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Only Yesterday - How The Federal Debt Went From $1 Trillion To $18 Trillion in 33 Years
Submitted by David Stockman via Contra Corner blog,
In the great fiscal scheme of things, October 22, 1981 seems like only yesterday. That’s the day the US public debt crossed the $1 trillion mark for the first time. It had taken the nation 74,984 days to get there (205 years). What prompts this reflection is that just a few days ago the national debt breached the $18 trillion mark; and the last trillion was added in hardly 365 days.

I remember October 1981 perhaps better than most because as the nation’s budget director at the time I had some splain’ to do. Ronald Reagan had waged the most stridently anti-deficit campaign since 1932 when, ironically, FDR promised a balanced budget while denouncing Herbert Hoover as a “spendthrift”. Likewise, Gov. Reagan had denounced Jimmy Carter’s red ink and promised a balanced budget by 1983.
But as 1981 unfolded and the US treasury borrowed large sums each day to fund what we were pleased to call Jimmy Carter’s “inherited deficits”, the trillion dollar national debt threshold rushed upon us. And, in truth, it came far more rapidly than had been anticipated because by the fall of 1981, the Reagan White House had enacted the largest tax reduction in American history. On top of that, it had also green-lighted a huge defense build-up, yet, as we liked to rationalize at the time, had made little more than a “down payment” on sweeping reforms of domestic spending and entitlements.
The latter were supposed to happen in subsequent years and had been designated by a placeholder in the out-year budgets infamously labeled the “magic asterisk”. In fact, there was nothing magic or devious about it. Washington well recognized that it represented large and painful reforms of social security and other middle class entitlements that were to happen in 1982 and beyond.
Needless to say, we never got there. What happened, instead, is that the GOP embraced a revisionist fiscal policy, which at first was called “grow your way out”; and, eventually, was articulated by the nefarious Dick Cheney, as simply “deficits don’t matter”.
Additionally, a new regime came to the Fed in August 1987 when lapsed gold bug, Alan Greenspan, discovered that he could run the Fed’s printing press with gusto, yet falsely claim credit for the disinflation of the 1990s. In fact, the tens of million of Chinese peasants streaming from the rice paddies into Mr. Deng export factories inaugurated two decades of goods and labor deflation on a worldwide basis, allowing the Fed to monetize a growing portion of the ballooning national debt with seeming impunity.
Yet none of that was anticipated in October 1981. Most of Washington was still in thrall to the old-time religion, fearing the untoward effects of chronic budget deficits and unbridled rise of the national debt. That is, that massive treasury borrowing would “crowd” out private investment and eventually grind economic growth to a halt.
Even the Gipper, ever the optimist, did not want to trifle with this core precept of fiscal rectitude. With no inconsiderable reluctance, therefore, he embraced legislation to vault the national debt over the $1 trillion mark, while at the same time chiseling back his cherished tax cuts and defense build-up.
Back then, there was really no choice. You couldn’t have found a single dyed-in-the-wool Keynesian or even Marxist economist who would have embraced the path of massive, permanent government borrowing and debt monetization by the central bank which actually ensued over the next three decades.
So Washington stumbled forward at the $1 trillion mark. By October 1981, with the US economy sliding back into a double-dip recession, the fiscal math of Reaganomics was already beginning to burst at all the budgetary seams. The “Reagan tax cut” had triggered a monumental bidding war on Capitol Hill among special interest lobbies, and had ended up reducing the permanent out-year revenue base by about 6.2% of GDP—-compared to the original pure supply side rate cut of less than 3% of GDP.
Likewise, the defense budget was supposed to have grown at about 5% in real terms for a few years, but the Pentagon had spooked the new President into authorizing a decade long spending spree that would have tripled defense outlays by the mid-1980s (the neocons told him the Evil Empire was flexing for military victory when it was actually tumbling into economic collapse). Needless to say, the modest domestic cuts enacted during the Reagan Administration’s initial honeymoon did not even make a dent in these monumental excesses on the tax and defense fronts.
So in the fall of 1981 it was not merely the symbolic ignominy of crossing the trillion dollar national debt threshold for the first time that weighed on the White House. It was actually driven by fear that acquiescence in giant, permanent deficits would lead to economic ruin.
And by the standards of the past, where even Lyndon Johnson’s infamous “guns and butter” deficit of 1968 had only amounted to 2.5% of GDP, the outlook was indeed dire. As I put it at the time, the nation faced 6% of GDP deficits “as far as the eye can see”.
And there’s one more salient point. The nation’s central bank was then being run by the great Paul Volcker who was determined to break the back of the double digit inflation that his predecessors, William Miller and Arthur Burns, had foisted on the nation during the 1970s. It goes without saying, therefore, that no one thought Volcker was about to monetize the Federal debt in order to let spendthrift politicians at either end of Pennsylvania Avenue off-the-hook.
So for nearly the last time in history, Washington reluctantly repaired to the “takeaway” mode. During the next three years by hook and crook about 40% of the giant Reagan tax cut was recouped. Likewise, the bountiful flow of the defense pork barrel was stretched out and tamped down. And, crucially for all that was to follow, they payroll tax was jacked-up by about 20% in the guise of rescuing the social security trust fund from insolvency in 1983.
Taken together, these measure of fiscal restraint did no inconsiderable amount of good. They put a cap on the runaway deficits that would have otherwise occurred owing to the frenzy of tax-cutting and defense spending in 1981 and the drastic recessionary shock to the economy that had resulted from Volcker’s unavoidable monetary medicine. Still, for the period 1982-1986, the Federal deficit averaged 5% of GDP.
Nothing like that had every been imagined before outside of world war—not even by Professors Samuelson, Heller, Tobin and the other leading Keynesian lights of the day. During the peacetime period from 1954 to 1964, for example, the Federal deficit had averaged less than 1% of GDP and Eisenhower had actually achieved several modest surpluses during the period.
Indeed, the deficit breakout that ensued notwithstanding the take-away efforts of 1982-1984 was not even embraced by assistant professor Paul Krugman. Back then he was on economics staff of the Reagan White House. Never once did he aver that the national debt at only 33% of GDP was way too small, and that open-ended “stimulus” was in order.
But then came Volcker’s victory over inflation, a strong economic rebound and the “morning in America” campaign of 1984. For all practical purposes, the job of fully restoring fiscal rectitude was left unfinished; and permanently so, as it turned out.
What happened was that the structural deficit begin to shrink modestly. This was in part owing to the strong economic recovery of 1983-1985 when GDP growth averaged 5% per year, and also due to the delayed revenues gains from three tax increase bills signed by Reagan during 1982-1984 and the massive payroll tax increase that was buried In the so-called bipartisan social security rescue (1983).
And that was the historical inflection point. Thereafter, Social security and Medicare entitlement reform was off the table due to the trick of the front-loaded payroll tax increase. This caused cash surpluses in the trust funds and the accumulation of intra-governmental accounting IOUs for the next two decades. At the same time, these front-end surpluses functioned to bury the long range fiscal disaster these intergenerational “social insurance” entitlements embody in 75-year projections that are always way too optimistic.
Likewise, the White House took any further tax increases or defense cuts off the table in January 1985. The spending cut weary politicians of both party, in turn, were more than happy to oblige by shelving any further meaningful domestic spending reductions, as well.
So in 1985, fiscal policy went on automatic pilot—where it has more or less languished ever since. Even before the fiscal madness of George W. Bush broke out in 2001, the handwriting was on the wall. By the time the 12 years of the Reagan-Bush administrations has elapsed, the national debt had reached $4.3 trillion, and was now 4X the size of national debt that Jimmy Carter had left behind.
Ironically, the scourge of deficit spending and his 1980 primary opponent, who had noisily campaigned against “voodoo economics”, had teamed up to generate deficits that averaged 4.1% of GDP. That initial 12-year plunge into permanent deficit finance was not owing to a weak economy or insufficiently robust real GDP growth, as Reagan revisionists have argued ever since. In fact, between 1982 and 1993, GDP growth averaged 3.6% annually and was at the top of the historic range.
No, it was a political choice that changed the policy landscape forever. The Reagan-Bush deficits amounted to 3X the average deficit that had been accrued during peacetime by FDR, Truman, Kennedy-Johnson and Jimmy Carter, combined. Accordingly, the Democrats would never again face Tip O’Neill’s great fear——that they would be someday flushed out of their congressional majority owing to a 1946 style GOP attack on their proclivity for deficit spending.
But there was something more. The economic ruin that was supposed to flow from large chronic fiscal deficits did not happen—-at least in the time frame that had been traditionally imagined. Accordingly, the GOP gradually embraced a militant anti-tax doctrine which simply ignored the ballooning levels of national debt.
Meanwhile, bourbon democrats and the fading ranks of orthodox Republicans made one last run at restoring fiscal rectitude during the early Clinton days. And on paper they made considerable progress. Indeed, the Federal budget registered surpluses during the last three years of the 1990s—– albeit unsustainable ones owing to the massive one-time tax windfalls from Greenspan’s dotcom bubble.
But the structural fiscal problem was not solved; it was merely temporarily buried beneath three illusions.
The first was that the giant Reagan defense build-up—which was actually a vast armada of conventional land, sea and air forces ideally suited to wars of invasion and occupation—-would go quietly in the night when the cold war ended and the Evil Empire was no more. It didn’t.
Instead, the military-industrial complex and its neocon propagandists panicked the nation into a pointless “war on terrorism” after the fluke tragedy of 9/11. Soon the defense budget had doubled, rising from under 3.0% of GDP during the early post-cold war to nearly 6.0% of GDP after Bush’s war campaigns reached full intensity by 2007.
Likewise, the front-loaded payroll tax hike eventually exhausted its capacity to deceive. Accordingly, by fiscal 2013 the OASI fund (retirement) ran a $95 billion cash deficit and the DI fund (disability) generated an additional $45 billion cash deficit. This means that on a combined basis, the cash deficit was nearly $140 billion annually and growing rapidly into the future.
In effect, the so-called social security surplus, which had financed the general fund deficit for more than two decades, had not only disappeared, but had now entered the liquidation phase of Washington’s phony trust fund accounting scheme. Stated differently, the $3 trillion of paper IOUs which had been issued to the trust funds over the prior decades were no longer building up due to the receipt of real cash income from employers and employees.
Instead, the trust funds were booking just enough phony intra-governmental “interest” income on the prior balances to give the appearance of solvency. But even by the lights of OMB’s rosy scenario economic projections, in which full employment is attained in 2017 and remains there for time immemorial, the trust fund cash deficit is projected to each $190 billion annually by 2019.
By then, however, the trust fund accounting game will have been long exposed. In fact, the OMB projections show only $95 billion of phony intergovernmental “interest receipts” by 2019, meaning that trust fund “assets” will be liquidated by $100 billion that year alone, and then disappear entirely over the following decade.
What this means is that the $18 trillion of public debt outstanding today is the real debt—–not the convenient illusion peddled by Washington and Keynesian economists that the “publicly held” debt is only $13 trillion and therefore a “manageable” 75% of GDP.
Nope, the nation’s true leverage ratio today is 106% of GDP. Thirty-three years on from the first trillion dollar crossing, the public debt burden on national income has tripled. And when you add the $3 trillion of state and local debt, the total public sector debt ratio is nearly 120% of GDP.

And that gets to the final question. How did we get away with this vast fiscal debauch? The short answer is that we didn’t.
Crowding out and high consumer price inflation never occurred because the Greenspan Fed launched the entire world economy down a path of massive credit expansion and financialization—–an insidious process engineered by the concerted action of all the major central banks. That convoy of money printers generated large but dangerous central bank “vaults” where Uncle Sam’s debt has been temporarily sequestered.
It was the equivalent of a monetary roach motel: the bonds went in, but they never came out. What happened in practical economic terms is that central bank fiat credit was substituted for real savings from privately earned incomes in the financing of public debt.
Indeed, owing to currency pegging by the mercantilist export economies of Asia and the oil exporters nearly $5 trillion of the US public debt has been absorbed by foreign central banks and sovereign wealth funds. Another $3 trillion is owned by the Fed. And still another $5 trillion, as indicated above, had been temporarily funded by intergovernmental trust funds that are now about to plunge into an irreversible liquidation mode.
Two thing are therefore evident.
The first is that massive monetization of the public debt cannot go on much longer or the monetary system will be destroyed. That’s what being stuck on the so-called zero-bound really means. And that’s why the lunatic money printing in Japan is a sign that the end of the monetization era is at hand.
In the case of Japan, the largest debtor government in the world has already destroyed its own bond market—-the BOJ is the only bid left at 0.4% on the 10-year JGB. And the BOJ is now fast deep-sixing the yen, as well.
Secondly, the US nominal GDP has been growing at less than 4% annually for the last decade, and, in a deflationary world, it has no chance of breaking away from that constraint. Accordingly, the ridiculously optimistic rosy scenario currently projected by CBO does not have a snowball’s chance of materializing over the next decade. Rather than $8 trillion of cumulative baseline deficits over the next ten years as projected by CBO, the current policy stalemate in Washington—that has been running for 30 years now— will generate at least $15 trillion of new public debt in the decade ahead.
Yes, add that to the nation’s current mountain of public debt and you get to $33 trillion by 2024 or so. And then also recognize that the giant financial bubble and vast malinvestments generated by the worlds central banks over the last two decades now guarantee a long spell of global deflation.
Accordingly, US nominal GDP will be lucky to reach $24 trillion by that same year. The math computes out to a public debt equal to 140% of GDP. For all practical purposes, it means an endless fiscal crisis lurks in the nation’s future.
That’s the real end game of a lamentable path of unprecedented fiscal profligacy embarked upon 33 years ago today.
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stop the presses
There's that number 33 again!
Hint: This ponzi scheme is designed this way!
Am I the only one who prefers log charts for unsustainable stuff like this?
And with the press of the keyboard, it can instantly go back down to 0 again.
We have the technology.
They thought deficits would crush the economy before the next election. 30 years later we're still worried deficits will crush the economy by the next election.
Our fate was sealed when the FIRST link in the debt chain was forged, not whenever it happens that the last one is added.
And the sociopaths that designed the Ponzi scheme know how the scheme must end. That's the tell. The end will be near when the oligarchs have stolen everything from the common serf and are forced to feed on each other for any more gains. The currency wars going on now are just a hint of what is to come. Eventually we will see Bear Stearns, Lehman, AIG, PIIGS, Cyprus etc, times 10 causing some soverign implosion with dire ripple effects to other soverigns. It will require Hank Paulson's bazooka to morph into a nuke in one final world bailout and world currency and banking system to "protect" the people. That's when the real oligarch losers and winners will be decided. The only alternative will be anarchy caused by revolution by the people against this because they are starving in the streets. Either way, the herd is going to be massively thinned at both the top and bottom. It's the sociopath way.
They're not trying to start WW3 because they believe in the Brotherhood of Man.
Oh, yeah. This:
"The latter were supposed to happen in subsequent years and had been designated by a placeholder in the out-year budgets infamously labeled the “magic asterisk”. In fact, there was nothing magic or devious about it. Washington well recognized that it represented large and painful reforms of social security and other middle class entitlements that were to happen in 1982 and beyond."
I'm surprised Stockman doesn't remember that after the tax cuts were agreed upon with Congress-- but BEFORE they could reach agreement on the domestic spending cuts-- Reagan was shot by the son of a Bush family friend.
After the shooting, the tax cuts passed Congress, and then Reagan magically forgot about pursuing the spending cuts. This was a guy who wanted to eliminate entire departments-- like the Department of Education-- and was elected to do so by landslide, but suddenly became allergic to the entire idea.
Getting shot by your Vice President will do that, I guess. You'd think Stockman would have put the pieces together himself. He was right there when it happened, for crying out loud.
Bullets have a strange way of making people give up on their ideals
Ronald Reagan, the one republicans love to lion for his conservatism and fiscal responsibility, managed to outspend Obama, on a percentage basis. He more than doubled the debt, worse than big spender bush, and eve bigger spender Obama. He also tried to modify posse comitatus to allow the military to participate in the 'war on drugs '. This is one of the many reasons I left the red team and now despise them. Just as ignorant of history as the blue team.
If you can interpret the mindset of an armed robber where there is no one to catch him, it is easy to understand why we have so much debt.
"From this point up today, there is an unprecedented rise of the US debt held by the FED. Specifically: In the first quarter of 2014, this figure is skyrocketing at 15,34% of GDP, which means a rise of 377,88% in six years!"
http://failedevolution.blogspot.gr/2014/11/us-debt-held-by-fed-further-i...
Compound rate stupidity.....
And for all this untethered irresponsibility the dollar supposedly increases in value.LOL
No manipulation here folks, move on...
"That’s the real end game of a lamentable path of unprecedented fiscal profligacy embarked upon 101 years ago today."
That fixed it I think.
When FRAUD goes Exponential.
From about 2001 we went debt crazy exponentially. The Fed's infinite model in a finite system. Should start to see the negative effects. Just a matter of time.
Bubble-blowing, with each larger than the last.
They hate us for our fiefdoms
Is the grisly reaper mowing?
Yes! The danger must be growing
For the rowers keep on rowing.
And they're certainly not showing
any signs that they are slowing!
Here's an up-vote for the Wonka quote! It fits here.
Buddy,
can you spare a dime?
Please don't forget US unfunded liabilities that are at least $130 trillion (Kotlikoff says they are $244 trillion) and rising at $7 trillion every year.
I'm amazed the whole thing hasn't gone "Weimar" or "Zimbabwe" already.
Coming (eventually) to a convenience store near you: How a loaf of bread went from $1 trillion to $18 trillionin 33 days
http://www.usdebtclock.org/
Click tabs on bottom, have fun.
"Rather than $8 trillion of cumulative baseline deficits over the next ten years as projected by CBO, the current policy stalemate in Washington—that has been running for 30 years now— will generate at least $15 trillion of new public debt in the decade ahead."
The FIRST thing the Manchurian Candidate (McCain - slated to head Senate Armed Forces Committee) said following the election
I want to do away with sequester for defense
Open the (spending) Floodgates!
They say that "we owe it to ourselves."
My guillotine and I say, "No, we owe it to you."
Time to collect.
An American, not US subject.
My lawyers at AK, AR and Glock approved this message.
"My lawyers at AK, AR and Glock approved this message."
Thanks for the new email signature
Awesome.
First, kill JFK. Then start printing presses.
Anoint MIC messiah. Install ZOG as perpetual leader.
Result? 18 trillion and collapse countdown.
Alex: You nailed it. A complete summary of the last 50 years in 20 words.
ZOG, according to Wikipedia, https://en.wikipedia.org/wiki/Zionist_Occupation_Government:
"Conspiracy theory?!" But then, the theory of Relativity is still a "theory" as well. At some point, after enough observations, I would think that "theory" becomes a fact.
An American, not US subject.
Wikipedia is a propaganda battleground, which repeats the general patterns found in the mainstream society.
I fought entries about some things I am directly involved in to a stalemate. However, overall, the more important an issue is, the more that the mainstream media, and Wikipedia, lie about that. To similar degrees as the mainstream media are dominated by the ruling classes, so too are the alternative media on the Internet distorted, although not, yet, quite so badly lopsided ...
Still, we are relatively lucky to be living at times near enough to the birth of the Internet that some of its original ideals are built into its standing structure. Looking at the history of other communication technologies, it appears only a question of time until the Internet is more completely captured and subverted as a possible means of freedom of expression. While the Internet Reformation, and possible future Internet Revolution has great theoretical potential, in practice it is hard to believe it will be able to survive to fulfill that potential.
A trillion here, a trillion there, and soon you're talking about (un)real money.
.
that's easy
It did it the 'Old Fashioned Way'. It let the US Congress do it.
Good article. He was a guy who was on the inside. But he really doesn't talk about the dollar being a reserve currency and he really doesn't explain why there are no obvious bad effects. Why did Zimbabwe or the Wiemar republic have bad effects and we didn't? I guess it's out there but I'm a person who believes in proportional responses. If it is bad we should see it's bad within 5 years of it happening. And I very much believe we should balance the budget.
The whole world is in flames because of our monetary policy and the politics required to support it. One way or another, money printing countries end up with nothing.
Zimbabwe and the Weimar Republic were unable to export their own inflation like the US has been doing for decades. When those governments printed money, the increased money supply stayed right in the country they originated in. This meant that there was no delay in the hyperinflation; prices for goods were bid up pretty much right after new money was created.
Contrast this with the US, which has the world's reserve currency and abuses this status to dump dollars everywhere. That's why there has been no hyperinflation in the US yet. The dollars don't exist here to bid up prices to hyperinflation levels... yet.
There will eventually come a time when people around the world no longer want dollars. When that happens (actually it's happening already), all the dollars the US has flooded the world with will return to our country and that's when we'll get hit with a catastrophic hyperinflation shockwave.
Surging, thanks, a serious answer to a serious question. Just out of curiousity why do those other countries put up with us dumping our dollars? And you are right about the dollars sloshing back. Great Britain had this problem when the Pound lost it's status as the worlds' reserve currency.
The last credit card to tap with an unlimited credit balance. That is, the world's CBs that will rest assurd, in one fashion or another, monetize until they just can't monetize any longer.
We've got a ways to go people as I'm affraid this party has a large amount of cheap booze, food, and drugs still available for the masses to binge on a while longer. When the foundations of capitalism are no longer valued as it relates to generating a real profit, producing positive/free cash flow, actually abiding by the concept that debt must be repaid and have actual security/collateral, offering reliable financial information (and not mark to what I think its worth), and offering proper risk/capital returns, you know we are in trouble. And thanks to the foundation being laid by both Washington and the CBs, that at its core is the belief that deficits and debt don't really matter, the concept of economic returns and capitalism have been destroyed. Why would anyone even bother to think they have to repay their debts when both the federal government and the Fed don't have to. So whether its the student loan mess, the next subprime lending debacle with autos currently brewing, or coming soon to a movie theater near you, Horrible Housing Loans II, don't fret as our unlimited credit card with the Fed will be tapped again.
But the points and comments made on Japan are of interest and what I'm watching the closest. Not so much from the depreciation in the exchange rate but more importantly, from the damage being inflicted on Japanese consumers and small businesses (record high BKs over the past couple of months). When the foundation of the 4th largest economy in the world fails (smaller than China, the US, and the EuroZone), the ripple effect throughout the world will be unmanagable, even by the Fed. So it will be the littlest of events, at the bottom of the food chain in Japan, that begin to spell out the final fall of the once mighty Yen. But it won't be all economic centered but rather will encompass social, political, and military events as well as the masses will finally be pushed to the breaking point. Just too much hardship, too many broken promises, too many lies, will all accumulate into a moment in time that transforms into a movement that breaks the world's unlimited currency printing experiment from the CBs.
BTW and one final comment, I believe Putin in Russia clearly understands the monetization risks and long-term damage that will be created but he might have played his cards a little too early. I have no doubt that Russia will sit idle and watch the West rape and pillage the country but for the moment, Putin needs to focus on stablizing the Rubble and the Russian economy before he makes his next move. Just proving to the world that Russia can stand on its own two feet would be a short-term victory for the country.
Simply, it's compounding, bitchez. $17.5 trillion is on square 45 of the 64 square chess board. The 64th square, representing 64 "doubling of principle" is....
9 Quintillion 223 Quadrillion 372 Trillion
36 Billion 854 Million 780 Thousand.
So tax policy "eventually exhausted its capacity to deceive." Nicely said, and the perfect epitaph for the whole Morgan, Goldman, dot-gov, TBTF dog-and-pony show when it finally goes tits up.
Like the Zimbabwe $100 trillion dollar bill.
The US can have their $1 trillion dollar bill with Obama photo on the front of it.
http://www.ebay.com/itm/25-NOBAMA-MONEY-OBAMA-NOVELTY-MONEY-FAKE-WHOLESA...
I would also argue that the u.s. was very fiscally responsible up until 1981 (other than social security and medicare which was masked by good worker to retiree ratios). Basically for the worlds' largest economy to have no debt by 1980 is exemplary. And the runup described in the article is just filling up the Rogoff and Rienart "optimal" debt to gdp ratio. So that explains why we have seen no bad effects?
figure it out
28 years later Obama would appeal to voters as a peace candidate equal to Eugene McCarthy.
IOW, first we got fucked in the ass by a white guy, and then we got fucked in the ass by a black one.
Ya pays yer money and takes yer cherse.
The beauty part is that some people actually think the system can be saved. I won't mention any names.
Financial Erection.
Fiat Schwing !
Bankers gaze amazed, they 'did' that !!
Mexican invasion is a wonderful thing
2012
1912
This article grossly understates things, since the problem did not start in America merely 33 years ago, but more than a Century ago! (And, that was merely another wave of events that go back for thousands of years, through the history of Neolithic Civilizaitons.)
I repeat my comments on these articles:
http://www.zerohedge.com/news/2014-12-02/5-complete-lies-about-americas-new-18-trillion-debt-level
5 Complete Lies About America's New $18 Trillion Debt Level
http://www.zerohedge.com/news/2014-12-02/us-debt-reaches-18-trillion-surges-70-obamas-‘recovery’
US Debt Reaches $18 Trillion; Surges 70% In Obama's ‘Recovery’
The MAD Money As Debt system's inherent structure requires exponential growth of debts. Especially since 1971, the total growth of debts in the USA has been on a nearly perfect match to the mathematics of exponential growth. The SOURCE of that MAD problem is the way that the best gangsters, the banksters, were able to apply the methods of organized crime through the political processes in order to capture control over the powers of governments, and effectively PRIVATIZE those powers.
http://www.zerohedge.com/news/2014-11-25/federal-reserve-heart-debt-enslavement-system-dominates-our-lives
The Federal Reserve Is At The Heart Of The Debt Enslavement System That Dominates Our Lives
However, that has become an almost totally globalized system of electronic frauds, backed by the threat of the force of atomic bombs. That system was the deliberate result of the international banksters making it happen and maintaining it!
Historian Carroll Quigley wrote:
"powers of financial capitalism
had another far-reaching goal,
nothing less than to create a
world system of financial
control in private hands
able to dominate the
political system of
each country and
the economy of
the world as
a whole ..."
AFTER the MAD Money As Debt system gets implemented (as it ACTUALLY was by the international banksters applying the methods of organized crime to dominate the political processes, and all other social institutions like the schools and mass media), then everything caused by that automatically gets worse, faster.
RESULT:
A Comprehensive Breakdown of America’s Economic House of CardsThe Biggest Bubble in History is About to Pop
The American Economic House of Cards was originally built on the government ENFORCED FRAUDS of privately controlled banks being legally allowed to create the public "money" supply out of nothing as debts. For more than a Century the American economy has been based on making more and more "money" out of nothing. Hence, the government necessarily went deeper and deeper into debt, and the American people as a whole went into deeper and deeper debts inside of that criminally insane system, which only existed due to the real ways that the best organized gang of criminals were able to capture control over the powers of governments!
David Stockman's series of articles continue to be typical of featured articles republished on Zero Hedge in the ways that they grossly understate the deeper nature of the problems, and therefore, grossly underestimate what would be theoretically necessary to resolve those problems any better. Those understatements, and resulting underestimates, can be described as existing on TWO LEVELS:
The FIRST LEVEL is that whereby the people who were the best at being dishonest and backing that up with violence actually controlled civilization. The SECOND LEVEL is that whereby the chronic political problems inherent in the nature of life demand that there must necessarily be some death control systems.
THE SOURCE OF THE "MONEY" IS THE
SOURCE OF THE REST OF PROBLEMS!
However, the SOURCE of the SOURCE of that "money" was the murder system that backed up the monetary system. That was the path whereby the history of successful warfare based on deceits and treacheries created the political economy based on fundamentally fraudulent accounting systems. The PARADOX inherent in that SOURCE OF SOURCES was that there must necessarily be some death control systems, and there are! However, those death controls were most socially successful by being the most deceitful. That is the foundation for the ENFORCED FRAUDS, which drive bubble economics, to aggregate systemic risks to become runaway criminal insanities.
There are some that go through the FIRST LEVEL of understanding that the government is the biggest form of organized crime, controlled by the best organized gang of criminals, which currently happen to be the international bankers, that dominate almost all the governments in the world. However, I am not aware of anyone who then goes on thoroughly through the SECOND LEVEL of better understanding regarding how and why we ended up with our death and debt controls being done through the maximum possible deceits and frauds.
The aggregated RISK of globalized electronic fiat frauds, backed by the force of weapons of mass destruction, is trillions of times BIGGER than anything which previously existed in known human history. However, almost NONE of that is understood better by anyone, as illustrated by those who continue to believe in the same old-fashioned false fundamental dichotomies, and their related impossible ideals, which always actually make the opposite happen in the real world.
In principle, the problem that the human species faces is how to operate better murder systems, through better militarism, after the development of weapons of mass destruction. That is imperative because the current death controls are what back up the established death controls: MONEY IS MEASUREMENT BACKED BY MURDER.
The accumulating RISKS are all being amplified to more astronomical SIZES by their driving mechanisms, which are systems of legalized lies, backed by legalized violence, which never can stop those lies being false, no matter how much those lies are enforced, but rather, only drives society as a whole to become more criminally insane, since those triumphant systems of lies backed by violence become more psychotically detached from relatively more objective facts, since the mechanisms WITHIN society reward people who agree with lies, and punish people who do not agree with lies.
Thousands of years of social slavery systems, based on backing up lies with violence, have made and maintained our current political economy, based on ENFORCED FRAUDS, which therefore run ever increasing RISKS due to the ways that ENFORCING FRAUDS is never able to stop those frauds from being false, although, WITHIN society, the enforcement of those frauds successfully operates systems of organized lies and robberies, which makes the pyramidion people INSIDE the social pyramid systems become relatively more wealthy and more powerful, and therefore, even more able, WITHIN society, to continue to back up lies with violence, despite that overall resulting in that society becoming terminally sick and insane, to the degree that it becomes increasingly psychotic.
I REPEAT, there are at least TWO LEVELS upon which we can perceive that we are living inside of a civilization controlled by enforced frauds, which are driving RISKS of that system's eventual psychotic breakdowns. The FIRST LEVEL is that the political economy is controlled by lies backed by violence, while the SECOND LEVEL is that there must necessarily be some system of death controls.
My assertions are that we should go through a series of intellectual scientific revolutions in the philosophy of science, which then apply to political science, and especially to the combined money/murder systems. My conclusions are that the existing systems are necessarily due to governments being the biggest form of organized crime, controlled by the best organized gang of criminals, while the only genuinely better resolutions to those social situations would require better organized crime, because there must necessarily be some murder system, to back up some money system.
Human intelligence emerges as the internalization of natural selection. So far, from the perspective of the SECOND LEVEL, it makes sense that the history of warfare developed death controls to be done through the maximum possible deceits about themselves, which simultaneously resulted in the significant controlled opposition groups to the established systems also operating INSIDE of the biggest bullies' bullshit world view, regarding the death controls, or the murder systems, whose ideology was militarism.
The issues regarding RISKS that human beings now face are whether or not they can go through quantum leaps of better understanding natural selection, in order to develop better systems of artificial selection, which is made imperative by the SECOND LEVEL OF DEEPER RADICAL TRUTHS, but also made practically impossible by the FIRST LEVEL OF DEEPER RADICAL TRUTHS.
The mechanisms behind that are the history of the social successes based on operating systems of organized lies and robberies, whereby those who were the best at doing that were able to make and maintain the kind of civilization that we are currently living INSIDE, where the foundation of its political economy is ENFORCED FRAUDS, which are driving themselves to become more and more criminally insane, at faster and faster rates, as demonstrated by those debt slavery systems driving the generation of numbers which have become debt insanities.
In that context, the greatest RISK that we face is our collective FAILURE to understand the ways that natural selection became artificial selection. We are operating human evolutionary ecologies through the maximum possible deceits about themselves. INSIDE that overall context, we are operating a political economy based on the maximum possible frauds, whose abilities to be enforced never resolves their problems, but rather, only drives those problems to get bigger and BIGGER!
A THIRD LEVEL of more radical truths would require the creative synthesis of the FIRST & SECOND LEVELS. I.e., there are death controls, which are being done through the maximum possible deceits, and there must be some death controls, which could theoretically be done through greater use of information enabling higher consciousness. There are NO possible solutions which do not have death controls at their core. However, there are NO better death controls without profound paradigm shifts in the ways that we perceive those, because the biggest bullies' bullshit now dominated the philosophy of science, and especially political science, because human ecology operates through murder systems which developed to be most successful when most deceitful, while political economy developed to be most successful when most fraudulent.
SINCE THE VAST MAJORITY OF PEOPLE WILL LIKELY CONTINUE TO DELIBERATELY IGNORE THE BASIC FACTS I HAVE OUTLINED ABOVE, WHILE PEOPLE LIKE DAVID STOCKMAN WILL CONTINUE TO PRESENT RELATIVELY SUPERFICIAL VIEWS OF THE NATURE OF THOSE PROBLEMS, THE MOST PROBABLE FUTURES ARE AS FOLLOWS:
Making "money" inside of the established systems is the paradoxical result of successfully taking advantage of established systems of organized lies operating robberies, in the short-term, as the "best" an individual can do, while they are stuck inside an entrenched pyramid scheme that is driving irreconcilable social polarization and even worse irreparable destruction of the natural world.
As many other articles and comments posted on Zero Hedge also pointed out, "the greatest crash in history" is coming to a theater near you ... working its way in from the periphery to the center. The basic dilemma is that human realities are organized lies operating robberies, which eventually suffer from paradoxical final failure from too much success from doing that.
I have no better actionable intelligence to offer. I am merely observing the consequences of the collective tragedy that civilization is controlled by ENFORCED FRAUDS. I am not able to offer any practical advice about the banksters stampeding into walls of limits, and then bouncing off cliffs. Those who have the power to blow economic bubbles, by making "money" out of nothing as debts, tend to be the insiders that can profit the most from both riding their bubble up, and then down, after it pops.
For instance, the banksters routinely buy up assets at bargain prices after they have blown another economic bubble, that has popped. The cycles of bubble economics that the banksters drive end up making them become more wealthy, and thus, more politically powerful, and therefore, even more able to continue to blow bigger bubbles driven by more "money" made out of nothing as debts, which systems become more psychotically detached from relatively more objective realities, because their continue social successes depend upon ENFORCING FRAUDS, which they become even more able to do through the vicious spirals of previously successful ENFORCEMENTS OF FRAUDS!
The great paradox of human beings is that their abilities to make greater and greater "killings" is killing their future. However, all the way there, each increment of making another "killing" enables the next, and so on and so forth, towards killing so much that the human species probably will go extinct, along with most of the other bigger forms of life on the planet. Some human beings have become way too good at being hunters, to the degree that they are totally wiping out their prey. That applies all the way down, from the pyramidion people, of the men that prey on men, throughout all other lower levels of social control based on backing up lies with violence.
ENFORCED FRAUDS are destroying economies, and ecologies even more so. Meanwhile, anyone who thinks that they could make a "good deal" from riding the economic bubbles UP and DOWN, by timing to get in and out, and from strategies like buying up some of the broken pieces as a bargain, after a bubble pops, tend to be continuing to operate inside the overall frame of reference of the paradox of the final failure from too much success through those systems of ENFORCED FRAUDS, by attempting to run with the stampeding banksters, as they blow economic bubbles that then pop, because they can make "money" out of nothing as debts, while those FRAUDS ARE ENFORCED!
Overall, we should develop some better implemented wisdom which enables there to be an evolutionary ecology that limits the degree to which the killers make their killings, so that they do not end up wiping out their prey, and thus, wipe themselves out thereby. However, the globalized scale of the established systems of electronic fiat frauds, backed by the threat of the force of weapons of mass destruction, have barely any influence upon each individual, within each short-term increment, that endeavours to maximize their own local abilities to make another killing, which continues to all add together to globalized killing of the future the killers, as well as everything that they used to depend upon to be able to kill to live.
Reaganomics explained in ONE chart, all to further "our money your problem" mantra of Dear Henry days, from its petrodollar recycling blues in banks (1979 crisis in inflation), to steroid pumping WS assets and junk bonds in deregulated "winner takes all" mayhem.
A model which took the inflation out of wages, aka the real economy, and gave it to supply side Oligarchy.
"Our money your problem" was their Don Corleon way of saying : DEBT is ASSET when its invested in OUR WS machine, the Jack's beanstalk that never ends giving to its investors, until Hell freezes over behind the Iron Curtain.
Nothing has changed except the train has no brakes and the train driver has lost his brain. Its called irrational exuberance in unbridled Hubris.
Now moral hazard is not a subject to concern this Capitalist class, there is no trade off between risk and return !
"Don Corleon
way of saying:
DEBT is ASSET"
"If history shows anything, it is that there’s no better way to justify relations founded on violence, to make such relations seem moral, than by reframing them in the language of debt — above all, because it immediately makes it seem that it’s the victim who’s doing something wrong."
— David Graeber,
Debt: The First 5,000 Years
https://www.youtube.com/watch?v=CZIINXhGDcs
Some folks printed about 10 trillion too much.
Apparently there is no check on:
- Defense & MIC Spending
- NSA & Black Budget Funding, Plans, Expansion, and Covert Ops
- Government & Banking Corruption, expansion of Laws, Regulations, Rules, Taxes, Complexity, Financial Schemes, watering down of Accounting & Auditing & Financial ratings
Where does that leave us?
We have to simplify, Streamline, Standardize, and reinvent government, banking, military, National Security, and Spying Agencies.
No Biggie.
Got a Lunch with you?
Unfortunately the people working on this probably number only in the hundreds... and they don't want their names published for the most part. So we have a small hurdle here. Participation. Debt Bondage. Loss of Economic Power due to no interest rates on savings, collapse of financial systems & Real Estate Ownership & Value...
And could get worse as they come for savings & Pensions to bail-in Derivatives or Bailout Banks...
Likewise, Gov. Reagan had denounced Jimmy Carter’s red ink and promised a balanced budget by 1983.
But as 1981 unfolded and the US treasury borrowed large sums each day to fund what we were pleased to call Jimmy Carter’s “inherited deficits”, the trillion dollar national debt threshold rushed upon us. And, in truth, it came far more rapidly than had been anticipated because by the fall of 1981, the Reagan White House had enacted the largest tax reduction in American history. On top of that, it had also green-lighted a huge defense build-up, yet, as we liked to rationalize at the time, had made little more than a “down payment” on sweeping reforms of domestic spending and entitlements.
- so nothing changed since Ronald Reagan
- 33 Years of show business in front of the TV Camera
- 33 Years of Lying about defense
- Nicaragua? We are not in Nicaragua, nor are we doing Covert Actions for Regime Change in that Region
- We don't negotiate with Iran, Sell Arms to Rebels, and We don't move drugs or sell them
Moral Hazard in the Whitehouse
Moral Hazard in Private Banking
Moral Hazard in FED, a Privately Held Corporation
Moral Hazard in 2008 Bailouts & 2015 Bail-Ins for derivatives
Moral Hazard in Federal Management of Teamsters Pension Funds which lost to 2008 Stock Market & Real Estate and ... now will be reduced for current pension holders by 30-40%