5 Complete Lies About America's New $18 Trillion Debt Level

Tyler Durden's picture

Submitted by Simon Black via Sovereign Man blog,

On October 22, 1981, the government of the United States of America accumulated an astounding $1 TRILLION in debt.

At that point, it had taken the country 74,984 days (more than 205 years) to accumulate its first trillion in debt.

It would take less than five years to accumulate its second trillion.

And as the US government just hit $18 trillion in debt on Friday afternoon, it has taken a measly 403 days to accumulate its most recent trillion.

There’s so much misinformation and propaganda about this; let’s examine some of the biggest lies out there about the US debt:

1) “They can get it under control.”

What a massive lie. Politicians have been saying for decades that they’re going to cut spending and get the debt under control.

FACT: The last time the US debt actually decreased from one fiscal year to the next was back in 1957 during the EISENHOWER administration.

FACT: For the last several years, the US government has been spending roughly 90% of its ENTIRE tax revenue just to pay for mandatory entitlement programs and interest on the debt.

This leaves almost nothing for practically everything else we think of as government.

2) “The debt doesn’t matter because we owe it to ourselves.”

This is probably the biggest lie of all. Two of the Social Security trust funds alone (OASI and DI) own $2.72 trillion of US debt.

The federal government owes this money to current and future beneficiaries of those trust funds, i.e. EVERY SINGLE US CITIZEN ALIVE.

I fail to see the silver lining here. How is it somehow ‘better’ if the government defaults on its citizens as opposed to, say, banks?

3) “They can always ‘selectively default’ on the debt”

Another lie. People think that the US government can pick and choose who it pays.

They could make a bing stink about China, for example, and then choose to default on the $2 trillion in debt that’s owed to the Chinese.

Nice try. But this would rock global financial markets and destroy whatever tiny shred of credibility the US still has.

Others have suggested that the government could selectively default on the Federal Reserve (which owns $2.46 trillion of US debt).

Again, possible. But given that the Fed (the issuer of the US dollar) would become immediately insolvent, the resulting currency crisis would be completely disastrous.

4) “It’s the NET debt that’s important”

Analysts often pay attention to a country’s “net debt” instead of its gross debt. If you have a million bucks in debt, and a million bucks in cash, then your ‘net debt’ is zero. It washes out.

Problem is, the US government doesn’t have any cash. The Treasury Department opened its business day on Friday morning with just $71.9 billion in cash, or just 0.39% of its total debt level.

Apple has more money than that.

5) “They can fix it by raising taxes”

No they can’t. Just look at the numbers. Since the end of World War II, US government tax revenue has consistently been roughly 17% of GDP.

They can raise tax rates, but it doesn’t move the needle in terms of revenue as a percentage of GDP.

In other words, the government’s ‘slice of the pie’ is pretty consistent.

You’d think with this obvious data that, rather than try to increase tax rates (ineffective), they’d do everything they can to help make a bigger pie.

Or better yet, just leave everyone the hell alone so we’re free to bake as much as we can.

But no. They have to regulate every aspect of people’s existence: How you are allowed to educate your children. What you can/cannot put in your body. How much interest you are entitled to receive on your savings.

All of this costs time, money, and efficiency. So do never-ending wars. The bombs. The drones. The airstrikes.

This isn’t about any single person or President. The problem is with the system itself.

History shows that every leading superpower from the past almost invariably fell to the same fate.

Great powers often feel that their wealth and success entitles them to spend recklessly and wage endless, arrogant wars. The Romans. The Ottoman Empire. The British.

History may not repeat but it certainly rhymes. And the lesson here is very clear: debt weakens a nation. It weakens a society.

Generations that will not even be born for decades will inherit these debts by complete accident of birth.

And the people in charge of the system have backed themselves into a corner where there is no way out other than to default– either on their creditors (creating a global financial crisis), the central bank (creating a currency crisis), or on the citizens themselves (creating an epic social crisis).

Bottom line: this is not a consequence-free environment. And while you can’t fix the debt problem, you can certainly reduce your own exposure to what happens next.

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foodstampbarry's picture

We indebted some folks.

zerozulu's picture

Two things I read, if debt is 100% of the GDP, it cannot be paid. Second, if budget deficit is more than 3% it cannot be balanced.

JLee2027's picture

We are well over 100%. The real deficit - taking away all the bookeeping tricks they employ - in 2012 per John Williams was 6.6 trillion, so annual spending exceeds 10 trillion FOR ONE YEAR. Counting all the promised entitlements you get to 70-80 trillion in actual debt.

It's going to be a crash of Biblical proportions.

Greenskeeper_Carl's picture

ya, we are passed the point of no return, thats for sure. If we were forced to account for liabilities like SS/medicare the way a publically traded company has to account for their current and future retirees pensions, we are well over 100 T in debt. And the real yearly deficit is far larger. depending on who you ask, our unfunded liabilities are between 70- 200 trillion dollars, which it really doesnt matter which figure is correct, we are fucked either way. and each year, while we may "only" add a little less than a trillion each year to the 'debt', we are adding between 4-6 trillion each year onto our true(unfunded liabilities) debt

Latina Lover's picture

There is no return. The debt will NEVER be paid.


Besides, a few Trillion here, and a few Trillion there, and it adds up to fraudulent FRN's.

insanelysane's picture

And people say the government isn't good at anything.  

Bastiat's picture

#2  The debt doesn't matter because we say it doesn't matter. 

NoDebt's picture

Any of you guys remember the Joe Isuzu commercials (played by David Leisure) from the early 1990s?  Well, here's how he'd fix the national debt:


Now I want you to remember how we used to laugh at stuff like that, not live it in real life.


economics9698's picture

"Others have suggested that the government could selectively default on the Federal Reserve (which owns $2.46 trillion of US debt).

Again, possible. But given that the Fed (the issuer of the US dollar) would become immediately insolvent, the resulting currency crisis would be completely disastrous."

And?  What is the problem?

Legalize private money backed by gold, full reserve banking, crisis over. 

weburke's picture

back in the nineties it was figured at 40 trillion.....  !   It pays to be in the new rome !

Hugh_Jorgan's picture

The only way to make this mess go away is a massive bloody war. Putin is more than happy to be the bad guy as the world pretends to have lost it's mind. It is 1938 all over again.

First they debase the currency, then we go to war.

stacking12321's picture

you people are so pessimistic, saying things like, the debt will never be repaid.

relax, it's all part of the plan, everything's working according to schedule.

i even have a few 100 trillion dollar bills in my posession i can donate to pay off the national debt.

mine might be from zimbabwe, but it's only a matter of time before the usa starts printing its own $100 trillion notes:


mkhs's picture

Has everyone forgotten about Krugman's trillion dollar platinum coin?

JLee2027's picture

Once the Federal Reserve is in default, the US can no longer be the Global Reserve Currency, and we'll be forced to live within our means. Gold and Silver will certainly ascend to the heavens while Barry and his Tranny will be lucky to escape with their lives. But fixing the money and hanging Ben/Janet's group from trees is the easy part. Dealing with the riots from EBT holders, welfare and 60 million on food stamp crowd will probably end with major American cities burned to the ground and maybe a few million dead. Don't misunderstand me, it can be done. But will be painful, at least for several months. 

overmedicatedundersexed's picture

know your history of money: USA has had such changes in the past..ever hear of US NOTE? Silver certificate? gold Certificate? the fear of Fed reserve notes being worthless is way over blown by those who would get hurt the current elite banksters ..paulson in 08 knew the FRN going to Zero was possible so he and GS would take big hits, thus his threats to GWB and congress, he lied and we got the obvious crimes of tarp and money debasement called monitisation of debt which bernak and co said would never happen-well it did and here we are.

"Again, possible. But given that the Fed (the issuer of the US dollar) would become immediately insolvent, the resulting currency crisis would be completely disastrous."

TeamDepends's picture

This may sound harsh but it seems to us that after the reset, the penalty for fractional reserve lending, counterfeiting/fiat printing, ponzi scheming, and all other "white collar" crimes must be death.

Bro of the Sorrowful Figure's picture

i agree. but i dont think that sounds harsh. i think what we should do, which does sound harsh, is put the main offenders' cut off heads on stakes in time square to remind anyone thinking about FRL or creating a CB that the same fate awaits them.

economics9698's picture

Hanging by the neck in the middle of town has a certain propaganda effect to it.

TruthHunter's picture

"penalty for....white collar" crimes must be death"

Oh, it will be. The laws of cause and effect weren't repealed. 

Seize Mars's picture

Team Depends

Well in the US Constitution, there are only three crimes defined: Treason (punishable by death), Counterfeiting and Piracy.

Article 3 section 3; Treason (Death Penalty)
Article 1, section 8, clause 6; Counterfeiting
Article 1, Section 8; Piracy

Further, the Coinage Act of 1792 provides, in section 19...

...and be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of fine gold or fine silver therein contained, or shall be of less weight or value than the same ought to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offences, shall be deemed guilty of felony, and shall suffer death. 

So the law already exists to prosecute the motherfuckers who took over our country. The problem is, any possible legal mechanism to seek justice here is thwarted because the whole fucking government is comprised of Zionist Rothschild stooges. All of them.

silverserfer's picture

they get around the coinage act by issuing enough ASE's& AGE's etc to meet the demand of the public who still wish to purcase it as the intrinsic value has exceeded face value. So they technicly are still in compliance with the coinage act to "meet demand". The problem is there are to many stupid fucks out there willing to accept and circulate the cupronickel coins.

Seize Mars's picture

I think a strong case can be made that they intended to outright ban fiat money.


romanko's picture

Agree, but have to add, nothing wrong with your cupronickel coins, in fact they happen to be the least-FIAT type circulating money the USA currently issues. Both copper and nickel are respectable monetary metals, and the intrinsic value of the 5cent piece is now at least equal to it’s face value.

StandardDeviant's picture

Ohh... you were doing so well, and then you had to go and ruin it by foaming at the mouth about "Zionist Rothschild" blah blah blah.

Grinder74's picture

"Section 19 of the Act established a penalty of death for debasing the gold or silver coins authorized by the Act, or embezzlement of the metals for those coins, by officers or employees of the mint; this section of the Act apparently remains in effect and would, in theory, continue to apply in the case of "any of the gold or silver coins which shall be struck or coined at the said mint." (At present the only gold or silver coins struck by the US mint are the American Silver Eagle and the American Gold Eagle coins, some Proof coinage at the San Francisco Mint, such as the silver US State Quarters, and much of the Commemorative coinage of the United States.)"


Nice try.

JLee2027's picture

Yes the Coinage Act of 1792 was never repealed. Just not enforced. Under it, President Johnson should have been executed in 1964 when he removed silver from coins.

stacking12321's picture

no, team depends, actually it doesn't sound harsh enough: the ponzi schemers and federal reserve scammers extracted a whole lot of wealth, but they only  were a problem because of the sheer apathy, stupidity and gullibility of the american voter.

why should they get all the blame and the stupid american sheeple enablers not? there's too many of those useless eaters, anyhow, they should get the death penalty as well.


A Nanny Moose's picture

#2 Is a particularly dangerous collectivist idea. Who exactly is "ourselves?"

The present ourselves? Future ourselves? If this is owed to ourselves, where is my check?

TheReplacement's picture

You want a check, I want a refund.

noben's picture

It'd be easy as pie to pay off, if TPTB priced the Debt in Gold.  8,500 tons of gold reserves priced for a debt of $18T amounts to ~ $66,000/oz.  If the debt were to go higher, so would the price of Gold.

The problem is... A. They don't have anywhere near 8,500 tons (as it's been sold or rehypothecated a gazillion times), and B. some governments would demand payment in gold, and that would deplete the US reserve.  Think back to De Gaulle and France in 1969-1971.

The countries who'd demand gold can afford to limit their budgets to gold backing, because they don't have the same kind of Imperial ambitions that the US has and they therefore don't need endless money creation for their MIC.  They also don't have the same kind of scum as does Wall St, which drives up the price of... everything.  Cause Bonuses depend on price and volume, don't you know.  They have scum too, but not nearly as devious plus creative as the guys on Wall St or at GS.  IMHO.

p.s.  As a newbie, thanks for not making me step into the FC Ring.  I'm a lover, not a fighter.  See avatar.  :-)

TheReplacement's picture

Try that math with the debt at $200T.  It would be interesting to watch people race to collect enough dollars to buy a fraction of an ounce of gold (silver more likely - lower price) and other people racing to collect gold to sell for dollars to pay off debt.

PrecipiceWatching's picture

"The debt will never be paid."


What does this mean, exactly.


A debt, by definition means some entity is owed money.


So WHO is not going to get paid?


The Chinese and other US debt holders, public pensions, Social Security?

whirling tword freedom's picture

We're fucked.....

People will still need dollars as long as it's tied to energy but, that is changing too....  

won't be long now.

Amerikan Patriot's picture

You're confusing the debt with unfunded liabilities.  The debt is what's actually owed, RIGHT NOW, irrespective of what happens with future spending. 

Unfunded liabilities, in contrast, are projections of WHAT WOULD BE OWED IN THE FUTURE if we continue down the current unsustainable path. 

However, while astronomical in size (e.g., Boston University economist Laurence Kotlikoff estimates unfunded liabilities currently exceed $220 trillion), those big numbers aren't amounts we actually owe today.

pkea's picture

How long did the japanese have their debt over 100% GDP like 20 years,move along, we can postpone longer... or pretend

effendi's picture

Not true. In 1815 Britains debt from the Napoleonic wars was 100% of GDP. By the start of WW1 (1914) they had paid that debt off.

Then they made a far bigger debt in 4 years that destroyed the British Empire.

It took nearly 100 years to pay off a debt and they had the advantage of an expanding and prosperous empire with gold mines in South Africa and Australia and a captive market in India and a hundred other colonies.

So still not true but it may as well be because no empire today could repeat what Britain did.

stacking12321's picture

you are correct, and zerozulu is talking nonsense, neither of his statements is correct:

"Two things I read, if debt is 100% of the GDP, it cannot be paid. Second, if budget deficit is more than 3% it cannot be balanced.".

of course it is possible to pay off a debt equal to gdp, and also to balance a budget with 3% deficit. it's just very rare to have the political will to do so.

but to say that it can't be done is just plain false.


Ahoy Polloi's picture

We indebited some folks... [So move all your gold & digital fiats to Gstaad].


There, fixed it.


That watch is worth $18T in Philly.

NoDebt's picture

I disagree.  In Philly, it's worth fifty bucks.

Say, how much for the gun?

StandardDeviant's picture

This "We past-tense-verb some folks" meme was funny for a while, but by now it's getting really old and tired.

Soon we'll be saying that it's "so 2014".

IridiumRebel's picture

We will raid some folks accounts.....

max2205's picture

We Zombied some folks.....


We are fucked but it doesn't seem to matter? 

Chupacabra-322's picture

We wil Rape, Murder, Pillage & Steal some Soverign Folks Gold.

Greenskeeper_Carl's picture

thats coming. Next market crash, they will come in under the guise of protecting 'folks' 401ks and IRAs from the volatility and predations of wall street. They will mandate that all retirement accounts(and all pension funds) hold some % of their money in the 'safety and security' of USTs, which will earn them a 'reasonable rate of return without all the risks of wall street'. This will allow them to steal a couple trillion more from prudent savers and keep the ponzi alive a few more years. It will also preserve their low interest rates and keep demand for USTs high even without the fed buying. While obviously this is pure speculation on my part, its a backdoor way for them to confiscate all that retirement money without having to call it confiscation. May not play out exactly like that, but we all know they are coming for that money, one way or another. Thoughts on this, anyone?

TheCanadianAustrian's picture

Yep. This will happen. But it will only buy them time. They might only be able to claim 10 or 20 percent of pensions. Much more than this, and citizens would be burning down the capitol.