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Why US Interest Rates Can Never Rise (In 1 Chilling CBO Chart)
Submitted by David Howden via Mises Canada,
It’s not just homeowners who have to worry about rising interest rates, the Federal government might soon get a taste of its own medicine.
With the Fed doing all it can to stimulate inflation, increases to interest rates are taking a front seat amongst borrowers’ fears. From the admittedly partisan Republican Senate Committee on the Budget comes this report outlining how federal interest outlays will dovetail with other expenses in the future.
To summarize:
The U.S. gross federal debt currently stands at $17.548 trillion, and net interest payments to our creditors are the fastest-growing item in the budget. In 2014, the Congressional Budget Office projects that the nation will spend $233 billion on interest payments. By the end of the budget window in 2024, however, CBO forecasts that interest payments will nearly quadruple to an astonishing $880 billion. Every dollar spent paying our creditors is a dollar wasted—money for which we get nothing in return. Interest payments threaten to crowd out every other budget item.
To put the $880 billion, single-year interest payment in perspective, here is what we currently spend on other budget items:
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Federal Courts – $7.4 billion
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Department of Education – $56.7 billion
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Secret Service – $1.8 billion
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Food Inspection – $2.3 billion
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Census Bureau – $1.0 billion
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Border Patrol – $12.3 billion
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National Parks – $3.0 billion
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NASA – $17.6 billion
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Centers for Disease Control – $7.1 billion
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Federal Prison System – $6.9 billion
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Workplace Safety Inspections – $0.9 billion
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Immigration and Customs Enforcement – $5.6 billion
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FDA – $2.6 billion
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Federal Highway Budget – $40.4 billion
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Coast Guard – $10.0 billion
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Small Business Loans – $0.9 billion
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Veterans’ Health Care – $55.3 billion
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FBI – $8.3 billion
Every debt incurred today will be paid off in the future. The graph above may be shocking to some, but it’s only a very small part of the picture. This is just interest on debt, and doesn’t even include the costs of repaying the principal. Of course, the principal never really gets repaid as the government just borrows afresh to paper over its old debts, but the interest must be covered lest savers stop lending money to the government.
Nor is this only a concern for the future. Last year the government spent more on interest payments (c. $700 bn.) than it did on Medicare (a little under $600 bn.).
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Tax revenue will proportionaly increase making this a non issue. This is basic economics silly Austrians.
As the saying goes, you can't squeeze blood out of a turnip...
Last one out, turn off the lights...
The Federal government borrows +/- $1 trillion in new debt every year. It also rolls over +$3 trillion in maturing old debt into new debt every year. The Federal Government basically has a $18 trillion ARM loan.
think of the interest as a Transfer Payment, which is something we can all support as part of the social contract
hugs,
jackloo
Yeah, but.....
All the treasuries owned by the Fed, the interest and principal thereupon, are returned in whole, to the US Treasury.
So, if, for example, the Fed owned all the Treasury debt, the Treasury would pay all the interest to the Fed and then receive it back meaning...... They paid interest to themselves and oui voila! Magique magnifique, et est tres biens! Scare bleu! Magico!
See, every time you think the system has a limiting factor, reality comes along and mitigates it one more fucking time, immemorial.
The addition of a small servicing fee helps them help you...
using above data: 17 tril debt, 233 bil interest 2014 = less than 1.5% interest rate on current debt load
and the government is broke at these rates
"As the saying goes, you can't squeeze blood out of a turnip...
Last one out, turn off the lights... "
Not to worry, we can just crank up the tax rate to 90% on the dwindling supply of remaining workers. They eat too much any way. It'll keep them nice and lean, so they can maximize their output for the FSA.
Forward!
Sometimes, I wonder if a gubmint, thusly having backed itself into a very difficult corner with no apparent route of escape, mightn't resort to killing large numbers of people.
Studying the sociological pathology of those who have decided upon a course that insures the destruction of not only themselves but also all those that surround them is a very interesting subject in and of itself. A woman who murders her children, or a husband who shoots his wife before taking his own life are quite interesting studies (in HOW NOT TO BE LIKE THIS).
IN FACT, there is a website link within one of my frequented places that seems to be fascinated with this. I haven't ever gone to this link, because I am NOT of the opinion that this topic is condusive to the type of knowledge that I seek.
You are CORRECT; however; in describing this vector of a government that is in it's last throes; and realizes that FAILURE is it's only option. In such situations, the few 'desision-making' people WILL IN FACT decide that total eradication of life is the 'ONLY OPTION'.
SHIT.
Media Monarchy:
http://mediamonarchy.blogspot.com/
Scroll down ,and look at the right-hand side.
'MURDER/SUICIDE':
http://murder-suicide.blogspot.com/
YES, THEY CAN.
Silly mortals. This all points to deflation. Nobody--not even the government--has a dime to their name. Might want to think about selling that gold and worshipping a new idol.
Gold...$35/oz!
Of COURSE too much debt is deflationary. But try saying that around here.
We all confuse symptoms with causes. Deflation is nothing more than a symptom of everybody being broke- what you said. Hyperinflation is also a symptom of everybody being broke...welcome to the reality mobius strip.
Why the fuck does a government need to borrow money?
'Cause it seemed like a great way for its owners to get rich back in 1913?
I'm surprised that the author failed to mention that $880 Billion is less than one year of Fed liquidity injections at $85 Bil/Mo.
Amazing.
Because they are doing a million fucking things that they are explicitly prevented from doing (see ennumerated powers) and saying "these assholes inhabiting our contry will pay for it"
If the government wasnt doing all of those things it has no authority to do, then it wouldnt be screwing us daily.
If the government was doing things is DOES have authority to do (like run the treasury, maintain a sound currency, protect borders...) and ONLY those things it has explicit authority to do...
how the fuck prosperous would this nation be...
Yes. You've said something here I'm surprised we don't hear and see more often. A friend of mine once said "you don't shit where you eat". I have often wondered myself: Why would these idiots be so intent on screwing this place up? Don't they live here, too?" This is the one thing about human nature everyone should strive to understand, the problem with short term memory of history, and the need for greed today that dooms you tomorrow. Thanks for your post.
see dual citizenship
Jonesville on a National level. Fuckers. I'm not going to drink that coolaid (figuratively or literally).
Stalin-Soviet Union. Wonder no more.
http://www.zerohedge.com/news/2014-07-06/mike-maloney-dollar-we-know-it-will-be-gone-within-6-years
Mike Maloney:
"By the way, any profits that the Fed has at the end of the year are supposed to get turned over to the Treasury. Well, they are paying the banks interest that reduces the amount that they give to the Treasury by exactly that amount. So in other words, the public is paying those banks interest. That's where all of the interest comes from. We're not seeing those profits passed on to the Treasury anymore."
“The very idea of a government that can create money for itself allowing private banks to create money that the government then borrows and pays interest on is so preposterous that it staggers the imagination.”
--- William F. Hixson, It’s Your Money
The triumphant take over of the powers of government by the methods of organized crime, primarily through the funding of the political processes, has resulted in a debt slavery system which has generated numbers which have become DEBT INSANITY!
If governments didn't have to or couldn't afford to pretend they needed to tax or borrow to spend, very soon the money will become worthless. That is what caused all known cases of hyperinflation.
It is mcuh easier to pretend the money isn't created by the government if the banks/Central Bank are owned privately and not by the government.
Banking is an industry that creates public faith in the value of a commodity that is inheremtly worthless and is rewarded in the same worthless commodity in which they have been able to create public faith.
@ Knukles:
You must have missed the memo.
Hillary Clinton (when 'secretary of state') went hat-in-hand to make deals with the nations that ACTUALLY OWN the debt. The 'USTREASURY' doesn't own SHIT, silly boy (these terms were changed by the 'Federal Reserve Act Of 1913'). The TREASURY doesn't print the money. The TREASURY doesn't have Congress telling it to coin money. The TREASURY has been superceded by the FED. LOOK AT THE FED NOTES.
The TREASURY'S GOLD RESERVES were bled dry during Vietnam.
It's ALL 'paper assets' now.
17 trillion in DEBT isn't some bullshit 'theory'. THAT'S ONLY counting the non-GAAP reporting by the GAO...
(WB7- advised food and beverage warning when envisioning the following)
It's like the FED and the TREASURY are giving each other a good '69'. Soon, the FED gets sick of swallowing, and makes the TREASURY take a few loads. Mr. Yellen loves sticking her icky and smelly little girl-clit in our face...
US INTEREST RATES CAN NEVER RISE. (I won't come in your mouth. I'll just put the tip in. I didn't come; you did. It's not MY baby. Yes, I DO really love you. REALLY! I'm only going to the store to get some smokes... and I PROMISE I'll be back... ) Trust me!
True that the "thing" seems to go on ad nauseam. There are clear limits to a system which is essentially a "confidence" game. Even sheep bite as they are being pushed onto the killing floor. All it takes is one mistake that erodes confidence a tiny amount but that tiny loss of confidence becomes the "straw that breaks the back" .
I suspect the Fed (and Treasury) will one day hit that point. You can QE or monetize all you want but if foreigners and/or your own citizens reject your paper, you have a very serious problem. Imagine how high you would have to raise rates to stem a global flight from the dollar. They got off the hook in the late seventies/early eighties with ~ 20%. Can't help but wonder if things would need a stronger remedy now.
There are so many thieves out there that the Fed has a lot of competition.
If Retail rates were to edge anywhere near 20%, the bloodbath in the Consumer / Automotive / Housing sector would be "interesting" from the perspective of an outside observer . . . .
The "changes" required would be so extreme that the masses would quite likely revolt in the streets!!
"if, for example, the Fed owned all the Treasury debt, the Treasury would pay all the interest to the Fed and then receive it back ..."
No, that is incorrect. The Treasury is broke, it has no cash just laying around to pay interest.
In order for the Treasury to pay the interest it would have to borrow it and therefore the debt and the interest just keep on growing.
How much of the debt is held by the FED and associated interests? Probably much more than is let on. So ultimately we owe a bunch of money to ourselves.
Take no comfort from this. When we are in t he process of failing to pay ourselves confidence in the dollar will evaporate; and confidence is all it has.
The FED and its associated interests are neither Federal nor government entities. They are corporations. So, unless you are a shareholder of one of the 12 Regional FED corporations, you are not owing the debt to yourself. You owe it to them.
The FED returns interest paid on the Treasuries it holds to the treasury. It's a common knowledge accounting gimmick not talked about because it makes it crystal clear that were monetizing our debt.
For fuck's sake: can we please stop calling this debt?
Debt is meant to be repaid. This is NOT debt.
This is the selling of Perpetual Income Streams disguised as debt.
This is feudalism being constructed with bond auctions.
Bingo! Why can't people see that? It will be so through inflated dollars or forced confiscation.
Its a weapon used to control and extort with the threat of destruction at will. Most technological advanced military in the world is impotent against it... that's why Lloyd is laughing.
No we can't stop calling it debt. Because "intent" is not part of the definition. It waddles like a duck, it's covered in feathers, and it quacks, it's a duck.
Debt comes with a legal contract specifying repayment. What is "meant" is unknown. "only the Shadow knows what lurks in the minds of men", and he's not talking. Your "assumption" does not change the defintion of "debt".
Not Perpetual Income Stream, Perpetual Ponzi Scheme. Fixed it for you. The Fed's game is to neutralize the bond vigilantes by controlling 51% of the bond market (probably already there with their 1/3 outright control + lacky foreign CB's like Belgium). Then add in the infinite printing press, and you have Perpetual Ponzi. The goal is to establish a New Feudal World Order by making all people debt slaves to the elites. And it is working perfectly in the sociopathic banker mind, so it will continue until some unforseen great outside force destroys it all. All Ponzis eventually crash, and this time the entire world will be collateral damage.
"The wages of monetary sin is financial slavery." -Kirk* L O'Him <-- religulous humor
Moses limited Usury with the 7 year Debt Jubilee. After the Rabbis killed him, the Rabbi traditions were incorporated over time in the Talmud, which eventually became heavily influenced by their Pagan influences in Babylon.
Usury was back on the Jewish financial menu. Especially when applied to those outside their faith, i.e. the Goyim. It's still that way today. Call it... "tradition".
Hedge, Plan and Act accordingly.
* Kirk is Scottish for 'Church'.
$18 trillion is one hell of a "Neutron Mortgage" - http://www.chron.com/business/article/Adjustable-rate-mortgages-are-like-a-neutron-1774236.php
No wonder the various agencies have been on an "ammunition shopping spree" . . . . . .
tell the people in Shenzhen to ramp-up iPhone capacity, we'll pay them next year with some dyed linens
I see that! Magnificent! We are looking at a Mensa Candidate here! +++++++++
Just looking at the Veteran's Health Care cost. With the most recent beligerent moves I reckon that cost as shown will look like a bargain in the long run. It's gonna change!
Which is why I've been saying for some time, the US Govt is covertly pushing the end of USD reserve currency status, so that when that "era" is over, they will default on it all and say, "what, we're just another currency in the world now, this is normal!!"
Anyone who thinks there going to be paid on 10 year coupons or bigger, is smoking huge hits of something groovy at this point!! These charts are suggesting, even with interest rates at historical, unnatural lows for the next decade, the payments will reach almost a trillion a year and we are currently running trillion dollar a year deficits!!!
Come on people, are you serious?? Really? You think this "system" has unlimited upside???
* ..there going to be paid --
-- what?
there you go...
Renewable Life - I agree. The debt will be defaulted on. The brand name of USA will be dropped like the Soviet Union did and pensioneers and other government beneficiaries will get .40 on the dollar. Thats going to be one horrible year or two when it happens for most people. I don't know what catalyst event excuse will be used for that occurring but I hedge for that scenerio. I think some luxury barter items like liquor and cigarettes will be useful to trade others for there gold. Carton of smokes for the gold necklace.
Why would they need to default on a payment in their own currency? The Fed can buy all the outstanding US government debt by printing fresh money. When the US government pays interest on the debt, it comes right back to the tresaury as income. The dollar will lose its purchasing power as the trillions of dollars locked till now in treasury bonds now come back to chase goods and services, but the US government doesn't have to and will not default.
It may seem unlimited, just like it did to every other government ever caught in this predicament. Currency creation (even in electronic form), has real inherent physical limits however, which always halt it and lead to the inability to make your payments. You eventually just can't create it fast enough.
We're arguing semantics. If the currency is worthless, then it is a de facto default.
Seems that we've got to the point that we should have implemented a 'Carbon Currency' already, (so as to tax everyone equally)...and that's been a failure because of those 3% of the pesky sceptics!
But onward into oblivion!
lulz. This comment proves that the FED created a generation of idiots.
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
Ronald Reagan
The Fed also created generations of the Rentier Class. As intended.
Obvious Troll is obvious.
You forgot the /sarc tag.
ok i'll explain you :
the 17 trillions is not a yearly loan paid back yearly with interest that'd be draining the economy & create as much income to tax & gdp to pay back, it's the result of decades of taking loans to the fed.
what's your plan to make the IRS revenu increase proportionnally up to 800b in one year & every year to cover for decades of getting fucked by fed ? (beside a 100% income tax - that might not even be enough in fact)
anyway, i believe the fed would silently erase a big chunk of those 17t if they were to raise some rates
So what does that graph look like when you factor in the ole unfunded liablities I wonder.
Thats the graph that makes a hockey stick look flat...
I've been surmising for a few years based on data such as this plus 5 years of evolving Peak Cheap Energy depletion rates that at the year 2020 give or take a couple of years, the wheels would finally begin to really come off the U.S. Not just a random thump, thump, thump.....or an increasing shimmy like we have had in 2000 and 2008......but really come off the axle.
We all know it won't be anything less than a Trillion in the real world by 2024. So yeah.....2020 give or take a few years. Still about right.
Jumbotron - I agree with you on the timetable. I doubt the resturcture will be as painful as the Soviets though. America has more infrastructure, intellectual capacity and information sharing through the Internet for a quicker reorganization. It's still going to suck though and all of this has been a slow motion collapse that picks up speed near the end.
It will not rise proportionately. Revenues rise and fall with employment, income and market activity. What will almost undoubtedly happen is the Fed and the U.S. goverment will almost undoubtedly have to inflate, which is to indirectly increase taxes and destroy retirements.
"What will almost undoubtedly happen is the Fed and the U.S. goverment will almost undoubtedly have to inflate, which is to indirectly increase taxes and destroy retirements."
Theft from future generations. Feudalism.
That $17T isn't debt: it is a securitization and sale of future tax revenues aka feudalization.
Your govenment is privatizing the federal tax revenue stream right before your very eyes and you cannot grasp it.
The numbers don't add up; and due to your innumeracy, you cannot grasp it. The impossible is impossible, tha's why we have the word.
"Things are only impossible until they are not."
-Jean Luc Picard
It isn't debt. LOL. It's just called debt to confuse you. maybe you could come back in ten years after you become properly educated.
Exponential growth on a limited planet is possible, if you really wish it?
Idiot.
yes exponential growth is possible when it's measured in something that there is an unlimited supply of, idiot.
The only thing in existence with unlimited supply is idiocy, idiot.
Basically correct; human beings imagine they know how to think; they don't. Since we stopped teaching Plain Geometry in School, no one knows how to think. And then, of course, largely due to the infterweb, where plagiarism passes for expertise, "no one knows nothin".
A little deomonstration of useless verbalization in place of logical analysis; standard interweb fare.
You are partially correct, but its still not good. This $800 billion in debt service in 2024 will be in value-reduced, inflated dollars. Regardless, the necessary inflation over the next 10 years to avoid crisis will still push millions of workers REAL salaries lower and destroy Baby-boomer savings.
The US middle-class will be screwed whatever happens.
Of course. What did you think the point of Most favored Nation Trade status was for the Chinese; signed into law by Bill Clinton, passed by Congress. Are you having trouble understanding the basic play in motion here? The middle class were taking too much of the Capitalist Class profits home with them, so a long term plan was put in effect to destroy them and reduce them to poverty; it's working out as planned. The answer is to cut off trade with "China; but no one will do that. So; yes; fucked.
Yeah, lets tax everone's incomes at 99%! Make them work for 1 penny on the dollar and see how everyone starts working harder to make ends meet.
That will get this economy moving!
Or people will just start shoointg govt officals. One of the two anyway.
.
Damn, that is fucking hilarious. The deadpan delivery nailed it.
You'll be reeling them in one after another. Touché.
+1
Stooge, agreed I think we have another Non-de-plume for MDB arriving to take up the mantle..
2024 is ten years from now. Guess how much purchasing power a $ will have then? Guess which is the only completely rational bet, a sure thing, for your ten year savings campaign. Silver. In Bullion, and in coin form. You're welcome for the free analysis; which reprsents 30 years of my life and 40,000 hours of study.
you forgot the Sarc. tag. I hope.
where will the tax revenue come from with inversions happening almost daily and economic output decreasing? Tax increases (historically) usually only work the first few years in increasing government tax revenues and then take a nose dive until a tax CUT is put in place.
This article is very relevant to what is the truth of the situation.
"In 2014, the Congressional Budget Office projects that the nation will spend $233 billion on interest payments. By the end of the budget window in 2024, however, CBO forecasts that interest payments will nearly quadruple to an astonishing $880 billion."
"Nor is this only a concern for the future. Last year the government spent more on interest payments (c. $700 bn.) than it did on Medicare (a little under $600 bn.)."
What am I missing here???? Article doesnt make sense.
I totally agree tax rates will increase to pay this mess but its quite naive to think that, that wont come without consequenses
Sounds like liberal Keynesian economics.
I will pay you Tuesday for a hamburger today.
Wimpy always tried to put that one over on Bluto... What you don't see is Bluto breaking Wimpy's arm when he doesn't pay the vig on time...
Actually. .whimpy pulled that shit on everyone.
Which is another way of pointing out that Bonds are instruments of guaranteed confistication, (for the retarded, the confistication is of buying power, and the mechanism is inflation); this is how it will be. Watch and learn, Chipmunk.
This reminds me of a famous quote that "Bonds are instruments of Guaranteed Confiscation". You're loaning money to the gunslinger at the poker table who has assistant gunslingers standing on either side of him, and you know that he gets to decide how much the "money" is worth when he pays it back. Not a very good idea.
-SAT 800 – 04/07/2012 – Zerohedge
Boobies!
Where?
Found this little pearl of unwisdom herein.... what do I win ?
' Every debt incurred today will be paid off in the future '.
The government will never default. Default is an event, and that event will never happen.
They'll subject those who own government debt to a "reverse asset seizure". That's not a default. Remember that.
What happens when China gives the CME an order for redemption of 100,000,000 oz of silver?
by then it wont matter, due to China's inability to see the hounds are circling them. China will eventually have conflicts on its door steps followed by sanctions and eventually maybe a partition...if only china realised what is happening to russia will eventually happen to them..but they wont.
Nothing is happening to Russia. You tend to take wishfull thinking for reality (a common disease among Americans, nowadays...)
im not american
You are right on. The decades following WW2 were boom timesin the US because we had wiped out all the productive capacity and competitiveness of most industrial nations. We're trying to pull the same trick, without boots on the ground.
We defaulted during the Depression. FDR confiscated people's gold.
We defaulted during the Nixon Administration. Nixon took us off the gold standard so we would not have to show the world we did not have enough gold to pay our debts. Hence the dollar devaluation through the use of the Fed's printing press.
pashley1411 is correct.
In the future.....we'll print enough to pay anyone off....and if we can't without hyperinflating us into oblivion we'll send out the War Pigs to do "reverese asset seizures".
We also default all the time :) Every time a creditor is paid back with a dollar whose purchasing power is less than what was loaned it is a real default, but considered legal by the system:
“When the Congress shall declare a national monetary policy which shall give the Nation a dollar whose debt-paying, purchasing power shall remain the same from one generation to another, the people of the United States, for the first time in their history, will have an honest dollar. The only honest dollar is a dollar of stable, debt paying, purchasing power. The only honest dollar is a dollar which repays the creditor the value he lent and no more, and requires the debtor to pay the value he borrowed and no more. The people of the United States are entitled to a sound currency. The only sound currency is a currency whose exchange value is the same from one generation to another. The failure of the Government to create and stabilize the value of money has not only resulted in the unemployment of millions of people through no fault of their own, but it has seriously changed the- relationship between debtors and creditors,… The experience of the last 31 years of four serious panics and depressions is proof positive that the banks cannot control the volume of money, and that their failure to do so has not only destroyed thousands of banks, but has inflicted the people with great suffering. The Government alone can give relief. The Government alone has the legal authority and duty to establish and regulate the value of money, and to create it ill sufficient quantity to serve the national use. It alone has the power and the duty to prevent either injurious expansion or destructive contraction. “
-Robert L. Owen, Former Chairman, Committee on Banking and Currency, United States Senate. Sited in US Senate Doc. 23, 76th Congress, 1st Session – Written Dec. 23rd 1938, and printed January 24, 1939 pages 74-75:
http://www.archive.org/download/NationalEconomyAndTheBankingSystemOfTheUnitedStates/NationalEconomyAndTheBankingSystem.pdf
Check, and mate in two moves. To you Yellen. Or do you still want to play?
Wait... what? Did we spend $233B in 2014 or $700B? Both cant be right.
The same thing occured the me too Owl Flavored............
"It’s not just homeowners who have to worry about rising interest rates..."
Isn't that a slap on the dick? In the old normal rising interest rates would signal that the economy is healthy, housing is growing, and inflation in wages is apparent. You might say something like...interest rates are at 7% (which is somewhere near the historical average) things seem to be going well. Here we are 2.5% and things are shit and the thought of 7% interest rates throws everyone into night terror bankruptcy sweats.
They really fuckered it up good.
Tyler: Explain to me why our government pays interest to a middleman when they have the power to coin their own money interest-free? Of course it's The Fed, but at some point, don't you think our government "leaders" will be forced to acknowledge this fact and take action?
It's because the US government has already defaulted several times in history. We had to concoct some Tom Foolery scam to trick the world into keeping dollars so the dollars wouldn't cascade back and choke our cocks off with inflation. I believe Charles De Gaulle called us on our bullshit last time and that's why Nixon cut us off of the gold standard (didn't happen over night but the world eventually realized we were robbing Paul to pay Peter). Now it seems Russia is calling us out and no one seems to give two shits because the US is full of a bunch of retarted nigger babies worried about their free section 8 vouchers and $15 dollar an hour burger flipping wages.
https://petitions.whitehouse.gov/
“My administration is committed to creating an unprecedented level of openness in government. We will work together to ensure the public trust and establish a system of transparency, public participation and collaboration. Openness will strengthen our democracy and promote efficiency and efffectiveness in government.” — President Barack Obama
$17 trillion... $34 trillion... $68 trillion... it doesn't even matter anymore.
When this shitshow collapses anyone holding government debt will want their money NOW before it becomes worthless and the Treasury/Fed will print all public debt out before collapsing currencies and skyrocketing interest rates wipe out the private debt sector and take the global banking system with it.
Money never needed to be created through the issuance of debt. It was just more proftable to do it that way...
It really doesn't. The numbers are just meaningless at this point.
The incredible thing is gold is down nearly $700/oz from it's peak a couple years ago, and the Fed has printed what, something like $2T extra via QE, plus the USG has added something on the order of $3T to the debt. Whiskey-Tango-Foxtrot.
Because when the velocity of money picks up and the banking system lends out all this new money 9 to 1, inflation will pick up and they will want to pull some of the new base money they pumped into the system out, so they will sell bonds, basically reversing what they are doing now. that is why they attach debt to money.
http://en.wikipedia.org/wiki/Preamble_to_the_United_States_Constitution
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence,[note 1] promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
.
Gold revalued to 1000....0 an ounce will cover all the debt and payments, and re-liquify the system. The alternative is a black hole.
Shut down everything on that list and let local government handle it all. May the most efficient provider of "services" prevail.
Debt Jubilee for everyone but the banks the only answer.
The FED needs to start sending out those $3 Million tax-free checks/deposits to every legal taxpayer.
Our bailout is five years overdue; let us see some real stimulus given to those on the hook for it.
Then raise the prime rate to 5% and end all QE and stand back.
i reckon so, but really fork that dog, i have been the poorest and the wealthiest, measured by worthless dollars, and all that taught me was about human nature. but guess what that old school religion, done as is real, and as is gone, made me the man i am, i believe that i will continue to be blessed. kinda like a central banker, not sure why. but just the same. i have never in my life paid any obligation but as quick as i could. had unbelievably honest big money men and women and by GOD honest and poor (in money) family. learned my best from the hellcats, and never ever ever lost my natural connection with the almighty. But anyhow, i sorta feel like a man that will soon have an exciting new start or exciting final finish. no more waiting for Godot.
Slavery by compound interest.
The land of the free? Sheeple. Debt slaves.
sure as shit interest rates can go up. they'll just print a fuckass ton of more money to pay for it. !!!!! when the retirees accuonts get demolished and sold off and bought for pennies on the dollar.
and massive DEBT BUYBACK IS HOW THE OLIGARCHS AND UBER ELITE MAKE THE MONEY. THE HARD PART IS KEEPING IT ONCE THE ENTIRE PUBLIC HAS BEEN MADE IMPOVERISHED....
AND THAT IS WHERE THE ROBOT RIOT POLICE COME IN.
THANK YOU GOOGLE .
Why no mention of the Pentagon?
Did not see "Defense Spending" listed.
With reports like this who needs real information?
If you stop printing money in order to kill poor brown people with no prospects maybe the books might balance.
Oh wait. Never-mind.
In the US, killing the FSA helps balance the books. You need enough to keep you in power, but Diebold is making good progress on automated progressive voting.
2013 Defence Budget was a cool $640 Billion ( http://www.businessinsider.com.au/us-military-spending-chart-2014-4 ) so not that far short of the "dreaded interest amount" predicted.
Note how this amount compares with the TOTAL of all those other line items, all of which are pretty "essential services".
A very strange set of priorities . . . . .
Unlike most of those listed "essential services" only the census and defense are called out as a government responsibilities in the Constitution.
The sovereign shouldn't have to borrow its own currency. Fiat should be debt free and the best way to get it moving through the economy is with a citizen's dividend, which should first be required to be used to pay off any private debts. It would help provide liquidity as we move from fractional reserve to full reserve banking and, as a result, the Too Bigs implode (feature, not a bug). Mish had a post on one way banking could function after such a reform:
http://globaleconomicanalysis.blogspot.com/2014/09/should-banks-lend-mon...
Sovereignty is based on the power to rob, with the power to kill being the most extreme form of the power to rob. The biggest gangsters were the banksters, who were able to engage in enough bribery, intimidation, and assassination of those who could not otherwise be bribed or intimidated, in order to capture control of the the powers of governments.
Individual alternatives such a "Lending Club" are pathetically insufficient, in the face of the facts that the government enforces frauds, by demanding payment of taxes using the fiat legal tender made out of nothing as debts by private banks.
Money is measurement backed by murder. The debt controls depend on the death controls. The runaway debt slavery systems generating numbers which are debt insanities are going to be resolved by provoking death insanities. It is cruel joke to still talk about "capitalism" or "free markets" after the public "money" supply is legally allowed to be created out of nothing as debts by private banks, while the government forces everyone, including the government itself, to operate inside of that system.
http://www.conspiracyarchive.com/NWO/silent_weapons_quiet_wars.htm
Silent Weapons for Quiet Wars
"Energy is recognized as the key to all activity on earth. Natural science is the study of the sources and control of natural energy, and social science, theoretically expressed as economics, is the study of the sources and control of social energy. Both are bookkeeping systems: mathematics. Therefore, mathematics is the primary energy science. And the bookkeeper can be king if the public can be kept ignorant of the methodology of the bookkeeping. ... In this structure, credit, presented as a pure element called "currency," has the appearance of capital, but is in effect negative capital. Hence, it has the appearance of service, but is in fact, indebtedness or debt. ... if balanced in no other way, will be balanced by the negation of population (war, genocide)... They must eventually resort to war to balance the account, because war ultimately is merely the act of destroying the creditor ... War is therefore the balancing of the system by killing the true creditors (the public ...) the economy has been transformed into a guided missile on target."
Sovereignty of the people is different from rule by oligarchs who own our legislature, and is what our country is based on.
"Benjamin Franklin expressed the concept when he wrote, "In free governments, the rulers are the servants and the people their superiors and sovereigns"
http://en.wikipedia.org/wiki/Popular_sovereignty
Sure, spooz, the ideal of Sovereignty is that everyone is equal. However, the reality of Sovereignty is almost totally the opposite, and the established systems are automatically making that get worse, faster.
In my view everyone has some power to rob, and power to kill to back that up. However, those powers were assembled and channeled through the history of warfare, to create War Kings, that made the so-called Sovereign States. Then the Fraud Kings (the banksters) were able to apply the methods of organized crime to dominate the political processes, so that the powers of governments to rob were effectively privatized, and the enforced of the rule of law became actually the enforcement of frauds.
IF citizens were not already reduced to being Zombie Sheeple, then the theory of popular sovereignty might be able to work. However, in fact, to do that citizens would have to comprehend that they were actually members of an organized crime gang, namely their country. Since the vast majority of people have been brainwashed to believe in bullshit, there is no reasonable chance that the established systems can be improved, rather than continue to automatically deteriorate at an exponential rate.
There is nothing wrong with the THEORY of a democratic republic operating through the rule of law. However, in practice, enough of the people have been reduced to being Zombie Sheeple that the actually existing political situation is totally hopeless. The runaway debt slavery systems have already created debt insanities, and there is other way out in the real world than for that to provoke death insanities and the final consequences.
I WISH that I could come to some other better conclusion, however, there are no good grounds to doubt that "democracy" and the "rule of law" are already dead, or, at least terminally sick and insane.
Whether the American Republic was ever actually operating consistently, as based on its ideals, would be open to debate, consider the ways that the Europeans treated the natives, and the blacks, etc. ... My view is that human realities are always organized lies operating robberies, and the only things which exist are the dynamic equilibria between the different systems of organized lies operating robberies. Most ideal theories of what politics should be are ridiculously based on false fundamental dichotomies, and their related impossible ideals, which actually make the opposite happen in the real world.
In fact, militarism is the supreme ideology, and those who were the best at operating the murder systems, by following the principles and methods of organized crime, ended up controlling civilization. In reality, the American democratic republic was the transplantation of the European descendent of Neolithic Civilization onto the fresh continent of North America, which had its previous human system there decapitated, so that the American Republic could be grafted onto that, after the American Revolution.
However, the American Revolution did not end the basic social systems of slavery. (E.g., the Dredd Scott case decided that blacks could not be human beings, in order to make the social reality continue to appear consistent with the Declaration of Independence, etc.) The only things which ACTUALLY happened were that much more sophisticated systems of social slavery were developed, through means such as the Federal Reserve Board, and Income Tax, etc., along with the history of creating corporations that sneakily became "persons" with more real rights and freedoms than flesh and blood human beings.
The ideal theories for improvement would depend upon a series of political miracles that enough citizens would stop being incompetent political idiots, in order that the ideals of a democratic republic operating through the rule of law could be improved. However, that is to wish for a series of political miracles, which wishes ignore that everything important is automatically headed in the opposite direction.
I sympathize with people who look for nice little alternative monetary systems, that they can develop with other groups of like-minded individuals. However, I still regard that as pathetically way too little, way too late, as well as too trivial to matter much. The real problems are how to operate the murder systems to back up the money systems. At the present time the ways that are done have become criminally insane, and are headed towards psychotic breakdowns.
There are NO mathematically possible ways to solve the debt slavery problems after they generate numbers which become debt insanities. The issue that increasing interest rates would make the government paying the interest on its debt totally dominate its budget merely is one way of illustrating that basic social fact.
The TRUTH is that society operates a combined money/murder system, and so, there is no way to fix the money system without fixing the murder system. Since the vast majority of people do not understand that, and do not want to understand that, the only possible ways that events can unfold is to go through crazy collapses into chaos. Enough of "We the People" have become Zombie Sheeple, who are being fleeced to exhaustion, while being set up to be slaughtered, that there are no other plausibly believable futures that for that to play through.
In theory, we should go through a series of intellectual revolutions, to understand how we ended up with a globalized electronic fiat money fraud, backed by the threat of the force of atomic bombs. However, almost nobody is going to go through that process. Instead, it now looks like most of the human species is going to stupidly commit collective suicide during the next Century of so. The banksters have set up a criminally insane civilization, (that they have lost control over) that is going to madly destroy itself, while I find no good reasons to doubt that is what is going to happen, other than those based on some irrational hopes for some series of technological and political miracles.
I am not as much a pessimist as you, and I see less chance for revolution than reform. Instead of false dichotomies, we need to look at mistakes made with different ideologies and systems from history and figure out how to improve them. If man can't learn from reflecting on his errors, we are no better than animals. I don't believe that. My meager efforts at consciousness raising keep me from losing all hope. Better than just waiting for armageddon.
In case you aren't aware, the monetary system I speak of was fleshed out in Kucinich's NEED Act, and based on The Chicago Plan, written by six economists, including Irving Fisher, in 1933 as a proposal to return the US to full employment after the Great Depression . Kucinich's bill died in committee, but the Financial Times' Martin Wolf recently described another version of it in his new book. Main stream media, of course, ignores it.
Again, I would say, SURE spooz, there are plenty of theoretically good ideas, perhaps even including "Kucinich's NEED Act." However, NONE of them have a hope in hell of ever being implemented, due to the degree that money already dominates the political processes, such as through political contributions, and the already established degree of control over the mass media, etc. ...
Nobody with any good ideas have any realistic chance of those ever actually being enacted. Instead, the automatically increasing evils ARE on exponential growth curves. I repeat, the POINT of the chart in this article above is that the economic situation is so totally screwed up that nothing within that system can save itself. There are no good reforms that will ever be practically possible to implement through the established political systems, where the vicious spirals of the roles of money have already corrupted everything so completely that they are CRAZY!
I came by my attitudes honestly, by working on the problem of the funding of the political processes through the last 30 years, including two court cases against the government of Canada over the laws that govern the funding of Canadian political parties. I continue to work on that issue through Electoral District Associations | ONE THING CANADIAN TAXPAYERS COULD DO, AND SHOULD DO.
However, the main thing I have proven by working on that issue so much for so long is that more than 99% of the taxpayers ARE Zombie Sheeple, and that is getting worse, faster, NOT better. The established systems are too deeply entrenched to be changed, other than eventually by factors beyond their control. Therefore, I do not expect any kind of saner monetary revolution, other than what might survive through the horrors of the established systems eventually collapsing into crazy chaos.
As many other articles on Zero Hedge keep on point out, the only thing that the established debt slavery systems can do to cope with their problems is pile on MOAR DEBT, which makes the overall systems MOAR DEBT INSANITY! All of the risks keep on being aggregated into greater units. The risks are not being diminished, but rather, thereby only amplified, while deal with those real risks is postponed by EVER INCREASING DEBTS, which is the only thing that is possible within the MAD Money As Debt system.
P.S.
Excellent Videos on Money Systems:
I prefer reading about economics to watching videos, and I do a lot of that. I don't see any answers in your responses, and nothing new as far as criticism goes. One of the reasons I like to discuss the radical monetary reform I prefer is that I think its important to have a plan when it all falls apart. Optimism makes life a little easier for me. I have given up predicting when the whole system will collapse, but that doesn't keep me from talking about what can take its place.
spooz, I too do my personal best to maintain irrational hope in some series of technological and political miracles, because I would rather have some hope than none at all. However, the more I learned, the worse it got. Therefore, I find no ways which have any intellectual integrity to actually believe that the established systems are not terminally sick and insane. ... Hence, I believe we ARE going through the severe social storms and psychotic breakdowns of the established systems in the foreseeable future ... AFTER which the future then becomes way too impossible to predict.
When I talk about what might be able to take the place of the systems that currently exist, I speak about systems of artificial selection, that understand natural selection better. The primary issues are whether they could be developed better death controls, to back up better debt controls. HOWEVER, first I believe we have to go through the death insanities provoked by the current runaway debt insanities. AFTER which it is almost impossible to predict what may still be left standing.
I am sublimely optimistic in the sense that I believe that Energy IS Spirit. Yet, that does not stop there being severe social storms blowing through, after enough energy is pumped into the established social systems to blow them apart! As countless Zero Hedge articles have documented in detail, the runaway system of MAD Money As Debt, led by the central banks, as the Kings of Fraud, have created DEBT INSANITIES, which are automatically getting worse, faster.
There is NOTHING within those systems that can resolve their problems. No "reforms" to Money As Debt can fix that fundamentally fraudulent financial accounting system. Only some "revolution" which happens when things go out of control are possible ... but that is way too out of control to be able to practically plan for!
This article was merely another way to illustrate that we are NEVER going back to "normal times" ... while the "new normal" gets more amazingly insane everyday!
Holy Crap! How much of of that shit are you smoking!?
Not enough!
only reason it is attached to debt now is it gives an easy way to inject or drain new money into or out of the system. yes you could do it without issuing debt, it would essentially be the same thing.
How would it be the same thing if we aren't forced to pay interest to financiers who create our money supply by making loans? And what is so hard about injecting money directly into the system by government spending it on things like a citizen's dividend?
because all interest on debt held by the fed is given back to treasury. citizens dividend would be fine for getting money into the everyday persons pockets, wouldn't make a difference funding that by borrowing money from fed or simply treasury creating it interest free though since interested collected by fed is returned to treasury.
So you are saying every penny we pay in treasury interest comes back from the Federal Reserve? Maybe the Congressional Budget Office needs to get a clue from you.
How exactly does the Treasury get back the interest it pays on the treasuries sold to public and foreign debt holders?
That interest is not returned to treasury of course. It's not a big deal though, think of it like a savings account.
If there was demand for loans they would lend out the money instead of saving it in gov debt.
think about it in terms of china, they hold US debt because they are running a trade surplus and need a place to park the surplus currency, just like a savings account. If they would be buying stuff back from us we wouldn't need to issue the debt for them to save in.
Pretty much in a debt based monetary system the government debt serves as a savings account for holders of the currency.
edit: you completely changed your post, but yes, less operating expenses the FED returns all interest on debt it holds back to treasury, this is a very well known fact just google it.
Right. Debt is savings. Why does anybody worry about the deficit then? You sure don't sound like one of those MMT guys I argue with. You seem kind of clueless.
well if we are getting into personal attacks I will say that you didn't even know the FED returns interest on on gov bonds back to treasury.
well if we are getting into personal attacks I will say that you didn't even know the FED returns interest on on gov bonds back to treasury.
The FED is required to pay back net profits. Its expenses are deducted from any profits, including interest income.
As of the end of June, the FED held $2.4 trillion in US tresury securities. Foreign interests held $6 trillion, and $12.6 trillion was held by the public. The majority of interest expense, obviously, will NOT be paid back to the treasury by the FED.
deagle44, I repeat this, regarding the view that "all interest on debt held by the fed is given back to treasury:"
http://www.zerohedge.com/news/2014-07-06/mike-maloney-dollar-we-know-it-will-be-gone-within-6-years
Mike Maloney:
"By the way, any profits that the Fed has at the end of the year are supposed to get turned over to the Treasury. Well, they are paying the banks interest that reduces the amount that they give to the Treasury by exactly that amount. So in other words, the public is paying those banks interest. That's where all of the interest comes from. We're not seeing those profits passed on to the Treasury anymore."
the reason 'full reserve banking' doesn't work . is because it does. it's the default status of what happens when fractional reserves default.
you are free to lend your own cash and savings to anyone as a private non-bank individual . that is called full reserve banking too.
the problem with you 'full reserve banking' and all your fantasies about the world is that for the past 60 years a large edifice has been built, and you cannot reasonably believe that any 'plan' for tearing down this edifice and rebuilding it is going to work as you hope it will because
1) everyone out there is anticipating and trying to front run the government of the u.s.
2) the bigger they are the harder they fall
3) there are other major actors out there , national entities and mega corporate entities and banking families that will choose to attack the u.s. system and extract whatever assets they can out of it should the u.s. change the game plan. they may already be attempting to inflict maximum pain on the united states and just are waiting for such an opportunit.
I am not saying you are wrong for wanting to change our fucked up situation. i am saying the best laid plans will fail in such a situation as this. and your plans are not the best laid. full reserve banking is what happens IN EVERY FINANCIAL CRISIS AS THE DEFAULT MODE OF OPERATION WHEN THERE IS NO TRUST. the u.s. is a system that is like a car in a drag race being driven as fast as possible down a hill with poor traction by an insane driver who is threatening to crash the car if he doesn't win the race. you are the passenger who believes he can grab the wheel and force the race car into a 180 spin and redirect the car up the hill , in the opposite direction away from the race, without the cars tires having any problems, or the car tipping over, or the other race cars in the race smashing right into you.
empires don't simply 'change course' without repercussion to their citizens.
this is why people talk about the value of gold.
GOLD IS NOT A PLAN. IT IS NOT AN ASSET WITH A BALANCE SHEET OR A FULL FAITH AND CREDIT CLAUSE , OR EVEN THE NEED TO FEED A MILITARY TO BACK IT UP. It is not a marketing strategy or an advertising campaign. it is not a chinese or indian fad . it is not lead but people with bullets food or medicine will readily trade for it. GOLD IS AU. : 79. Number of Neutrons: 118. and some electrons . it is the stuff supernova's shit out their superholes, bitch.
you can keep your full reserve bitcoin and shove them up your bithole.
17 billion for NASA? Lets close it down and save the money. There is no exploration. Let private companies put up satalites
NASA... the front group for the faked moon landings. Truly a waste of money.
Just stiff the FED they are not part of government and their demise would be good for the country!
actually the money paid to creditors goes back into the economy eventually.. whether its buying a NYC Penthouse or more bonds it ends up going around.
Yea, the interest China gets pays for their military.
Attention all muppets. Keep your bonds. Don't beleive W Street BS about bond bubble. Great rotation never happened because we're not stupid.
There's no use for:
You forgot one. *Security for the White House
Veterans healthcare should be vouchers so Vets can seek private care at their leisure. The VA is a jobs program for more FSA shitheels.. Highway budget should never get to Washignton much less be allocated back from on high. Federal prison system for what? There are only what 3 legitimate Federal crimes. Arne Duncan and his SWAT team should be defunded yesterday..
You left out the Department of Energy. Never 1 KW of power out of that place. Certainly no light bulbs over any person's heads who works there ever were lighted. Money goes in and doesn't come out, except as loans for crony capitalism projects. Another Jimmy Carter failure. Want to give foreign aid? Move the ENTIRE prison system in the US to a third world country(s) (other than this one) that still has lower labor rates. Let them earn their foreign aid that way. One US administrative person per prison to see that prisoners are treated to acceptable standards. Border patrol should be taken over by militias, they will do a better job than any Federal or State organization, because they are patriots. Give them a rulebook and a $100. a day stipend to offset daily expenses. In the background will be the regular military, there if you need them. Veterans should get priority funding over welfare and illegals. If more money is needed there, take it out of welfare, because most welfare recipients can get up out of a chair and work.
Sorry to rain on your bubble, but I have to disagree with much of your assessment as it is lacking in specifics. You let the individual states set the eduation standards and you'll just speed the balkanization of the US. Rich folks will get the education and poor folks will serve them.
Census, more information is not a bad thing and for geneologists, it's a gold mine. Considering it's once every ten years, it's not a bad thing.
Prison System, why not just turn everyone back into the population so they can commit their crimes again, sure way to vigilante justice.
FDA/USDA/CDC, everyone should take responsibility for their own food safety and who cares about public health problems as long as it doesn't affect me, right?
Highway Budget, hope you like your dirt roads outside of major population concentrations.
Coast Guard, first thing states will cut when they see the cost of a helicopter or boat that gets used only in emergencies
Veterans HC, considering the flak Obamacare is getting, you're giving Vets a choice between the frying pan and the flames.
LEO's, yeah, too much alphabet soup, but do you really want the FBI trying to run spies in Russia or investigating suspicious bomb blasts in bumfuck, Alabama or feeling people up at airports?
BP/Military. Nice sentiments, however much of what we do and who we are is world-wide. The days of raising the drawbridge and filling the moat don't work when there are satelites and networks and countries which consider cyberwarfare "better than nukes"
SS: It's walking dead and doesn't know it, blowing it's brains out would be a blessing.
Funning thing though, increasing taxes 5% and reducing overall spending 5% across the board for three years would bring revenues and income to a neutral balance. Do it for four years and you see a slight surplus (i.e. debt reduction). But that would require fiscal fortitude and governmental responsibility. Neither of which we seem to stock in D.C.
Cutting all that is a rounding error.
The Big 4 are:
DOD
Social Security
Interest
Medicare/Medicaid/PPACA
Everything else is irrelevant, include foreign aid to Israel and the DOE and NASA.
This will correct, but it's going to be by the market, and it will suck.
Anyhow, I am outta there. You guys have fun.