It Is Mathematically Impossible To Pay Off All Of Our Debt

Tyler Durden's picture

Submitted by Michael Snyder via The Economic Collapse blog,

Did you know that if you took every single penny away from everyone in the United States that it still would not be enough to pay off the national debt?  Today, the debt of the federal government exceeds $145,000 per household, and it is getting worse with each passing year.

Many believe that if we paid it off a little bit at a time that we could eventually pay it all off, but as you will see below that isn’t going to work either.

It has been projected that “mandatory” federal spending on programs such as Social Security, Medicaid and Medicare plus interest on the national debt will exceed total federal revenue by the year 2025.  That is before a single dollar is spent on the U.S. military, homeland security, paying federal workers or building any roads and bridges.  So no, we aren’t going to be “paying down” our debt any time in the foreseeable future.  And of course it isn’t just our 18 trillion dollar national debt that we need to be concerned about.  Overall, Americans are a total of 58 trillion dollars in debt.  35 years ago, that number was sitting at just 4.3 trillion dollars.  There is no way in the world that all of that debt can ever be repaid.  The only thing that we can hope for now is for this debt bubble to last for as long as possible before it finally explodes.

It shocks many people to learn that our debt is far larger than the total amount of money in existence.  So let’s take a few moments and go through some of the numbers.

When most people think of “money”, they think of coins, paper money and checking accounts.  All of those are contained in one of the most basic measures of money known as M1.  The following definition of M1 comes from Investopedia

A measure of the money supply that includes all physical money, such as coins and currency, as well as demand deposits, checking accounts and Negotiable Order of Withdrawal (NOW) accounts. M1 measures the most liquid components of the money supply, as it contains cash and assets that can quickly be converted to currency.

As you can see from the chart below, M1 has really grown in recent years thanks to rampant quantitative easing by the Federal Reserve.  At the moment it is sitting just shy of 3 trillion dollars…

M1 Money Supply 2015

So if you gathered up all coins, all paper currency and all money in everyone’s checking accounts, would that even make much of a dent in our debt?

Nope.

We’ll have to find more “money” to grab.

M2 is a broader definition of money than M1 is, because it includes more things.  The following definition of M2 comes from Investopedia

A measure of money supply that includes cash and checking deposits (M1) as well as near money. “Near money” in M2 includes savings deposits, money market mutual funds and other time deposits, which are less liquid and not as suitable as exchange mediums but can be quickly converted into cash or checking deposits.

As you can see from the chart below, M2 is sitting just short of 12 trillion dollars right now…

M2 Money Supply 2015

That is a lot more “money”, but it still wouldn’t pay off our national debt, much less our total debt of 58 trillion dollars.

So is there anything else that we could grab?

Well, the broadest definition of “money” that is commonly used is M3.  The following definition of M3 comes from Investopedia

A measure of money supply that includes M2 as well as large time deposits, institutional money market funds, short-term repurchase agreements and other larger liquid assets. The M3 measurement includes assets that are less liquid than other components of the money supply, and are more closely related to the finances of larger financial institutions and corporations than to those of businesses and individuals. These types of assets are referred to as “near, near money.”

The Federal Reserve no longer provides charts for M3, but according to John Williams of shadowstats.com, M3 is currently sitting somewhere in the neighborhood of 17 trillion dollars.

So even with the broadest possible definition of “money”, we simply cannot come up with enough to pay off the debt of the federal government, much less the rest of our debts.

That is not good news at all.

Alternatively, could we just start spending less than we bring in and start paying down the national debt a little bit at a time?

Perhaps that may have been true at one time, but now we are really up against a wall.  Our rapidly aging population is going to put an enormous amount of stress on our national finances in the years ahead.

According to U.S. Representative Frank Wolf, interest on the national debt plus “mandatory” spending on programs such as Social Security, Medicare and Medicaid will surpass the total amount of federal revenue by the year 2025.  That is before a single penny is spent on homeland security, national defense, paying federal workers, etc.

But even now things are a giant mess.  We are told that “deficits are under control”, but that is a massive hoax that is based on accounting gimmicks.  During fiscal year 2014, the U.S. national debt increased by more than a trillion dollars.  That is not “under control” – that is a raging national crisis.

Many believe that that we could improve the situation by raising taxes.  And yes, a little bit more could probably be squeezed out of us, but the impact on government finances would be negligible.  Since the end of World War II, the amount of tax revenue taken in by the federal government has fluctuated in a range between 15 and 20 percent of GDP no matter what tax rates have been.  I believe that it is possible to get up into the low twenties, but that would also be very damaging to our economy and the American public would probably throw a huge temper tantrum.

The real problem, of course, is our out of control spending.

During the past two decades, spending by the federal government has grown 63 percent more rapidly than inflation, and “mandatory” spending on programs such as Social Security, Medicare and Medicaid has actually doubled after you adjust for inflation.

We simply cannot afford to keep spending money like this.

And then there is the matter of interest on the national debt.  For the moment, the rest of the world is lending us gigantic mountains of money at ridiculously low interest rates.  However, if the average rate of interest on U.S. government debt was just to return to the long-term average, we would be spending more than a trillion dollars a year just in interest on the national debt.

So the best possible environment for “paying down our debt” that we are ever going to see is happening right now.  The only place that interest rates on U.S. government debt have to go is up, and our population is going to just keep getting older and more dependent on government programs.

Meanwhile, our overall debt continues to spiral out of control as well.  According to CNBC, the total amount of debt that Americans owe has reached a staggering 58.7 trillion dollars…

As the nation entered the 1980s, there was comparatively little debt—just about $4.3 trillion. That was only about 1.5 times the size of gross GDP. Then a funny thing happened.

 

The gap began to widen during the decade, and then became basically parabolic through the ’90s and into the early part of the 21st century.

 

Though debt took a brief decline in 2009 as the country limped its way out of the financial crisis, it has climbed again and is now, at $58.7 trillion, 3.3 times the size of GDP and about 13 times what it was in 1980, according to data from the Federal Reserve’s St. Louis branch. (The total debt measure is not to be confused with the $18.2 trillion national debt, which is 102 percent of GDP and is a subset of the total figure.)

As I discussed above, there isn’t enough money in our entire system to even pay off a significant chunk of that debt.

So what happens when the total amount of debt in a society vastly exceeds the total amount of money?

Is there any way out other than collapse?

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Meat Hammer's picture

Well....

Since money (currency) IS debt, if the debt were paid off there would be no currency. Wrap your head around that one.

MonetaryApostate's picture

Principal != Principal + %  ~ The System is Rigged in their favor...

You cannot win because inflation = theft.

stacking12321's picture

well, duh!

that's why they are growing the money supply, so that we WILL have enough money to pay off all the debt!

/s

Future Jim's picture

Relax! US Federal Debt – Problem Solved

The American government has been spending trillions of dollars on programs it had no Constitutional authority to create, and such unconstitutional expenditures exceed the amount of the federal debt. Therefore,

The federal debt is unconstitutional.

Not only are most government programs themselves unconstitutional, but the debt used to pay for these unconstitutional programs, which were created by previous taxpayers, is paid for by future taxpayers. Therefore,

The federal debt is Taxation without Representation.

Taxation without representation is also unconstitutional. In fact, it is the reason America seceded from the British empire.

Given that the US Constitution is pretty simple, then anyone who loaned money to the US government should have known that they were loaning money to a fraudulent and illegitimate enterprise and thus should not expect repayment.

Of course, there would be a huge consequence – no one would be willing to loan money to the US government again until it started obeying the Constitution, which would be ...

Good!

max2205's picture

100 Oz of gold ought to hedge the implosion and let you buy an island with fresh water.

Slomotrainwreck's picture

Do you actually think that you will get the stash out of the Country?, State?, County?, City?, Neighborhood?

Urban Roman's picture

... out of the pool pump enclosure in your back yard?

BuddyEffed's picture

Even though current debts may never be paid back, at any current point in time we will always have whatever existing stockpiles of natural resources and commodities on which to run our world the best that we can, kind of just like we do now.

But the trending attitudes might change a little for some people.

Four chan's picture

the jew system of money that replaced the patriot one creates the principle but not the interest. insuring enslavement.

Pinto Currency's picture

 

 

There is a way to avert collapse.  

Open the mints to citizen held gold and silver to be minted into money.  100s of millions of oz of gold jewellery in US citizen hands.

Congress set the value of gold and silver monetary units according to the Constitution.  It will be a high number - similar to that estimated by Bloomberg for China.

More points here: http://www.safehaven.com/article/37496/action-plan-to-prevent-us-monetary-and-economic-collapse

daveO's picture

Deut. 23 19-20 

19Do not charge a fellow Israelite interest, whether on money or food or anything else that may earn interest. 20You may charge a foreigner interest, but not a fellow Israelite, so that the Lord your God may bless you in everything you put your hand to in the land you are entering to possess.

Hey Christian Conservatives, wake up. You're the slaves.
TheRedScourge's picture

The data was worse after WWII and yet it got paid back somehow.

 

We don't work that hard anymore though, so we're gonna have to pull some tricks like cutting spending and raising the retirement age to 70 for starters.

lunaticfringe's picture

Sure. We had plenty of jobs, taxes were low and we had the CAPACITY to pay it back. We do not have the capacityto pay, we have no jobs, and taxes are already maxed out.

So no, the comparison doesn't work. 

daveO's picture

Plus, Bretton Woods syphoned money from the conquered nations. To the victor go the spoils.

ShortBusDoorGunner's picture

The "somehow" was that we were the only industrial nation left standing after the war.

I guess we could go blow everybody up again.

 

That might help

fleur de lis's picture

Debt = scam so there is no real need to pay it back.

Benjamin123's picture

Short constitution: Shut up and do as told or else!-Signed, US Army.

I say everything they do is constitutional.

luckylongshot's picture

Let us imagine that in 3030BC the total possessions of the people of Egypt filled one cubic metre. Let us propose that these possessions grew by 4.5% a year. How big would that stash have been by the Battle of Actium in 30BC? This is the calculation performed by the investment banker Jeremy Grantham.

Go on, take a guess. Ten times the size of the pyramids? All the sand in the Sahara? The Atlantic ocean? The volume of the planet? A little more? It's 2.5 billion billion solar systems. It does not take you long, pondering this outcome, to reach the paradoxical position that salvation lies in collapse. -George Monbiot explains why the 99% must lose everything because the banksters have compound interest working for them... and against us.

EmmittFitzhume's picture

"The only place that interest rates on U.S. government debt have to go is up" --- That will make the debt rollover trick that they are currently pulling impossible....and then the end

daveO's picture

More likely, imo; ZIRP, cash bans leading to barter and dollar abandonment creating hyperinflation, if a war isn't invented. Most likely, multi-front Russia(Ukraine) and China(South China Sea and/or Korea). An alternate would be a false flag nuke, ala 911, to blame on the new boogeyman ISIS. They must have constant crises to scare the money(debt enslavement) out of Congress. They've probably already created the script on how the 'turrurists' sold cigarettes for cash dollars on the streets to finance the nuke they bought off of Pakistan; therefore, requiring a total cash ban. After all, it was the guise of the war of drugs that they used to crack down on cash deposits. Don't forget Cheney and Ovomit have been nearly prosmising one for years before this article;

http://www.independent.co.uk/news/world/middle-east/isis-claims-it-could...

Miffed Microbiologist's picture

Well, when you divide a number by zero the result goes to infinity and is not numerically defined. I guess hyperinflation would be similar. Kind of a Zen thing. Only comprehendable while drunk.

Miffed

813kml's picture

That's what I was thinking, divide by zero and travel back in time through the resultant wormhole in order to smother Mayer Rothschild in his crib.

fleur de lis's picture

What a disgusting sewer rat AM Rothschild must have been. And all his creepy spawn, too.

Urban Roman's picture

Well that does it. Im'ma change all my retirement savings to Hryvnia.

Then I will be rich and Miffed will leave her current family to run away with me...

Miffed Microbiologist's picture

My dearest urban roman. You are already rich. You are intelligent. You are awake. You are quality. These are noble traits and should never be discounted for anything money could buy which is fleeting. I would much rather be with a noble poor man I could respect than a rich fool.

It's funny you should mention running away. I'm always fighting this urge! Every day I drive highway 8 east and come to the 67N exit towards my home. Sometime I have a fierce compulsion to keep going east. Just to see where I would end up. Would I become Kerouac? A wondering mystic writer with no home, just a traveler experiencing life in the moment with no safety net? Or would I just end up as a dried up pile of bones in the Mohave desert, unsung and forgotten? I complain about having no freedom yet do I have the courage to toss my life away and embrace it? So far the answer is no and I take my freeway exit. And wonder what I have left behind.

http://youtu.be/KUaQgRiJukA

Miffed;-)

Urban Roman's picture

I am flattered and touched by the thoughtful reply, MM.

My comment, of course, was BS. I am too old for aimless road trips <sigh>

Just kick some dirt in on me when I'm done. Otherwise I'll stink and draw flies (more than now)...

Miffed Microbiologist's picture

My dear roman, perhaps old in body but never in spirit.

I look at some old picture of me in high school and sigh. That young pretty girl is gone but I'd do see the spirit I have still. Mr tells me he sees so much of me still in those pictures which really makes me laugh, I cannot. How funny our perception of ourself is so different from those around us. To be honest with you, I would never go back if I had the chance if I couldn't take my mind of today with me. What a silly time that was with such petty concerns. I cringe at the wasted time.

Do not discount yourself my dear friend. Road trips are seductive but don't necessarily provide satiety. One can still peer out the window and see the beauty of Devine creation be it the wonderful mountains near my home or a flower planter on a deck in the city. The mind wanders unrestrained and the soul untethered. This is the greatest of rewards. Knowing you can find contentment no matter where you are.

Miffed;-)

Chuck Walla's picture

"I Travel not to go Somewhere, but to just go."
R.L. Stevenson

UR & MM, you are both treasures here.

FORWARD SOVIET VAGABONDS!

MisterMousePotato's picture

We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time.

- T.S. Eliot

Little Gidding, I think?

oddjob's picture

Since money (currency) IS debt, if the debt were paid off there would be no currency.

 

Mike Maloney was all over that a few years ago, but in his version all that remained was debt.

Servitude anyone?

TheRedScourge's picture

No, that's if ALL debt were paid back, not the US national debt. When the economy is so prosperous that 25 year olds can own a house free and clear debt free, thats when we have to start worrying about that problem. Or we could get rid of debt money anyway, just to be safe.

TheSilverJournal's picture

"Well....

Since money (currency) IS debt, if the debt were paid off there would be no currency. Wrap your head around that one."

Currency is a money coupon. Money is gold and silver. If the debt stops expanding, the world fiat monetary ponzi implodes. - fixed it for ya
acetinker's picture

Yup! And that debt is what the Buffett's and the Soros' of this world call wealth.  Not to mention the pension funds and money market accounts... etc.

What we really need to know is;  Who's buying the zero yield bonds of this Ponzi?  Belgium?  LMFAO!

It's the Buffets and the Soros', and they're stealing our childrens' future... and (almost) nobody cares.

nofluer's picture

that debt is what the Buffett's and the Soros' of this world call wealth.

There is no wealth but the ability to draw the next breath, and to have fuel for that thing we call a body for one more day, one more hour. Beyond that the term "wealth" has no meaning, and the Buffets and Soros’ (sounds like a disease, eh?) of the world have no more or less than the street bum who just found an unopened box of cereal.

They may eat their fuel from a golden plate with silver utensils, but does it give them more energy or prolong their lives one second longer than their measured span of time? They scramble to accumulate things that they cannot keep, things that they cannot own because none of their wealth exists.

The only meaningful wealth for humans is the time that we have life in measured amounts. When it is gone, there is no debt, there is no savings account, there is no more of the things of this world for us. Regardless of the constructs we play with while we breathe, when we make our exit we will leave with not one bit of anything that belongs in this world - not even the body we inhabited. So in the end we are all equally "wealthy" or "poor".

And when we stand in the line waiting for judgment, there are no head of the line privileges, and no “do-overs”. When we stand in that line waiting for judgment, will we see weepers, crying for the waste that was their life and the loss of the meaningless “wealth” they never really had? The Buffetts and Soros’ own nothing more or less than anyone else in terms of true wealth.

Consider the “wealthy” of the past, and learn from them.

acetinker's picture

Word.  And word is bond, back where I come from.

kchrisc's picture

"It Is Mathematically Impossible To Pay Off All Of Our Debt"

Who is "our?" You don't mean me; Do you? I didn't sign for it, it's Unconstitutional, and I have withdrawn my consent. Therefore, try my neighbor, but I doubt he's "our" either.

Liberty is a demand. Tyranny is submission..

 

I am willing to share my guillotine, making that "ours."

Sudden Debt's picture

If you change "ours" with "theirs" it’s suddenly pretty easy to come up with a sollution!

Sell THEIR kids to china, they need all the small hands they can get to build those iPhones

and

Sell THEIR women to the Saudi’s

 

But on the other hand, why would they expect that the debts are repaid? It’s pretty easy to enslave people who are in debt, it takes their guts and creativity away and if the debt is never repaid, the interest becomes a fixed income.

 

Miffed Microbiologist's picture

There is one thing wrong with your proposal. They don't care about their women and children. Just their own power. Simply how psychopaths perceive the world and why we cannot understand them.

Miffed

ThroxxOfVron's picture

"They don't care about their women and children. "

THAT, right there: is the God awful truth of the matter and why many people are being oppressed and expropriated by TPTB.

Anusocracy's picture

Hey, they're easier to understand than women.

They are just apex savages of the past who have out-sourced their physical aggressiveness and upped their psychopathic skills for manipulation and control.

They can evolve too.

logicalman's picture

Take a look at 'odious debt' and 'unconscionable contract'

 

Urban Redneck's picture

About that "our" thingy... "we" do owe over $10 trillion and "they" have dibs on the money supply... so "we" will have a problem.

(from July 2014 in a post about Jörg Hülsmann's Has Fractional-Reserve Banking Really Passed the Market Test?)

The national debt may be 17T, but the US money supply that is supposed to repay it is only 12T, so of course it can't be paid back, but then the stock market is 23T, so even if the 99% didn't require any money to eat or shelter or commute to their indentured servitude, the 1% must be suckers to buy into this overvalued stock market, the municipalities must be retards to think there is going to be any table scraps left over from treasury repaying its debt which will allow them to cover the 4T they have borrowed, then moving back to those 1% retards who can never get their purchase price out of the equity markets... those companies that they overpaid for must be really mismanaged to think that after the Federal and Municipal governments get done trying to use the 12T money supply to repay their 21T in debt, that their companies will be able to repay the 10T they owe. But the award for dumbest dumb-asses (as opposed to just the dumb and dumber), goes to the little guy... who thinks that he- after big governments, big business, and big wallets have figured out how to divide the 12T amongst their over 50T in claims (and get something more than .25 on the dollar), joe-six-pack, is ever going to come up the 10T he owes the banksters...

nofluer's picture

You can't call a note denominated in money that has no value.

Urban Redneck's picture

Yes you can.  And if the debtor cannot satisfy the note, then the debtor is up shit creek without a paddle.  The debtors with access to regulators and printing presses will do relatively better than those without.

Fun Facts's picture

Madoff turned himself in because he ran out of new investors to float his ponzi scheme.

In this global central bankster version of madoff's ponzi scheme, the printing press is the substitute for new investors required to feed the ponzi math progression.

813kml's picture

Madoff turned himself in to avoid getting nailgunned with extreme prejudice.

Ham-bone's picture

'Merican Ponzi blew up in '08 when the 25-54 yr/old population segment peaked and has been declining since...fewer consumers, investors, etc.  Next year the 25-64 yr/old set will peak and just imagine the debt the Fed and Federal Gov will need to create to maintain the phony valuations.

http://econimica.blogspot.com/2015/05/reality-check.html

http://econimica.blogspot.com/2015/05/the-truth-of-great-financial-crisisand.html