5 Complete Lies About America's
New $18 Trillion Debt Level, Submitted by Tyler Durden on 12/02/2014 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 big 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.
Comments
The Treasury’s cash-flow problem is stunning.
We have $71.9 billion in the bank, but we spend $10 billion a day.
Politicians need to stop wasting our borrowed
and printed money. They need to cut $1 trillion from their $4 trillion spending
spree and make it on $3 trillion. I
would use $1 trillion to pay off the national debt, $1 trillion to pay out and
wind down Social Security and Medicare and $1 trillion to fund the federal
government. Needless to say, I would
transfer all unconstitutional functions from the federal to the States and
leave the federal government with the enumerated powers granted by the states
in the US Constitution (as written).
Norb Leahy, Dunwoody GA Tea Party Leader
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