Community | January 07, 2011 | 18 comments

Bankrupt America - The Irrelevance of the Debt Ceiling

source: http://www.peacefreedomprosperity.com/?p=3872

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shanklinmike
By David P Shirk

Over the news we have been hearing about the idea of congress raising the debt ceiling. It has been pointed out that if it is not raised, then many entitlements will not be paid. On the flip side if the debt ceiling is to be raised even higher to cover the cost of all the programs that were promised, then there will be no way to meet that debt no matter what you raise taxes to. Indeed both of these options present some very serious problems.

If government entitlements and are not paid, and other contracts are not honored, then there is a very high chance that riots will indeed ensue when peoples dependency on receiving government checks is severed. However if the debt is raised to meet those contracts and entitlements for the coming year, then the amount of resulting debt extension will make the consequences for the following year more dire. Qe2 will not suffice as it still results in more government debt that we the people are bound as citizens to pay. Monetizing the debt (increasing the money supply to meet the debt), will only result in even greater damage for reasons to numerous to name.

Yet as serious as this problem sounds, it is at this point irrelevant. The amount of unfunded debt from 2010 going into this year (which is far more than merely raising the debt ceiling can cover) remains a problem that I have not even seen the news address yet (for more information on the exact amount and to whom it is owed, go to http://www.treasurydirect.gov/govt/reports/pd/pd.htm and for the exact breakdown, go to http://www.treasurydirect.gov/govt/reports/pd/feddebt/feddebt_dec10.pdf ). What you must keep in mind is that the number 4,624,007 is not expressed in the dollar amount, but rather in the millions, meaning that the real rolled over debt is 4,624,007,000,000 – 4.6 trillion.

Politicians on the hill have grown complacent to this number. After all, the same number at the end of 2008 was 4.3 trillion. So if we can continue to carry over debt from one year into the next without a catastrophe, why should they pay it any notice? Given this simple way of looking at things, it would seem like the debt can be allowed to simply continue to go up.

Yet here is the part that no politician wants to mention – how the debts were funded, and how were they rolled over. Heck, your average US subject would never even bother to go to http://www.treasurydirect.gov/govt/reports/pd/pd_sbredemptionsissuesbyseries.xls , and find out how this happens. This oversight of tracking how the debt is funded is what will cause the catastrophe. If you want a real jaw dropper as to the impending danger of what is happening, I encourage you to open the link. The amount of bonds outstanding (the money received by the government for the sale of the bonds), is not nearly enough to meet the debt rolled over from 2010 into 2011, let alone to fund this year’s budget. This is why the raising of the debt ceiling is irrelevant. The outstanding debt was 4.6 trillion – the amount of bonds it had to back it was only about 2.2 trillion, meaning that for the first time, we have 2.4 trillion dollars of debt, and absolutely no way to answer it.

In 2008 people like Peter Schiff, Gerald Celente, and Ron Paul warned of this danger. Yet so blind are most people to the nation’s economy, they laughed at them. The three people I just mentioned attempted to break the problem down into laymans terms knowing that most people would be lost if they dug into the specifics – and because people attack what they do not understand, they mocked them. The sad reality is that people missed the point of their arguments completely, and what is coming very soon is the result.

Yet those 3 (amongst many others) made 1 last warning knowing that the spending of government would not slow – and that was the danger of monetizing the debt. Monetizing the debt would mean that the FED would simply print the money into existence. Outside of running the very high risk of creating hyperinflation, there is of course another danger.

The Federal Reserve is not a government entity. It is a private banking institution owned by people who have little to do with our government. Their sole responsibility was to create a ....

http://www.peacefreedomprosperity.com/?p=3872
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18 comments // Bankrupt America - The Irrelevance of the Debt Ceiling

  • ghostofamerica
    • 0
      ghostofamerica  

    • i watched a clip yesterday about money and debt, and in the American economy they are appear to literally be different sides of the same coin. as is mentioned here, all money is essentially borrowed from the federal reserve.

    • 1 year ago
  • davids80
    • 0
      davids80  
    • ghostofamerica:

      Actually the article does not say it is all the fed reserve - and actually states that other countries in the past have funded our debt by purchasing US securities. The Fed does the monetizing etc.

    • 1 year ago
  • ejasun
    • 0
      ejasun  
    • Image

    • "Where is MY BAIL OUT" ???? title here the debt is irrelevent

      Bankrupt I'm Writing a new book "How to be a hobo for Idiots"

      I'm sure soon it will be a top stolen book!

    • 1 year ago
  • tommic
    • 0
      tommic  

    • Never so true the title here the debt is irrelevent, right now spending as in percentage of money the military industrial complex sucks out of the economy producing fewer jobs per dollar spent than any other way to spend money. Until the United States comes to the full understanding that to spend 50% of all revenue on what we call defense, but is really the capitalist military industrial complex that Five Star General and President Dwight D Eisenhower ( a conservative Republican) warned the entire Untited States citizenry about in his farewell speech in 1959. Only when this is realized that the capitalist military industrial complex is really destroying the country we are told it is to protect. can it be changed. For without admitting this most salient point it cannot and will not happen. No society in the known history of the world has been able to do what we are doing now and survive. Every last one is gone. So the choice is really yours do you listen to progressive thinking ( which is neither liberal or conservative) and rational thought based on logic and historical perspectives. Or choose not to with certainty that it can only insure disaster and failed previous spending habits in how we as a people choose to exercise our way to run our society based on defense based industries. This is not to say we should not have Army Navy Air Force Marines we do and would, this is about spending half of what we spend on defense in order to be able to handle debt, handle deficits, pay for social programs and bring a stable financial world to order starting here at home with the most benifit being felt the quickest to bring manufacturing and new technologies manufacturing back to the United States in the long run producing more jobs per dollar than were when the military industrial complex sucked it dry.

    • 1 year ago
  • shanklinmike
  • PressCore
  • PressCore
    • 0
      PressCore  
    • shanklinmike:

      When Mao Tse Tung said that: " Power flows from the barrel of a gun "
      he wasn't off target though. Have you ever seen that 1997 movie: Starship
      Troopers produced by Paul Verhoeven ? If you haven't, check it out some
      time. There's a scene early on in the movie where Casper Van Dien ( gotta
      love my kin, the Dutch ) has a discussion with his classroom teacher played
      by Michael Ironside. Check out what they have to say, and it will restate
      Chairman Mao's political philosophy in other words, and more fuller detail
      as to its full implications. You don't have to agree with a p.o.v. to learn from it.
      When Government was small, people & money was big. When Government
      got bigger, people & money got smaller. No, it doesn't take a genius...As for
      Big Gummint, and the Statism it breeds, the Alchoholics Anonymous argument
      fits. " A man takes a drink, then the drink takes a drink, then the drink takes
      the man " Once Government stopped functioning to fulfill all its Constitutional
      duties, and wasn't in places where they were legaly obligated to be, we began
      to see them be everywhere they have no legal right to be. What happens when
      we tolerate Government by men, and not by Constitutional laws. The only true
      form of Government is Constitutional law, which exists in books. Law is
      predictable which is why I entered that field after Psychology.

    • 1 year ago
  • EvilTaco
    • +1
      EvilTaco  

    • Cue the litany of people trying to say it doesn't belong in news, even though it pertains to current events, just because Mike posted it.

    • 1 year ago
  • CreditFigaro
    • -1
      CreditFigaro  

    • -yaaaaawn- yet another ridiculous post about how terrible the debt is and how awful the Fed is.

      No data, no macroeconomic analysis, just quoting the debt figure and too much inflammatory BS to name.

      No thanks, Shanky. I'll bite when someone can prove to me that the Fed is a bad thing. In the mean time, I'll remember that it kept us out of the worst depression in the history of the US.

    • 1 year ago
  • shanklinmike
  • PressCore
    • 0
      PressCore  
    • CreditFigaro:

      I watched a good program on the History channel on January 5, 2011. It was
      first aired then, 2 days ago, so it's not passe. There were 5 men who took
      turns in the 2 hour episode giving their take on present trends and what the
      near future, then long term future will bring. It was a real eye opener. One
      man was an economist who's very credible. As a reference, check it out some
      time when it's rerun. I'm sure it'll be on again in a couple of weeks. " Prophets
      of Doom " is the title of the episode. I won't spoil the surprise for you. Something
      tells me, since the 2007 Denver minted Amero coins were shipped to China,
      that we'll be seeing an entirely different type of monentary system by the time
      the next decade starts in 2020. I don't mean to sound like Glen Beck (heaven
      forbid) but it is a well accepted fact that what we have now is not sustainable.
      I'd be interested in hearing your take on current events if you care to comment, nonetheless, sir.

    • 1 year ago
  • tommic
    • 0
      tommic  
    • PressCore:

      It is correct that the status Quo is financially and socially unsustainable, it is impossible for mankind to continue on the present path and survive economically, once the economic systems fail and they may within the frame of time it would take mankind to change from a system of constant debt, currency based on nothing more than a promise to pay, essentially a check. to resource based economy. There would be or will be anyway no matter what we do for no great leap forward will come without sacrifice. The problems are so deeply ingrained that its going to be difficult although not impossible.

    • 1 year ago
  • hotjuno
    • 0
      hotjuno  
    • CreditFigaro:

      I can not "-yaaaaawn-" like you. But I am sick of terror speech that comes across as 'skepticism'.
      You say, "No data, no macroeconomic analysis, just quoting the debt figure and too much inflammatory BS to name." Really?
      Let me guess...you have a groundless stance, right? Come on now, what do you stand for? To help you out here--it is ok to say 'BS'. You've said it before, you can say it again. LOL
      Your sophistry is terroristic in nature, it is.
      But this is ok too.
      "...macroeconomic analysis...", again really? LOL
      Be honest, you don't believe in the free flow of INFO, do you? I mean, with all the cuts coming down the road--the public library system will virtually disappear. You know this.
      Before the 2008 election the previous president you voted FOR purged the nation's E.P.A. library of your 'macroeconomic analysis' you so wantingly require as, there's that word...evidence.
      So your concern isn't the 'stance' that you refute but how the fook did that person get the INFO in the first place. ad hominem aside, you display terror speech but the problem we suffer is that no one is saying it until...now! LOL
      Flicka T Flocka T Flake
      Help us destroy the planet for your own sake
      And if you don't believe our lie then you must die
      Flicka T Flocka T Flake
      Flicka T Flocka T Flake
      LOL LOL

    • 1 year ago
  • davids80
  • CarlosIsDown
  • BrushwithDeathToothpaste
  • Nick19
  • davids80
    • 0
      davids80  
    • CarlosIsDown:

      A main topic on the news has been the debt cieling. In all of the news i have seen on it, not once once was the facts listed coming from the Dept of treasuries own site - including all the rollover debt from last year uncovered by any form of securities. There are three links in the article, each leading to pages that give a heck of a lot more info then was in this article. Did you click on these links, read their content, and analyse it before commenting? Does not sound like ya did.

    • 1 year ago
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