If The U.S. Government Keeps Spending Money Like This We Are Doomed And If The U.S. Government Stops Spending Money Like This We Are Doomed
January 27, 2012
The Economic Collapse
Either way you look at it, the United States is in serious trouble.” –KTRN
If you increased your credit card spending by a couple thousand dollars per month would your lifestyle improve? Of course it would. By going into large amounts of debt, it is possible to live a lifestyle that you can’t really afford, at least for a while. But if you keep racking up huge amounts of credit card debt every single month, eventually it gets to a point where it is extremely difficult to even keep up with the minimum monthly payments and the credit card companies will not lend you any more money. Well, on a larger scale it is the same thing with government debt. Right now, the U.S. government is spending more than a trillion dollars more than it takes in every year. Even if the U.S. government spends all of that money on incredibly stupid stuff, it still gets into the pockets of ordinary Americans. In turn, those ordinary Americans use that money to pay the mortgage, buy food, shop at the mall, etc. All of this borrowing and spending by the U.S. government has created a “false prosperity” bubble that is not real. It may feel real to you right now, but it is unsustainable by definition. If the U.S. government suddenly started spending only the money that it actually brought in every year, our economy would be doomed and all of this “false prosperity” would rapidly disappear. But if the U.S. government continues to rack up debt at this pace we are doomed as well. In fact, every dollar that gets borrowed makes our eventual collapse ever worse. We are heading down the exact same road that Greece has gone. Eventually the rest of the world is not going to lend us gigantic mountains of super cheap money anymore. When the flow of cheap money stops, it can be extremely painful. Anyone that has ever seen the interest rates on their credit cards go above 20 percent knows how this feels. If we had addressed these problems as a nation a decade or two ago, perhaps we could have found a solution. But now there is no way out under our current financial system and a devastating economic collapse is on the horizon no matter what we do.
If there was a Hollywood movie where some crooks successfully stole 150 million dollars, what would you think of those crooks?
Would you have admiration for them?
Would you be disgusted with them?
Would you feel like your intelligence was insulted because nobody could ever steal 150 million dollars and get away with it?
Well, right now the federal government is stealing approximately 150 million dollars from our children and our grandchildren every single hour.
That’s right – the U.S. government is borrowing an astounding 150 million dollars an hour that our children and our grandchildren will be expected to deal with.
Will Kevin Trudeau Run For United States Congress? How To Fix America (What Newt, Mitt, & Obama wont tell you)
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If you want to know How To fix America, you must watch this video.
Our liberties and freedoms are being taken away! Trudeau divulges what is wrong with America, and what YOU can do set it back on the right track!
Obama on Pace to Borrow $6.2T in One Term—More Than All Presidents from Washington Through Clinton Combined
January 13, 2012
By Terence P. Jeffrey
“Let’s just keep borrowing more money. We’re only in debt for trillions of dollars. At this point, we might as well just keep going to see what happens. If we let our personal finances get as bad as the government’s, we’d be screwed.” –KTRN
President Barack Obama has been increasing the national debt during his presidency by an average of $4.24 billion per day ($4,240,506,004.34) putting him on a pace to increase the national debt by $6.2 trillion ($6,195,379,272,340.74) by the end of his term on Jan. 20, 2013, according to the debt figures published by the U.S. Treasury.
That $6.2 trillion is more debt than was accumulated by all U.S. presidents from George Washington through Bill Clinton combined.
In fact, the U.S. national debt did not eclipse the $6.195 trillion level—the amount Obama is on pace to increase it in one term—until August 19, 2002, during President George W. Bush’s second year of office.
Today is the day you have all been waiting for…KT is back, and he’s back with a vengeance! Our liberties and freedoms are being taken away! Trudeau divulges what is wrong with America, and what YOU can do set it back on the right track!
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November 7, 2011
By Matthew Jaffe
It will be the latest sobering economic milestone that few were hoping to see: The U.S. national debt – any day now – will soar above the $15 trillion mark.
As of this writing, the total debt is $14.97 trillion, so moving beyond the symbolic $15 trillion is a foregone conclusion. When the unwelcome milestone is reached, it will come at a volatile time both in this country and abroad.
Across the Atlantic, President Obama is in Cannes, France, for the G-20 summit that takes place as Europe is trying to finalize a bailout for debt-ridden Greece.
Back on the home front, Obama is preparing for a difficult re-election fight next year. Republican candidates from Mitt Romney to Herman Cain have pounced on the country’s economic woes in their bids to win the GOP nomination and the chance to oppose Obama. Meanwhile, the Occupy Wall Street protests directed at the nation’s financial inequalities continue to rage across the country.
October 31, 2011
The Washington Post
By Lori Montgomery
Last year, as a debate over the runaway national debt gathered steam in Washington, Social Security passed a treacherous milestone. It went “cash negative.”
For most of its 75-year history, the program had paid its own way through a dedicated stream of payroll taxes, even generating huge surpluses for the past two decades. But in 2010, under the strain of a recession that caused tax revenue to plummet, the cost of benefits outstripped tax collections for the first time since the early 1980s.
Now, Social Security is sucking money out of the Treasury. This year, it will add a projected $46 billion to the nation’s budget problems, according to projections by system trustees. Replacing cash lost to a one-year payroll tax holiday will require an additional $105 billion. If the payroll tax break is expanded next year, as President Obama has proposed, Social Security will need an extra $267 billion to pay promised benefits.
But while talk about fixing the nation’s finances has grown more urgent, fixing Social Security has largely vanished from the conversation.
Lawmakers in both parties are ducking the issue, wary of agitating older voters and their advocates in Washington, who have long targeted politicians who try to tamper with federal retirement benefits. Democrats lost control of the House last year in part because seniors abandoned them in protest over Medicare cuts in Obama’s much-contested health-care act, and no one in Washington has forgotten that lesson.
September 19th, 2011
The Huffington Post
By: Jim Kuhnhenn
Drawing a bright line with congressional Republicans, President Barack Obama is proposing $1.5 trillion in new tax revenue as part of his long-term deficit reduction plan, according to senior administration officials.
The president on Monday will announce a proposal that includes repeal of Bush-era tax cuts for the wealthiest taxpayers, nearly $250 billion in reductions in Medicare spending, $330 billion in cuts in other mandatory benefit programs, and savings of $1 trillion from the withdrawal of troops from Iraq and Afghanistan, the officials said.
The plan includes no changes in Social Security and does not include an increase in the Medicare eligibility age, which the president had considered this summer.
The officials briefed reporters Sunday evening, but spoke on the condition of anonymity in advance of the president’s announcement.
All in all, the president’s plan is as much an opening bid as it is a political statement designed to draw contrasts with Republicans, who control the House of Representatives.
As such, it was not intended as a compromise and did not include agreements Obama had reached with House Speaker John Boehner during failed deficit reduction negotiations this summer.
The new taxes in particular have little or no chance of passing Congress as proposed. Republicans were already lining up against the president’s tax proposal before they even knew the magnitude of what he intended to recommend.
Key features of the proposal:
_$1.5 trillion in new revenue, which would include about $800 billion realized over 10 years from repealing the Bush-era tax rates for couples making more than $250,000. It also would place limits on deductions for wealthy filers and end certain corporate loopholes and subsidies for oil and gas companies.
_$580 billion in cuts in mandatory benefit programs, including $248 billion in Medicare and $72 billion in Medicaid and other health programs. Other mandatory benefit programs include farm subsidies.
_$430 billion in savings from lower interest payment on the national debt.
By adding about $1 trillion in spending cuts already enacted by Congress and counting about $1 trillion in savings from the drawdown of military forces from Iraq and Afghanistan, the combined deficit reduction would total more than $4 trillion over 10 years, senior administration officials said.
Obama backed away from proposing sweeping changes to Medicare, following the advice of fellow Democrats that it would only give political cover to a privatization plan supported by House Republicans that turned to be unpopular with older Americans.
Administration officials said 90 percent of the $248 billion in 10-year Medicare cuts would be squeezed from service providers. The plan does shift some additional costs to beneficiaries, but those changes would not start until 2017, and administration officials made clear as well that Obama would veto any Medicare cuts that aren’t paired with tax increases on upper-income people.
The deficit reduction plan represents an economic bookend to the $447 billion in tax cuts and new public works spending that Obama has proposed as a short-term measure to stimulate the economy and create jobs. He’s submitting his deficit fighting plan to a special joint committee of Congress that is charged with recommending how to reduce deficits by $1.2 trillion to $1.5 trillion over 10 years.
Republicans have ridiculed the war savings as gimmicky, but House Republicans included them in their budget proposal this year and House Speaker John Boehner, R-Ohio, had agreed to count them as savings during debt ceiling negotiations with Obama this summer.
But the Republicans’ biggest objections will be with the president’s tax increases.
“Class warfare may make for really good politics but it makes for rotten economics,” GOP Rep. Paul Ryan of Wisconsin, the House Budget Committee chairman, told “Fox News Sunday.”
Ryan was commenting on Obama’s plan to propose a new minimum tax rate for taxpayers earning more than $1 million.
The measure – Obama is going to call it the “Buffett Rule” for billionaire investor Warren Buffett – is designed to prevent millionaires from taking advantage of lower tax rates on investment earnings than what middle-income taxpayers pay on their wages. At issue is the difference between a taxpayer’s tax bracket and the effective tax rate that taxpayer pays. Millionaires face a 35 percent tax bracket, while middle income filers fall in the 15 or 25 percent bracket. But investment income is taxed at 15 percent and Buffett has complained that he and other wealthy people have been “coddled long enough” and shouldn’t be paying a smaller share of their income in federal taxes than middle-class taxpayers.
Still, the White House considers passing the jobs bill far more pressing and Obama has been looking for every opportunity to bring it to the public’s attention.
In his Saturday radio and Internet address, Obama said he would lay down a plan that would show how to pay down the nation’s debt and pay for his employment legislation.
“But right now,” he said, “we’ve got to get Congress to pass this jobs bill.”
To that end, Obama on Thursday will be at a bridge linking Ohio and Kentucky – home states to Boehner and Senate Republican leader Mitch McConnell. He will use the bridge as a prop to call for increased spending on infrastructure.
August 12th, 2011
When Standard & Poor’s reduced the nation’s credit rating from AAA to AA-plus, the United States suffered the first downgrade to its credit rating ever. S&P took this action despite the plan Congress passed this past week to raise the debt limit.
The downgrade, S&P said, “reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.”
It’s those medium- and long-term debt problems that also worry economics professor Laurence J. Kotlikoff, who served as a senior economist on President Reagan’s Council of Economic Advisers. He says the national debt, which the U.S. Treasury has accounted at about $14 trillion, is just the tip of the iceberg.
“We have all these unofficial debts that are massive compared to the official debt,” Kotlikoff tells David Greene, guest host of weekends on All Things Considered. “We’re focused just on the official debt, so we’re trying to balance the wrong books.”
Kotlikoff explains that America’s “unofficial” payment obligations — like Social Security, Medicare and Medicaid benefits — jack up the debt figure substantially.
“If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion. That’s the fiscal gap,” he says. “That’s our true indebtedness.”
We don’t hear more about this enormous number, Kotlikoff says, because politicians have chosen their language carefully to keep most of the problem off the books.
“Why are these guys thinking about balancing the budget?” he says. “They should try and think about our long-term fiscal problems.”
According to Kotlikoff, one of the biggest fiscal problems Congress should focus on is America’s obligation to make Social Security payments to future generations of the elderly.
“We’ve got 78 million baby boomers who are poised to collect, in about 15 to 20 years, about $40,000 per person. Multiply 78 million by $40,000 — you’re talking about more than $3 trillion a year just to give to a portion of the population,” he says. “That’s an enormous bill that’s overhanging our heads, and Congress isn’t focused on it.”
“We’ve consistently done too little too late, looked too short-term, said the future would take care of itself, we’ll deal with that tomorrow,” he says. “Well, guess what? You can’t keep putting off these problems.”
To eliminate the fiscal gap, Kotlikoff says, the U.S. would have to have tax increases and spending reductions far beyond what’s being negotiated right now in Washington.
“What you have to do is either immediately and permanently raise taxes by about two-thirds, or immediately and permanently cut every dollar of spending by 40 percent forever. The [Congressional Budget Office's] numbers say we have an absolutely enormous problem facing us.”
Seven Startling Things Most People Still Don’t Know About The National Debt, Banking And The Money Supply
August 2nd, 2011
By: Mike Adams
Most people, even smart people, know surprisingly little about the way money really works in Big Government. With the debt ceiling fiasco suddenly raising awareness of the possibility of a total global financial blowout, now seems like a good time to remind people of seven disturbing facts about money that are almost never acknowledge in the old media.
Fact #1 – There is no FDIC insurance fund.
The money at your bank is insured against loss by the FDIC’s insurance fund, right? Nope. That’s total fiction. There is no actual money in the fund. The FDIC insurance money has already been looted by the U.S. Treasury which has simply replaced the money with a bunch of IOUs.
Why does this matter? Because it means that if the U.S. government goes into default, so will the FDIC! And that means all your bank funds have zero insurance. That’s gonna be a big shock for tens of millions of people when they finally figure this out one day…
Fact #2 – There are no social security funds, either.
When you pay social security taxes, all that money goes into a trust fund that’s held for safekeeping until the day it pays you back, right?
Ha! That’s the “sucker’s view” of social security that only ignorant people believe. In reality, there is no money in the social security trust fund because it too has all been looted by the U.S. Treasury and spent. In truth, social security is already broke. Can’t wait for people to wake up and figure this one out, either…
Fact #3 – The U.S. Treasury is stealing money from you every day, even if you pay no taxes!
Here’s a mind-boggling truth that most people just can’t seem to get their heads around: The U.S. Treasury is stealing money from you every single day by the simple fact that they keep creating new money and handing it out to wealthy banksters. Well, technically this is being done by the Federal Reserve, which isn’t even part of the federal government. But it’s all done in cahoots with the Treasury, which is eroding the value of your money through these money creation and distribution actions.
That’s why prices keep going up all around you, folks: Food isn’t suddenly worth more money; the truth is that your money is worth less! That’s how the Treasury and the Federal Reserve steal from you without even breaking into your home.
Probably 99.9% of the population has no understanding of this phenomenon — the erosion of currency valuation through the centralized government printing of more currency. And yet it is a government scam that has been carried out against citizens of the world time and time again, spanning millennia! As history has clearly shown, every nation that goes down the path of printing more currency to pay its bills eventually ends up in a runaway hyperinflation scenario followed by economic collapse. The USA will be no different.
Fact #4 – The “balanced solution” isn’t balanced.
Don’t you love the quirky White House Press Secretary who keeps spewing out the phrase “balanced solution” even while the debt deal leaves the U.S. budget entirely unbalanced?
When you’re spending more money than you’re earning, that’s not financial balance. When the White House says “balanced” what it really means is “compromised” — as in, half way between the Republican position (spend us into purgatory) and the Democratic position (spend us into oblivion). Neither party has any real solution to the cancerous growth of Big Government. That’s because they are creatures of Big Government!
Politicians can no more solve the problems of Big Government than arsonists can solve the problem of office fires. Because they are, themselves, creatures of runaway debt spending (how else do you get elected these days?), they simply do not possess the cognitive framework from which real financial solutions must stem.
Fact #5 – The government is going to steal everything from you before it collapses
Oh my, this is a tough one for people to get their heads around… especially those who naively trust governments to act in the interests of the People. The simple truth of the matter — and I’ve publicly made this prediction before — is that the government is going to STEAL almost everything you own as it heads toward a total financial implosion. This will include:
• The government theft of private retirement accounts. The feds will claim they’re taking them over “for your protection.” Yeah, right. And then one day they will simply all vanish. Kiss your IRA goodbye…
• The government theft of precious metals. Within the next 3 years, watch for a national emergency to be declared, followed by government confiscation of gold and silver. The feds will take your gold and hand you paper money in exchange. The paper money, of course, will be all but worthless shortly thereafter. Only the suckers, of course, will actually turn in their metals…
• Government takeover of your bank accounts. As banks begin to fail in the big collapse, the government will step in and take ownership of the failed institutions, just as it did with Fannie Mae and Freddie Mac (which used to be publicly-owned companies but are now largely just government finance operations). This will put your bank accounts under the direct control of the White House, which can use executive orders to do things like banning all wire transfers out of the country or limiting daily withdrawals and transfers. Sure, you’ll still “own” your money in the bank, you just won’t be able to freely access it!
Fact #6 – Most people have no idea about fractional reserve banking, derivatives, the money supply or the Federal Reserve
It’s not just that most people don’t understand banking and finance; it’s that even members of Congress have no idea how all this works. With few exceptions (like Ron Paul), they’re just clueless!
Get this: Even most bankers don’t even know how fractional reserve banking really works. They don’t understand derivatives, either, which is why they screwed them up so badly in the housing boom that crashed in 2007. And because bankers, investors and bureaucrats have no idea how it all works, they unwittingly turn it all into a runaway catastrophe.
Allowing ignorant adults to play with debt and derivatives is like letting infants play with nuclear weapons. It can only lead to something messy.
Fact #7 – Most people are betting their lives on the dollar
People buy insurance for their cars, their homes and even their health. But when it comes to money, 99 out of 100 people in America are betting their entire financial existence on the U.S. dollar! They get their paychecks in dollars, their savings accounts are in dollars, and all their assets are denominated in dollars. As a result, they have no diversity to protect them against dollar devaluation.
That’s kinda crazy, considering just how quickly the dollar could collapse in the near future and become totally worthless. That’s why smart people are diversifying their assets and converting dollars into land, gold, silver or even storable food. Here in central Texas, even ammunition has a long-term barter value that far exceeds dollars.
Looking around at the financial behaviors of others, I’m just stunned at how many people are betting everything on the dollar because they never realized they had any other option (that’s the way the government likes to keep it, of course!).
July 14th, 2011
By: Andrei Fedyashin
Budget and debt problems are once again racking America. Barack Obama has failed to persuade the Republican majority in Congress to raise the national debt ceiling. That much is nothing new, and similar attempts will be unlikely to succeed in the future. Since July 10, the White House has been holding daily consultations on raising the ceiling. The current ceiling of $14.3 trillion must be raised by several hundred billion, or the Department of the Treasury will run out of money by August 2.
The Americans raise their debt ceiling on a regular basis. Since 1993, they have come close to defaulting 16 times. In 1995, the government even shut down for a week. In the past, the world perceived these exercises as a matter of course, whereas now the unwritten rule of the U.S. budget is increasingly becoming a sore subject.
The times have changed, and the national debt and deficit have become too astronomical to be treated as an American eccentricity, especially considering the U.S.-bred financial crisis of 2008 and the backdrop of failing finances in Greece, Ireland, and Portugal (likely to be followed by Spain and Italy) and the patently pre-crisis condition of the Euro.
The U.S. Department of the Treasury has not yet announced who will be the hardest hit if worst comes to worst – the secretaries of departments, other officials, congressmen, senators, the Pentagon, intelligence, teachers, transportation workers, the IRS, NASA, museums, or janitors. That much, at least, is of little concern to Europe.
The problem is not salary cuts for specific agencies but U.S. solvency. Nobody is saying that the United States will immediately default on its entire sovereign debt – it remains the most reliable debtor in the world.
The trouble lies elsewhere:
a) The national debt continues to swell (in reality, it exceeded the ceiling of $14.3 trillion in May).
b) The federal government has come too close to being unable to pay interest on its debt too often.
c) Due to the uncertainty surrounding American debt and financial upheaval in parts of Europe, interest rates are growing on all financial markets;
d) Insurance rates on credit are growing.
e) The stock exchanges are getting nervous.
Put together, these factors may constitute a volatile mixture that could flare into another global financial crisis. It may start with minor market convulsions that erupt into something much larger.
The extent of European frustration with American debt is aptly expressed in one telling commentary. The British journal The Economist, a well-known guru of the free market, free trade, and sound conservatism, supports Obama’s position and calls Republican grievances with the budget proposals of a Democratic president “a gamble where you bet your country’s good name.” It considers such conduct shameful and absurd for Republicans who advocate reductions in government spending.
Cuts in social spending and higher taxes are still the only way of reducing budget expenditures and a country’s sovereign debt. This is exactly what Obama suggests, but the Republicans object to any such tax increases. Meanwhile, they are ready to reduce the budget by only $2 trillion instead of the $4 trillion that Obama suggests.
To cut is to heal
In European eyes, these developments in the White House are a farce rather than a tragedy. It is something akin to taking the world’s financial and economic players hostage and making them the captive audience to an American soap opera that has evoked little but bewilderment and confusion.
It is clear that the Republicans do not want to come to Obama’s aid on the eve of the 2012 presidential elections, but it is unclear why they insist on keeping the rest of the world in suspense.
America is far from being a champion of the ratio between its GDP and national debt. That debt amounts to 65% of its GDP and ranks 37th on the list of major global debtors. Yet many European countries fare worse: Greece (144%), Iceland (123%), France (83%), Germany (78%), and Britain (77%).
A look at the information provided by the CIA (or IMF – they are only slightly different) makes it clear that Japan is worst off in terms of debt: 226% of the GDP! Only St. Kitts and Nevis come close with 186%.
The debt section of the CIA’s yearly periodical is the only economic publication in which we are pleased to see Russia in 123rd place (out of 132). We seem to have left everyone behind with a debt of only 9.5% of our GDP.
In fact, we are among the leading creditors of the U.S. government, although we cannot yet afford to talk to Washington or ignore its opinion like China, its biggest creditor. Washington owes $1.154 trillion to Beijing, amounting to 25.8% of U.S. external debt. Japan is the runner-up with $890.3 billion in U.S. treasury bonds. Put together, Tokyo and Beijing account for 45.7% of total U.S. debt. Russia’s share is some $130.5 billion or a mere 2.9%.
American debts are still considered the most reliable in the world. U.S. bonds have almost the same liquidity as dollars on the debt security markets. But Moody’s has already hinted that if the United States delays payment on its debt, there will be consequences for its credit rating. Moody’s Spokesman Steven A. Hess put it succinctly when he said that if a debtor delays interest payments once, it may do so again, adding that it will automatically remove the debtor from the top category of the credit rankings.
There is still hope that these problems will dissipate by the August 2 deadline. The world is counting on the fact that a new and massive “Greek dilemma” is not on the horizon. But the longer this situation lasts, the greater the risk that America’s debt problems will cause a chain reaction. If so, the storm clouds of a new crisis will form again in earnest and on an unprecedented scale.
The views expressed in this article are the author’s and do not necessarily represent those of RIA Novosti.
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