End the War on Freedom

Silver at The Mental Militia Forums - good summary of US debt, real and advertised, and the bogus debt ceiling crisis. The US government is way beyond the possibility of ever repaying its debts. It's only a matter of when the default will happen. There have been plenty of defaults in the past, and the world didn't end, but this one will be much larger than any of the previous defaults, so things could be much worse. The SSL certificate for the link is signed by a free certificate authority, so your browser will complain. Add an exception to see it. Entire article quoted below:

A friend asked me to post something about the debt ceiling and default issues. It's a big topic, many books have been written on the topic. I've read a few, certainly not all or even most.

Some basics:

The national debt is a fraud. It is a figure made up by government for government purposes. It has almost no meaning compared to what "debt" means for any individual, honest or otherwise.

The official national debt is $14.3 Trillion, but that ignores most of what is actually owed. The Treasury bailed out failed government enterprises Fannie Mae and Freddie Mac to the tune of $5 trillion, most of it on underwater mortgages that won't be repaid. The federal reserves bailed out big banks, paying them full face value for nearly $1 Trillion in toxic waste paper assets that the market wouldn't pay 10% on the dollar.

Every cent in Social Security and Medicare taxes ever stolen from wage earners has already been spent. In place of real money to pay those debts (the victims of the theft were promised to be paid back in their old age) Congress printed up non-marketable "bonds" promising to pay for Social Security from the Treasury. The current value of those worthless promises is about $2.5 trillion.

So we're up to over $21.8 trillion, but we've only started. We know, thanks to a first-ever audit of the fed resulting from a few decades of tireless work by Ron Paul, that the federal reserve made "emergency loans" totaling $16.1 trillion between Dec. 1, 2007, and July 21, 2010. What we don't know is how much, if any, was paid back.

But the whopper is the present value of the sum owed to Medicare and Social Security. Remember, when you hit 65, you're on Medicare. Apart from medical tourism, there isn't really any choice. Social Security is a Ponzi scheme, a larger version of Madoff's scam. Present receipts are immediately spent, and promises to pay much larger amounts in the future given to the victims. To pay for all the promises made on those two programs with a lump sum today would take between $62 and $200 trillion. The large range is because the future is uncertain, but no credible estimate comes in lower than $62 trillion.

So the real debt is at least $84 trillion and quite possibly three times that.

It will never be repaid. It was never intended to be repaid. The debt is nothing more or less than a tax. It represents an attempt to enslave future generations. They are good tax victims because they aren't around to defend themselves.

Most of the money is created form nothing, impoverishing us all with inflation tax. In some cases money was loaned to the government by investors, on the premise that the "full faith and credit" of the US government backed repayment. Translation: the government promises to beat the interest payments out of its victims citizens. The principle is always rolled over, never paid.

So we have a debt that would require something on the order of $100 to $200 Trillion to repay today; every day that it isn't paid the interest on the debt increases that amount. If the interest is a low 5%, then $5 to $10 trillion is added to the debt every year, before the government spends any more.

The entire amount of goods and services counted in the GDP is $14.7 trillion per year, but most of that is fake. For example, government deficit spending is counted as GDP. Actual productive output is probably closer to $8 trillion. If you tax all income at 100%, and let people freeze and starve, you'd probably won't get enough money to pay the interest on the actual debt. Once the citizens were dead, the amount collected would rapidly fall to zero.

The debt is far too large to be paid. The US government is completely bankrupt.

Default:

Default is nothing new, all governments eventually default. Most do it several times. The US is no exception:

1779: The 241 million paper "continentals" issued during the Revolutionary War became worthless. Each note promised payment in silver dollars. Essentially the first act of the traitor Washington on being elected president was to set the army on frontier farmers, attempting to steal money from them to pay speculators who had purchased vast quantities of the worthless paper, in the hopes a more powerful federal government would pay them in silver. It didn't work. Google "shinplasters" and "worthless as a Continental." Eventually payment was made at the rate of 1 for 1,000, the holders took a 99.9% haircut over the face value. In today's dollars, this represented a ripoff of about $7 billion.

1782: The Continental Congress borrowed actual money as well as printing worthless continentals. The interest on those debts began to go unpaid in 1782, and they were repudiated entirely in 1790.

1862: Paper "greenbacks" were issued to pay for the War of Northern Aggression, in August 1861. The Treasury refused to redeem them in gold, as promised, in January 1862.

1934: Liberty bonds were used finance World War I in 1917, promising repayment in gold. They were 20-year bonds, 4.25 percent issue, payable in gold at a rate of $20.67 per troy ounce. By 1933 the interest alone was rapidly draining the US treasury of gold, so FDR confiscated all domestic gold, repudiated the promise to pay the bonds in gold, and devalued the dollar by 40% to screw the foreign holders of Liberty bonds. Total haircut: about $640 billion.

1971: France knew the fed was printing money like crazy, and started cashing in their US dollars for gold. Nixon repudiated that debt, refusing to pay as promised.

So default is nothing new. The world does not end. Some people get screwed, some more than others. Life goes on. It's generally a different set of folks who get screwed in defaults compared to those screwed daily in normal circumstances, so there is a lot of howling and outrage.

Deficit reduction:

This is such concentrated BS that it gags me every time seemingly intelligent people regurgitate the standard swill. In 2010, the federal government collected $2.16 Trillion in taxes, fees, and other revenues. It spent $3.45 Trillion, a deficit of $1.29 Trillion. They spent $3 for every $2 they collected. Deficits of about $1.5 trillion are expected this year, the next year, and beyond.

So while the "official," debt is going up $1.5 trillion per year, every newsthing, congressthing, and other vile creature talks about "deficit reductions" over a 10 year period. A $4 trillion package of "spending cuts" is supposed to be a big thing.

$1.5 Trillion per year x 10 years = $15 Trillion. If they aren't talking number bigger than $15 Trillion in 10 years, they aren't talking about reduced debt. The most charitable cover for this torrent of lies is that they are discussing reducing the rate at which they want to go deeper into debt. If you look at the actual proposals, without exception the reductions come only after the next election.

It's all a lie. There may or may not be a default, this time. There will surely be a default, a big one, by some measures the biggest in human history. I don't know if that will come next year or in 20 years, but it will surely come. The debt is far too large to ever be repaid.

Debt limit:

Of course they will raise the debt limit. All the posturing and preening is done because politicians crave attention far more than the lowest junkie craves his next fix. They've played it very well and managed to convince a lot of otherwise sensible people that there is some drama here.

The has never been any doubt. They will raise the debt limit because they need to spend more than is sustainable to buy the votes to keep their worthless carcass from having to do anything approaching gainful employment. The only person talking about genuine spending reductions is Ron Paul. All of the rest, without exception, want to continue to go deeper and deeper into debt. The squabble is only about the rate and who gets screwed, not the direction.

Politicians never, ever stop their taxing and spending. They are parasites, it's what they do. Eventually the markets will realize that the debts can't be paid, and this empire will end. Something worse will probably replace it. But that's a topic for another rant.

Peace,

Silver

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