This page has been archived and commenting is disabled.
Guest Post: The US Debt Crisis - How High Will It Go?
Authored by Chris Ferreira, originally posted at Economic Reason blog,
The implications of the US debt crisis are not well understood in most circles, and it is not widely spoken about in the media and during important political debates. The irony is that the US debt is so significant that it plays a monumental role in finance and modern political strategy. The debt poses great risks moving forward, and yet it is referred to in only the vaguest of terms.
Here is why the US debt must grow every year and why it is mathematically impossible for it to continue forever.
Before we can understand why the debt must grow every year, here is is a visual representation, to scale, of how much the current debt is standing at. Each tall uniform column in the background of the picture below refers to a pile of $100 bills stacked one on top of another. Each “tower of debt” consists of 10 x 10 fork-lift palettes that reach out into the sky and are higher than the old World Trade Center buildings. These towers of debt represent $US 16.394 trillion. However, by the time you wake up to read this, it will be larger than that. DemonOcracy does great work on visual representation of the US debt levels.
Why did the US debt grow to these proportions?
Short answer: the US government spends more than what it receives in revenue. In 2012, the US federal government expects to receive $2.5 trillion in revenue, while the total spending carried out by the federal government is $3.8 trillion. The difference ($1.3 trillion) is debt piled onto of the previous debt.
To put $1.3 trillion into context, it is approximately $3,56 billion a day. To make matters worse, the current debt does not take into consideration federal obligations such as social security, Medicare, pension, and retiree health promises. According to David Walker, former controller of the US, when these unfunded programs are added to the enormous debt, it stands at $70 trillion and growing–that is $10 million per minute!
Seventy trillion dollars is over four times the debt in the picture on your left, dwarfing the current US GDP; in fact, it is approximately the world’s annual GDP in 2011. For a current view of the US debt, see the debt clock here.
The government allows for the debt to continue to grow by adding new debt on top of old debt plus compounded interest. Instead of paying back the debt, the government just borrows more to cover previous interest. The interest payments on the debt is over $1 billion a day. When “Uncle Sam” takes out a loan, it is called a bond (I.O.U.). These bonds are purchased by investors, banks, and foreigners. These bonds are a promise to pay capital plus interest. What “Uncle Sam” does, essentially, is pay his investors with his credit card and create new loans to cover interest.
Talk about short-sighted finances with no discipline.
Compounded interest has allowed the debt to grow exponentially, and has reached, in my opinion, unsustainable levels where the debt is reaching at the vertical portion of the “hockey stick” formation.
Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.
- Albert Einstein
How does the US government allow the US debt to grow?
Doing the “right thing” is usually political suicide for politicians. Cutting expenditure to pay its bills to pay down the debt will make the economy implode. Instead, the government in power continues its daily activities and promotes new social programs to promote reelection. Almost half of the spending done by the US government goes to entitlements (Medicare, Medicaid, social security). If any cuts are carried out in this sector, you can expect riots on the street (approximately 28% of the US population are baby boomers and 80% of investments and laws are carried out by this powerful demographic.) Cuts to entitlements are highly unlikely!
The continuous debate on raising the debt ceiling is all about a government mismanaging its money and not being able to control it–much like a child with no discipline. Since debt is being mismanaged, it has caused many distortions in the markets, and yet the debt is allowed to grow because of the US Congress. The debt ceiling has been increased 10 times since 2001. If the debt ceiling were actually a ceiling, the market and debt distortions would have imploded the economy–an implosion necessary for the economy to restore its equilibrium and liquidate all inefficiencies.
“Too big too fail” is absolute nonsense.
Paying back investors, costly wars, entitlements and bailing out the “financial terrorists” (who caused the crisis) all add to the national debt and to the dysfunctional economy that continues to operate until its debt will cease to grow. The problem with this system is that it created significantly more credit (someone is the creditor to all the debt) than “cash” money (money in your wallet). Every time debt expands, the credit supply also expands. (Read Fractional Reserve Lending on how money is created.)
According to the FED, the Total Credit Market Debt Owed (TCMDO) is approximately 53$ trillion and 2.4$ trillion in the true money supply (M1). In other words, cash money is approximately 4.5% of credit (TCMDO/M1).
The result to our economy is that “boom” periods are hardly driven by cash money, as cash money is insignificant in relation to credit. Credit is what drives the markets, and it is this same credit that “busts” the markets as well, in times of credit contraction. In order for debt to expand, someone must be lending the US this money. At the moment, the lenders are China, Japan, and the OPEC countries.
But why do they continue to buy this debt?
Because they have too.
The US Dollar is the reserve currency of the world. You need it to buy oil, a vital component of any economy. Since other countries like China cannot print US dollars at their leisure, they have to get it from somewhere. They get it from trade with the US. The US buys products in Asia and the rest of the world with US dollars, and in turn these same dollar surpluses are used to buy oil and US bonds, creating a much needed artificial demand for US dollars.
This is also how the enormous US 558$ billion trade deficit in 2011 was financed. The US has been in a trade deficit since the 1980′s and it continues the grow as jobs and manufacturing are being lost to more competitive nations. The trade deficit also accounts for the national debt. The financing of the debt creates artificial demand for US bonds which helps lower the interest rate and coincidentally helps to raise the debt levels even higher.
The table below shows the leading foreign holders of US debt, which are China and Japan, followed by the OPEC countries. These are the main financiers of the US trade deficit.
But here is the Achilles’s heel for the US debt scheme:
In order to maintain and continually expand the debt, the US dollar needs to remain the reserve currency. In order for there to be continuous demand for these dollars and debt instruments, the US dollar needs to maintain a hegemony over competing currencies. Any threat to the dollar needs to corrected immediately. or else confidence in the US dollar will be quickly eroded and the subsequent tsunami of US dollars abroad rushing into the US will cause hyperinflation as never seen before.
William R. Clark’s excellent book, Petrodollar Warfare, treats this issue precisely, going in depth into the Petrodollar collapse and how the US maintains its dollar supremacy with its current imperialistic foreign policy. This gem of a book is a definite read for anyone wanting to know how the US truly maintains its power on the world stage.
Undoubtedly, the extent of US debt would never have been possible had the US dollar not been the reserve currency and had there been less favourable global trade policies to provide a channel for the distribution of dollars. (You can also read more about the Petrodollar here.)
Why must the debt grow every year?
To keep the debt-servitude paradigm going. To increase economic activity in a country operating in this type of system, you need to increase the level of credit and thus debt grows in tandem. This is self serving: if debt is the “fuel” to increase economic activity, interest payments will become larger and larger, until eventually it reaches a point where debt can no longer be increased. This point is known as the Minsky moment–when there is no net benefit to extra debt.
Adding debt, both public and private, creates an environment of servitude among the population while the banks are generating extra profits. Through their lobbyist groups, the financial terrorists create favourable laws to keep people enslaved with debt.
Real estate, for instance, is a heavily subsidized investment; such subsidies entice people to purchase real estate and as a result, people are unwittingly working for the banks. In a real free market, people save money for a purchase.
The word “save” is becoming archaic in this debt servitude paradigm, a paradigm that was build on sand and cards and that can and will eventually collapse. The foundation, of course, is confidence in the US dollar.
So there we have it, in our “creditopia” world, if debt does not expand, the economy cannot grow and jobs cannot be created. In order to increase debt, foreigners have to continually finance the ever growing debt by purchasing government bonds and selling consumer products to the US. In turn, the US must increase the level of consumption, decrease savings, and eliminate the threat of any nation posing a risk to the US dollar hegemony. Is this a symbiotic or a parasitic relationship? Is is certainly a relationship that cannot grow forever. It poses an economic risk for ALL nations due to the interconnectedness of the global economy.
»
- 42664 reads
- Printer-friendly version
- Send to friend
- advertisements -
How tall is Bondzilla?
And don't try to talk about a debt crisis to all the brainwashed economic PHDs out there, they will laugh to your face.
/one of my friend is like that. He thinks I'm a kook, even facts don't matter to him, but eh, you wouldn't expect less from a Keynesian.
Don't just pick on the PhDs, everyone is brainwashed, the level of ignorance is breathtaking. Sometimes I feel like William Shatner in that Twilight Zone episode. I'm the only person I know that can see the monster on the wing of the plane.
That's correct, it was every single person who used high leverage Real Estate as a money making vehicle instead of saving first then investing, every person who continually allowed themselves to gain larger and larger Credit Card debt instead of saving first then investing, every person who took out a student loan instead of saving for most of it first then loaning the difference.
I'm surprised Tyler hasn't taken it up with Yves Smith on these pages...
The "house wisdom" at Naked Capitalism seems to be that the debt can and should be expanded without bound, and it is only greeedy conservatives who are trying to deny the poor and the disadvantaged their benefits, out of the innate meanness in their hearts.
Tyler is still listed as a contributor over there. Maybe some kind of alpha-blogger non-aggression pact...
I agree the debt should be expanded without bound. The US Treasury should send every household in America a $10,000 rebate check immediately. We need to kill the US dollar as world reserve currency as quickly as possible along with destroying the Federal Reserve Corporation completely, but that's going to happen anyway at this point. As far as the touchy feely emotional point of view, I could care less. People should address why there are no factory jobs for those poor individuals.
When you say foreigners are buying our debt, are you making reference to the foreign owned criminal cartel called the Federal Reserve ?
Surely, you can't be naive to think that any entity on this planet without a financial death wish would lend the U.S. government money for 30 years at 3% ?
EB5 visas stats (country, amount of investment (1 million to 500,000):
http://blog.lucidtext.com/category/eb-5-statistics/
http://www.uschinaindiaforum.org/speakers.html US/China/Asia forum - Promoting investments to outside investors.
http://eb5northerncalifornia.com/index.php?page=eb-5-investment-information
EB-5 Immigrant Investor Program
http://www.cmbeb5visa.com/news/20 Abandoned military bases (CMB closed military bases) are being sold - Adapting to the new development (or redevelopment) create jobs - for 10 people and voila - you are a permanent resident.
Fifth employment-based preference (EB-5) is one of the employment-based programs offered by the United States Citizenship and Immigration Services (USCIS). Fifth employment-based preference (EB-5) reserves 10,000 visas per year for immigrants seeking to enter the United States and invests at least $1 million in new commercial enterprises which will create at least ten full-time jobs for U.S. citizens, lawful permanent residents or other employment-authorized aliens. Immigrant Investor Pilot Program and Regional Centers Due to disappointing results to the initial launch of the EB-5 immigrant investor program which set aside 300 total immigrants visas per year, Congress enacted a revision to the program on October 1, 1993. It first increased the annual visa numbers from 300 to 3000 and created regional centers. The five-year pilot program has been extended several times. Currently, the President signed the Department of Homeland Security Appropriations Act of 2010, which extended the EB-5 regional center pilot program until September 30, 2012. The prevailing view is that the pilot program will be extended again.A Regional Center is defined as any economic unit, public or private, which is involved with the promotion of economic growth, improved regional productivity, job creation, and increased domestic capital investment. A Regional Center obtains its designation by submitting a detailed application to the U.S. Citizenship and Immigration Services (USCIS). When an immigrant invests through a Regional Center, the new commercial enterprise does not have to directly employ ten U.S. workers. Instead, it is sufficient to show that ten or more jobs will be created directly (i.e. through the use of independent contractors) or indirectly (i.e. using one of USCIS-approved forecasting models).
Furthermore, when the investment is located in the Targeted Employment Area, the minimum requirement is reduced to US$500,000 from US$1,000,000. EB5 Immigrants - Hire 10 employees and receive permanent resident status: The first major hurdle is the approval of the Form I-526 Petition. Once that is approved, the investor is scheduled for an interview and a visa, and a conditional Permanent Residency status is given to the investor and the investor’s immediate family.
Conditional Permanent Residency is a full residency status that expires in two years. CPR individuals have all the rights of U.S. citizens (i.e.: employment and legal rights) with the exception of voting in general elections.
In order to remove the two-year condition, the investor can submit a Form I-829 Petition before the expiration. Form I-829 Petition is a job-creation evaluation of the project that received the investment funds from the investor. Working together with Regional Center, an attorney will prepare a Form I-829 Petition that provides evidence that ten jobs were created. Once the Form I-829 is approved, the condition will be removed and the investor is granted Permanent Residency Status.
What she said.
I apologize for the long post. Also, for upsetting 8 people, it wasn't my intention.
Your idea of infinity, i got tired just scrolling past it. 8__*
I apologize for the long post.
Apology accepted.....just understand if you ever pull that again.....we WILL kill you.
Have a nice day.
Never apologise to these fuckers bunny.
If you want to ramble on about nuttin much then thats your business
However, i think your point is valid and i'll back you up on that, especally as i've had a belt of booze in me.
A link next time would be good:)
To some good porn...
Francis, ive seen some good links from you
this may be of interest
http://www.smh.com.au/world/republicans-warn-obama-on-pentagon-job-20130...
what a fuck up where a party can openly say they are in the pocket of a foreign power
This is the purposeful destruction of the America culture, bunny. It fits with the philosophy of Neo-Conservatives Julian Simon and Ben Wattenberg who have advocated very high levels of immigration from all parts of the world so that the U.S. will become the world’s first “Universal Nation.”
Don’t apologize for providing vital information because it’s “too long.” In fact, the length of your post is a wakeup alert to the Selling of America.
This program is just another cheap source of financing for America’s international elite, as is the on-going wave of low-wage illegal immigrants from the south as a cheap source of labor for the multinationals based on American shores.
Deal Book says it all: “[D]evelopers can raise money through the EB-5 program by offering returns of less than 4 percent. In contrast, the interest rates on debt starts at 6 percent, with some riskier forms of financing running at 10 percent or higher. Investors who take an equity stake in a hotel project aim for returns of 20 percent."
In return for investing a minimum from $500,000 for “targeted employment areas” (TEA) or at least $1 million in a new commercial enterprise employing at least 10 full-time U.S. workers, the foreign investors get permanent citizenship.
“Foreigners are buying visas and are much less concerned about the rate of return they earn on their investment,” said David Loeb, a senior analyst at Robert W. Baird.
Zhang & Attorneys, L.P., US Immigration Attorneys and Counselors says the Employment-Based Immigrant Program (EB-5) is “first time a category specifically facilitated the admission of immigrant investors as lawful permanent residents and currently remains the only such category to do so.
However, America’s producers must pick up the welfare bill to subsidize the corporatists’ demographic pressure.
This is why America’s middle class must “wake up to the full extent of its fiscal nightmare,” according to Professor Nouriel Roubini pontificating no doubt in some pagoda in China, and “recognize that maintaining a basic welfare state, which is right and necessary in our age of globalization…implies higher taxes for the middle class as well as for the rich ($200,000 and up).”
Never mind that the program was so riddled with fraud and corruption that it had to be suspended from 1998 to 2003. The government now assures us it has worked to clean up its program, requiring potential deadbeat investors to pay the full amount upfront.
http://www.hooyou.com/eb-5/index.htm
http://dealbook.nytimes.com/2012/09/06/visas-for-dollars-program-a-boon-to-hotel-developers/
+100 bunny.
Get a life, baby! U need to get laid!
...Death by a trillion copy-and-pastes!
More is not better, bunny. All those words you cut and pasted, and I'm still not sure what your point was.
I suggest you edit your post to make your point, and have links to the supporting documentation.
Yeah, they do, and it is not for interest or return of principal. It is to maintain their export economies. You see, they are kicking a different can down the road.
"who without a financial death wish would lend the U.S. government money for 30 years at 3% ?"
If its somebody else's money why not? Get a free income stream until...cross that bridge if u come to it.
Fixed that for you. Your original statement, as literally written, made no sense.
"Couldn't care less" means that you could not care less than you do right now --- literally, you do not care at all. "Could care less" implies that you DO care, because you COULD care less than you do right now.
After assessing my current level of caring, I determined that I COULD care less due to the fact that I was careless about the way I measured how much I actually did care. This has been corrected to the point that I couldn't care less now. I thank you and that is the mattering thing.
Just trying to do my share to avoid linguistic blobbing-up and US 'american' citizenismistic grammatical monolizing of the speeching means!
Forward Motion With Masses and Long Life To The People's Endeavor!
Masses when double lucky prevailing fortune assail up with burst in expeditious wising.
It is to pinpoint them out to point out a train that is pointed to by the whole of 'americans' trying to push someone else under the train for your own crustier bits alas alas.
Alas, alas, pi to the fourth power alas.
Indo-European-Antarctican-Lemurian Easter Island Chinese 'american' shitizenism is as roadside crapmongery does.
Just have to bear with it.
"PETRODOLLAR WARFARE" PDF FOR MY ZEROHEDGE CRAZY BUDDIES
http://home.aubg.bg/faculty/kpetrov/Other/Textbook%20Downloads/Clark%20-...
Thanks, HAB, I was about to buy it on Kindle.
And while, as always, the state can kiss my ass, please know that I'd be happy to kiss your avatar's.
Thank You!
Well ~ as for me... I could care less... But instead ~ I choose to care MORE... [Just trying to exercise my last bit of freedom before being hauled away to a re-education camp]...
Thanks. My grammar checker is on th fritz. I do admire your mastery and use of the language akak.
Add two zeroes to that number and make it payable to every man, woman and child. Then I would be ecstatic to pay a 56.67% tax on that and voila! No more debt!
What? Oh, yeah...
Who cares? Immagunna buy a boat with mine.
Government is a high time-preference entity. It needs the support of high time-preference individuals.
Therefore, it acts to create them.
BB,
Superb and classic Twilight Zone episode (the film version with John Lithgow was great as well).
DavidC
Agreed. PhDs like Krugman and Stiglitz simply mouth what the politicians and greedy Americans want to hear. But debt has risen by 136% since 2007 and is accelerating with out of control spending. http://confoundedinterest.wordpress.com/2013/01/06/pennies-40-ton-trilli...
The next debt ceiling level is to be set at $17.85 trillion.
There are bankster arrests still going on around the globe, Remember the David Wilcock and Drake interview? https://www.youtube.com/watch?v=e0BaAYt6vSQ
Check out these sites for more info;
http://removingtheshackles.blogspot.ca/
http://americankabuki.blogspot.com/
These legal documents are check mate to the banksters. If they ever challenge it, they are admitting to their participation in the fraud.
Along the way they got involved with other groups who had big pieces of the picture but not a clear understanding of the structure by which the banks ran their (giant) "operation," nor did they have the legal structure themselves in place to do much about it. They discovered that the bankers operated under the guise of a democracy government by setting up everything (individuals, countries, companies, etc.) as corporations and then everything was controlled and run through the Uniform Commerce Code and it was all a complete fraud.
The researchers (now Trustees) have met on numerous occasions with all the big players, good and bad. The (highly legalistic) documents which basically foreclose on all of these corporate entities were filed in August through October 2012 and there has been NO LEGAL REBUTTAL. Which means the documents which basically return everything to the people including the ownership of the UCC (it was privately owned before these documents were filed) are in full force and effect. The Trustees say that it will be impossible to rebutt because it leads to the discovery of fraud.
http://www.dailypaul.com/268715/important-stunning-document-released?page=1
Sadly... In practice... Sounds like a pyrrhic victory to me... [Though someday it'll all end for sure]... IOW ~ The odds are slim indeed that anything like this will ever be resolved in a courtroom... BLOOD will be required before it's all over...
As high profile arrests take place and makes MSM news headlines, the general public will start to get it. So much work was already done by people like Jordan Maxwell and others. The shadow government operates with no authority, and if they try to defend their territory, they expose themselves. I believe the old Illuminati guard are so old and addled with Alzheimer's and dimensia, they are collectively powerless at this time. That's why we go in for the kill now.
Jordan Maxwell - The Illuminati Exposed
https://www.youtube.com/watch?v=NgwMr_gdiv8
"As high profile arrests take place and makes MSM news headlines, the general public will start to get it"
~~~
So is that going to be on BEFORE or AFTER the "Honey Boo Boo & Snooki compete on Dancing With the Stars" special?...
Honey Boo Boo's mom has her own Mini Me.
Idiot.
No court on this planet will take on the bankers.
Filed and not rebutted by bankers simply means filed and ignored by bankers.
Which means the documents which basically return everything to the people including the ownership of the UCC (it was privately owned before these documents were filed) are in full force and effect.
Filed documents without adjudication by a court are meaningless and worthless. No filing is a judgment merely by being filed, and there's no default judgment because no judge will rule against bankers.
Anyone in 1st year law can see the nonsense in all this UCC crap.
"highly legalistic"...emphasis on highly.
Legality is just an extension of social convention. This may be technically legally correct, but the social convention now is that financial corporations are not prosecuted, and never lose based on mistakes or bad decisions.
so whats william clarks conclusion? anyone read that book?
The bad news?
The debt will climb to 20 trillion.
The good news?
The DOW will break 30,000.
So what's a boy to do?
http://www.angrysinner.blogspot.kr/2013/01/saturday.html
You guys are alarmists. The US debt is in dollars for now so it can easily be printed to pay off. SHTF when there is a new reserve currency and the dollar is devalued limiting the ability to pay interest on the debt.
So for now the party goes on, that is why Dick Cheney says debt is IRERELEvant!!!
If an alarmist is one who attempts to warn others of certain facts, then, yes, call me alarmist. No prob there.
But you say, "The US debt is in dollars for now so it can easily be printed to pay off".
1) US debt since 1971 is always in fiat, FRN dollars, what else could it be in?
2) to print more currency IS easy; to have that newly printed currency maintain its value is the crux of much debate.
And then you say: "SHTF when there is a new reserve currency and the dollar is devalued limiting the ability to pay interest on the debt".
1) Dollar is being devalued with every new one created.
2) Paying interest on the debt with less-valuable dollars seems to be the very goal of our central banksters because it's easier to pay with cheapend dollars. (Easier than harvesting more tax dollars out of taxpayers depleted pockets or - the old way - giving up Gold from the treasury.)
And Dick Cheney never said debt is irrelevant. What he said was, "Reagan proved deficits don't matter" I wish he hadn't said that. He may wish he'd never said that. But the cat's out of the bag on that one and I won't try to defend it on the basis of Reagan's deficits relative to GDP relative to restoring a robust defense posture. But I could.
The fact is, deficits DO matter especially in FedGov budgeting context because deficits add up each and every year to the $16 trillion plus DEBT we ALL suffer from now.
I find this alarming.
No, we're not alarmist,...you're fucking retarded.
While your fatal conceits are quite easily contrived, you'll find they do you very little good in the real world of scarce non-renewable resources that are fundamental to the productive capacity of your economy.
We could just as easily say that we don't plan on paying the debt (you know: pull an Argentina), but that might have some consequences both with respect to our ability to continue borrowing (which we must, to continue rolling this fecal pile along) and in the real world, where the price of commodities like oil (as priced in the currency you've advocated devaluing sharply) skyrocket...collapsing your economy by billions of GDP with every $1 rise per gallon.
If you think we're on the brink now, try looking at how much money goes to interest if rates go above 5% because your "easily printed" machinations have destroyed confidence in the dollar (you THINK people don't recognize inflation as a tax, but they do). What happens to the revenue side of the equation when the economy contracts from price-inflated inputs?
Wake the fuck up, Sparky.
Excellent comment. I just wish sometimes people would understand the two most important concepts in economics:
1)Humans desires and wants are unlimited (i.e. infinite)
2)But real resources are finite
Thus, to reconcile this conflict requires the price of anything be determined solely by supply and demand set by markets-and that includes the price of money (the interest rate). When central planners attempt price controls (i.e. the FED using QE to artifically depress the price of money) they are guaranteed to fail because of axioms 1) and 2) and in the process results in huge malinvestment (e.g. real estate, student loans etc)
Including debt parked at the mortgage agencies, REAL U.S. govt debt is already >$22 Trillion. And the main financier isn't China/Japan/OPEC anymore. It's the Rothschild family, alias the "Federal Reserve". I cannot imagine a deadlier situation. Neither can they. That's why the gun-grab.
That post was a waste of bold and italics.
You should demand a refund toot sweet (that's French!)
The time to see the dentist is 2:30... (That's Chinese)
Alas, Chinese dentalism is a bridge too far and less filling.
Entitlements aren't so bad as long as we use them like they did in the past. That means living with your mommy and daddy or them living with you.
"In the past", we put people who couldn't work anymore on ice floes or packed them away in an opium den.
Now we pay for their boner pills and heart meds while they play shuffleboard into oblivion over much time at great expense.
I say we take America's penchant for reality TV and make SS a competition...
"Two old men enter...one old man leaves...with a check."
Medicaid, Medicare and Obamacare are corporate welfare...for the pharmaceutical companies, insurance carriers, doctors consortiums, hospitals and other so called health care providers. The vast majority of elderly would be better off with a direct fixed payment annually as a health care subsidy and responsible for purchasing and providing their own health care or, if they chose, health insurance/HMO membership.
That approach would also save taxpayers a lot of money. No billings for 20 expensive procedures that didn't take place, no 15 different prescriptions because its a medicare patient and "the government can afford it", no twice a month doctor visits for the sheer sake of bill padding. On the other hand, those seniors whose basic health needs consist of nutrition, exercise, prescription lenses and hearing aids, would have the health care dollars to pay for those items, none of which are paid by Medicare.
China is simply biding its time to launch a Gold-backed RMB. At that time, the choice will be easier. Petro-Dollars anyone?
Bingo!
He who has PMs can convert his wealth into whatever other medium he wants, at any given time. Today's real money might be tomorrow's monopoly money. Beware of paper...
Pray we turn into Saudi America Texas again.
Toms thumb up.
You must have missed their proposal to make SDRs the reserve currency after adding the RMB to the basket.
That was over five years ago and was rejected by The US for fairly obvious reasons. China will, therefore, go it alone.
They better not wait too long with 1.3 B people they won't be able to feed and an excess of males to females (a sort of human time bomb the longer they don't get laid) China is not the future-its just in better shape than India or Bangladesh.
They also face the same problem of an aging demographic as Japan and most of the West do; iow, a lot more elderly in need of support by a lot fewer young.
everyone knows that facts mean nothing.
it is context that is king and facts are
pawns in the kingdom. meaning and value
refer and defer to the context, king.
you are not dealing with the open human
mind but a synthetic creation of debt money
consciousness. a half wit.
granted this is the phd level shit but
it does happen to be true. you cannot
argue facts in contradiction to the context,
that is just dismissed as trivial or irrelevant,
outlier, one off bullshit. it is the context
that must be destroyed as inept, the jugular.
corot that artery sir.
That was an amazing " Info Graphic" Tyler! You kick ass.
It's amazing how well you [scale} spending into pictures. I filed that little beauty in my favorites.
Remember it was a GUEST post! Give credit (if any is due) to whom created it.
The infographic comes from http://demonocracy.info
This debt bubble has to burst some time surely?
When interest rates start rising. It will collapse when the world realizes they will NEVER be paid back and therefore no longer buys American debt.
The (Fed.) thinks they can use reverse repos, as opposed to outright "money supply" contraction. We all just saw what happened to yields on a "whiff" of tightening.
Break out the ' Methadone' Bitchez/
With reverse repos, aren't they just buying securities to monetize the Banks. I think the only tool they have is different schemes of printing until they finally destroy the currency, and they know it but won't say it.
Are we lost in translation? The Fed. will use (short term) monetary policy to pull liquidity from the system.
ECB style/ They will fail, as all the short term paper has been twisted!
Ok I get it, like the ECB. Of course they will fail. I thought you meant Fed adding reserves to Banking system with a repurchase agreement like they did in 2009.
No, you don't get it. The Fed. has been twisting "inflation" for 4 years. If the Fed. decides to start selling paper, no sovereign on Planet Earth will settle for 10 basis points.
This isn't about U and Me. When those short term bonds hit the market ( KABOOM) Greece is a dot on your screen.
People will unwind to be liquid. The $ will spike (short term) Yields wil skyrocket, and the " Fractional Reserve" concept will hang some politicians and bankers.
You're right, no one will want to buy our bonds with 10 basis points. The increase in yields will then collapse the system. I think I get it. I believe all that wealth is going to end up going into commodities. Do you agree?
Like undoing a very necessary girdle in a public place...fuuugggly.
And they can't even agree on when to stop making it worse.
Some things you can only sterilize by nuking from orbit.
"Twisting" by the Federal Reserve moves short and long term treasury rates in opposite directions. The central bank is selling one end of the curve and buying the other.
In lieu of the above when they start selling treasuries back to their primary dealers (20 international banks) the money supply will contract and the economy slow.
On the other hand if the federal reserve wants the economy to expand then it purchases treasuries from it's primary dealers who are then flush with cash to loan to the public and the economy expands. This is what they have been doing since 2007. it isn't working very good. Beause the banks made poor investments in recent years they prefer to take little or no risk by holding cash in reserve at the federal reserve and be paid near zero interest. They are following Warren Buffet's first rule of inves ting, "don't lose money." Besides that smart business men and consumers are not borrowing from the banks due to the perceived future of risk.
So monetary stimulus is kind of broken, and hence all that is left is fiscal stimulus.
Your question is a good one.
Negative, see above. And I doubt the primacy of economics. When Civil War II begins - and, via the gun-grab, we are getting close - the debt-Ponziconomy will collapse w/in days.
Collapse within days? That may be a little optimistic. I'm a pessimist so I'll give it a couple of more years.
lol...not a problem...just stamp out a platinum coin saying its value is ONE QUADRILLION DOLLARS.
Instant surplus!
Next!!! ;-)
Ameri >l a ™ Backwards k's aren't allowed?
sometimes i wonder if i have lost my mind
when shit just gets funnier as the horror of
the situation becomes more obvious and worse.
.
if you haven't seen it ....
or watch it again.
George Carlin - advertising and bull shit
http://www.youtube.com/watch?v=AtK_YsVInw8
.
this is comedy. the other thing , "reality",
is tragedy wrapped in bad and fraudulent
paper.
.
your post made me laugh too.
The whole platinum coin thing makes me laugh. Yes, why stop at a trillion, when you can make it a quadrillion? Hell, the government shouldnt have to levy ONE THIN DIME of taxes anymore, right? They will have all the money they need to fund their shit and then some. And think of how great that would be for the economy if NO ONE had to pay ANY TAXES anymore? No income taxes, no property taxes, no sales taxes. No LIQUOR taxes!! Everyone could go on a spending spree like we've never seen in the history of the world. Talk about fiscal stimulus!! Lets do it!!
I believe the quadrillion dollar coin is called the Quatloo.
is that what is was called in Zimbabwe?
No... It's called the "jooZOOKA"...
Why should anyone pay taxes? Why shouldn't the US Treasury simply print United States Notes - the longest running currency in our nation's history?
Taxes are theft from the barrel of a gun.
Privately created debt money (the FRN) is the scam of the Century.
Can we create something from nothing? No. But at least it would be the People's Currency.
I have long wondered why not give a very large tax break as deficits don't matter to politicians nor economists. It would certainly stimulate my economy.
They do this kind of things, in China for example. :) All those bad debt at state banks? Let's modify a few computer files, there, all fixed.
Egad! ... can we buy a star fleet and piss-off before reality notices?
We had one but some jackass screwed up the metric conversion and at those speeds it really makes a difference; they're parked just past Zeta Reticuli.
I have ONE QUADRILLION DOLLARS. The thing is they are Zimbabwe dollars, ten notes of 100 TRILLION ZIM$.
But soon I'll be getting my hands on a ONE QUADRILLION DOLLAR US$ note.
And it will be worth the same as my ZIM$ notes: nothing.
As high as Barack Isuckoffbankers Obama says it will?
And I quote.
“If Congress refuses to give the United States the ability to pay its bills on time, the consequences for the entire global economy could be catastrophic,” he said.
"I will not compromise over ... whether or not Congress should pay the tab for a bill they’ve already racked up," Mr. Obama said in his taped weekly address,
HEY SHITHEAD, you added 6 MOTHERFUCKING TRILLION DOLLARS TO THE DEFICIT. DEBT REPUDIATION, YES WE CAN!Barack-Insane-Obama could veto ANY bill sent to his desk...he has chosen not to.
Lets throw another log on the fire...
(CNSNews.com) – House Minority Leader Nancy Pelosi (D-lol-Calif.) said Friday that she would raise the debt limit unilaterally “in a second” if she were president of the United States.
Pelosi and other Democrats have suggested that the president could bypass Congress and unilaterally raise the debt ceiling by invoking the 14th Amendment of the Constitution, which states, “The validity of the public debt of the United States…shall not be questioned.”
http://cnsnews.com/news/article/pelosi-raising-debt-ceiling-unilaterally-i-would-do-it-second-i-m-not-president
Yes, of course, by stating something, that actually makes it so.
So when I say I mailed my check through the US government Postal Pervice its as good as gold and in the hands of the IRS!
Its all good, as long as we understand each other Nana ;-)
I can't help but notice this little section of that amendment (yeah, it was about not financing one's own reparations from the rebels, but work with me):
"But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void."
Reneg on the basis that the debt was incurred while performing an insurrection on the US! DC has rebelled!!
When the time comes, the US will OUTRIGHT DEFAULT.
What better way to get a 'fresh start' than to 'file bankruptcy'.
Don't like it? Tell it to the F-35.
+1
That is the sovereign financial game being played, as always. The other side of that is patriotism, the issue (or trick) for all humanity, is to stand pat on our individual rights everyone is born with.
F-35s? In that case, better long Lockheed, long COL.
Drones? Better long Boeing, long COL.
Too 'actionable'? Sorry, please continue with clever quips.
What's that? Can't find anyone to fly your F-35s? They expect to be paid in what?!
I will not compromise over ... whether or not Congress should pay the tab for a bill they’ve already racked up," Mr. Obama said in his taped weekly address,
How about rewording that Mr. Obamao?, For a Bill YOU have already racked up, and JUST added another 4.4 TRILLION TO?.
Hypocitical bastard.
i think we have our answer to WAR, WHAT IS IT GOOD FOR ???
Be smart China don't get baited into a stupid conflict...think small island somewhere.
Bang on (pun intended). USD reserve status and ridiculous military superiority (read military spending - which is exactly what debt is needed for) is the key way of staving off the collapse. Its all very closely interelated really one big fucking catch22.
You see all the pronouncements of "end game" are correct in as far as we can never go back to a sensible economy without a 100% reset. They are wrong tho in as far as prediction of the impending doom. This shit can go on for years
Nope. Like I said last year: O's inaug, then 60 days to Ft. Sumter.
We shall see. I suspect you are wrong as "they" are not going to force the issue and the status quo can be qe-maintained for a while longer. But if you are right i wont cry either, i have long ran off from Amerikka and i am not important enuff to be hunted with a drone
"You stupid good lookings... I'm too important to be captured"
~~~
Madame Yes
http://www.youtube.com/watch?v=PojCDG5816Q
Brilliant clip, cheers dude
Business.
When it all ends... just watch Obunga... an exec order ot two forgiving all debt, seizing all American assets, marshall law, suspension of what is left of our Constitution... which will lead to armed revolt... it will get ugly and fast... and HE is the craven socialist muslim tool that will start the BIG party.
All resources will be nationalized. Jobs will finally come back. The government will control every wage rate and every business, but hell that's not that much different than now. Communities will be more like military bases or fema camps.
Is it a job when you are being forced to work?
Welcome to hell.
This is hell.
BANANAAA+ (borrowed from another ZH'er)
In the USSR's end days the joke was, "So long as the bosses pretend to pay us, we will pretend to work."
Putin asked why we were going towards where they were coming from. The answer is simple: we have the same type of leaders they had.
Government is to blame for our problems, and they're guaranteed to get worse.
What will people do if the gooberment turns off the electicity or gas in winter because the community didn't meet its bureaucrat assigned production quota? Or because a prohibited gun was found in a house? Or doesn't put any value on your EBT card because you criticized the Great Leader or because you didn't show up to a "Worker's Protest"? What will happen when your kid tells the teacher that rights are not granted by the government?
You'll get to fight Katniss Everdeen in the next Hunger Games episode... Or go against 'Sub Zero' in the next Running Man...
marshall law?
You've heard of him.
"Mayor, crime here in Dodge is gettin' outta control."
Sucking hard on his bong, the mayor looks up. "Better get a telegram off to the governor and have him send us Marshall Law.
Oh, and if he's busy, tell him we'll settle for Marshall Dillon."
I thought Marshall Law was where you punish people using amplifiers.
Before that Vox Populi was very punishing.
Martial law.
moar like marshmallow law.
"We are MARSHALL"
The US will be no different than Syria is today, killing its citizens.
Ghadaffy did it while he could. Egypt was ready to, but the muzzies pulled back first.
Bahrain, in the process. We're all just terrorists to our faithful, loving, caring gubmint.
And they WILL kill us. I don't know how we plan to fight back against jet fighters, tanks and drones.
I'm sure someone is drawing up plans somewhere, though.
The US has more than four times the population of Afghanistan and Iraq combined, and more than seven times the land area, with a firearm for every person in the country.
With nearly the full support of the US, we haven't succeeded in Afghanistan, and if the military we deployed within the US, there would be anything but support.
Presumably it'd take some TSA-esq organization, and it would fail at epic levels. If they simply wanted to kill the population off, presumably they could go chemical/biological, but that cuts both ways, and more critically, eliminates the labor base, and would likely trigger an complete breakdown of the chain of command.
Latern Spike, REX84, and Garden Plot are examples of the plans they've drawn up. I seriously wouldn't count on any "plan" working -- after the first 10,000 or so people get disappeared, any pretext of restraint would disappear when someone showed up at your door looking for you. The old adage of "no plan survives contact with the enemy" would apply the moment the civilian population of the US was declare the "enemy" the second time around.
Good post, Seek, 100% agree. Recently read a book by John Robb called 'Brave New War' that lays out the forth generational warfare reality confronting aggressive/oppressive, globalized nation-states. Great read.
Shut up you fuckin' tool...how much of that debt was accrued by your fuckin' hero, dumbass?
locveyajimbo,
Well may not be an armed uprising as he is coming after anything capable of monting an offense.
Time for Secession
http://www.washingtonpost.com/politics/white-house-weighs-broad-gun-control-agenda-in-wake-of-newtown-shootings/2013/01/05/d281efe0-5682-11e2-bf3e-76c0a789346f_print.html
HERE HE COMES...........................................AFTER the 2nd TOTALLY.
LIAR and a HYPOCRITE, as we all knew it.
http://cnsnews.com/blog/gregory-gwyn-williams-jr/flashback-obama-i-will-not-take-your-guns-away
According to David Walker, former controller of the US, when these unfunded programs are added to the enormous debt, it stands at $70 trillion and growing–that is $10 million per minute!
According to Kotlikoff, US unfunded liabilities are $222 trillion and growing at $20.9 million a minute.
http://www.bloomberg.com/news/2012-08-08/blink-u-s-debt-just-grew-by-11-...
The game is over. That is why the fuckers at the unfederal reserve and the white house NEVER offer ABSOLUTE equations for the type of growth that will get us out of this mess.
The only solution is revolution, along with a big dash of FUCK YOU I'M NOT PAYING THE BILL FOR LYING COCKSUCKING POLITICIANS.
No Big Deal! That's only 70 new Trillion Dollar Platinum coins with a picture of Obama on one side and Michelle's butt on the other. Everything's under control.
"Push the Button, Max"
Fate the Magnificent
Professor, I saw your fine movie about a month ago. It cracked me up when you froze half of your moustache off on the iceberg.
Too bad about Natalie Wood. She was beautiful when she was around you.
There was a graph on ZH the other day that proved, without a doubt, that there has not been enough platinum mined in all of humanity that could possibly contain Chewbacca's keister on it...
"Barry, does this coin make my ass look fat?"
"Damn girl, your butt blocks out the sun! We gotta get your ass its own zip code."
"Now....woman....I see...I see what you're....tryin' ta do here..."
She had back for days...I could put a week on it.
How do you stamp a coin big enough to display Michelles ass
if you keep the same scale as Oldbongwaters profile ?
selling consumer products to the US.
LOL!! Guess what, were not buying anymore! Good luck with that..
Has anybody picked $20 trillion yet? That's my number. As far as the official number, anyway. I'm not including derivatives and bank fraud and unfunded pensions and healthcare at the blowup. I think at $20 trillion we have interest rates double from loss of the reserve currency due mostly to our politicians being on television.
$20 Trillion or WW3, whichever arrives first.
i pick temporary US default followed by downgrade followed by retroactive non default followed by executive order eliminating debt ceiling followed by members of congress tried for treason for allowing the US to "not pay it's bills". (and found not guilty)
No, but I still have June 1st in the 'Begin the Conscription' pool.
That article is a POS.
Bunch of cut and pasted nonsense.
Jesus, get some editorial control over this blog-O-site
Lots of great content here (e.g., Nanex stuff) but this is pure garbage
I don't know, its basic. I link up ZH a lot in other forums, news, stats etc. A lot of those people are clueless, maybe some of them will wander through once in a while, read an article like this and grasp something at their level which wakes them up.
Debt bomb fuse ignited. 3-2-1- was that the 3 minute fuse or the 20 you rigged? "I'm sure it was the 29." (Coach-swoosh beer top pull). Lets watch and see.