. (we don't wnat no mash potatoes, we dont' want no ....)

here's the Rick in a Cliff Note version...

YouTube - Did White House serve up B.S. from BLS on Jobs Numbers? Ask Rick Santelli about the Conspiracy.

DosZap's picture

 sending our kids to die for the military/industrial complex,

While I agree with you on your post, this part I have reservations on.

NO one is forcing young men, and women into the services YET.

All who sign up KNOW the risks.

So ALL the blame cannot be thrown at the oligarchs,what IF NO One volunteered?.

Then, if a Draft system was re-instituted you would be 100% correct.

Seen this posted too many times, and not corrected.

Surrealist's picture

Man I wish my mortgage debt was 100 per cent of my income. Now look at public debt with the perspective of people managing their household debts and you see, its really not like the sky is falling after all.

Jam Akin's picture

I doubt you're adding to your total debt each year lately - with another multiple of that debt owed to others "in the out years".  How's that analogy looking to you now?

Surrealist's picture

Simple stop living above your means. That's the problem with you Americans you are all too stubborn to compromise on making reforms and cuts. So one side whinges about the need to cut entitlement reforms and leaving massive expenditure for fighting wars all over the planet while the other refuses to reform welfare at any cost. Get your house in order.