A Raging Case of Bailout Fatigue

You're right......it isn't about satisfying the debts, it's about keeping the game going.

For better or worse, the US government doesn't give the Fed a dime. In fact it's the opposite. The only way the US government can get money is by selling the Fed US bonds. For example, lets say the US government needs 10 billion dollars. They create US bonds equal to that amount and "sell" them to the Fed who in return gives the government 10 billion Federal Reserve Notes i.e. dollars. This represents a "debt" to the US government because at some point in the future the dollar value on the bonds has to be paid off. With regard deficit it means we'd have to sell 14 trillion dollars in bonds to get 14 trillion dollars. In other words we'd still have a 14 trillion dollar deficit.

IMO the creation of the Fed represents the privatization of the US Treasury Dept. and the most important function of any government, the control of its money supply. Unfortunately, like all things privatized, their first and foremost concern is them, not us. In the case of the Fed doling out trillions to banks, they are protecting THEIR investments at the expense of the US taxpayer who becomes responsible for any loses they incur.

Thank you -- I now understand the connection much better (and see how ignorant I was about the real situation); now, let me try this again ... when you talked about the 14 trillion in bonds to pay the Fed we'd still have a $14 trillion deficit, it sounded kind of like what the paycheck places do -- you 'borrow' $100 and pay it with a check they don't cash (as long as you get back in there b4 the 2 weeks are up), but the only way to break free of that trap is to have $200 so you can pay off the 100 you owe them and still have another 100 you can actually spend on bills. Yeah, personal experience sucks sometimes :-). The good news is -- true story -- when some idiot ran into us we got enough extra out of it to pay off that LAST postdated check and have never had to go back to that.

Slow Day

It's a slow day in a small Florida town and streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit. A rich tourist drives through town, stops at the motel, and lays a $100 on the desk saying he wants to inspect the rooms upstairs to pick one for the night. As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher. The butcher takes the $100 and runs down the street to retire his debt to the pig farmer. The pig farmer takes the $100 and heads off to pay his bill to the Farmer's Co-op. The guy at the Co-op takes the $100 and runs to pay his debt to the local hooker, who has also been facing hard times and has had to offer her "services" on credit. The hooker rushes to the hotel and pays off her bill with the hotel owner. The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything. At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 and leaves town. No one produced anything. No one earned anything. However, the whole town is now out of debt and now looks towards the future with a lot more optimism.

And that is how America conducts business today!

The National Debt Showdown By The Numbers - As Reported On CBS News Sunday Morning, July 31, 2011.

"The debt is at it's legal ceiling, 14.3 trillion dollars. Up from one trillion dollars in 1981. Of that, 3.6 trillion dollars is owed to us, the public, including financial institutions, pension funds and individuals. If you own a U.S. Savings Bond, you are part of the debt. The Federal government owes another 6.2 trillion dollars to the Federal government, including 1.6 trillion dollars to the Federal Reserve System, 4.6 trillion dollars to various government trust funds including Social Security. Nearly a third of the remaining debt, 4.5 trillion dollars, is owed to Foreign governments, with China topping the list with 1.2 trillion dollars. So, in what sort of shape is the Federal government to pay off this debt? As of Friday, the Treasury had just 39 billion dollars in cash on hand. By Tuesday, August 2nd, Deadline Day, that balance drops to 26 billion dollars. And by Wednesday, August 3rd, the government will have just about 15 billion dollars available with 23 billion dollars in Social Security checks to send out. There's new hope now that the negotiators on Capital Hill and at the White House have reached a deal to raise the debt ceiling avoiding the unimaginable. And on a subject of unimaginable, consider this, yesterday we learned that Apple, the computer maker, had 76 billion dollars in the bank at the end of June. That is more than twice as much as the U.S. Treasury had on hand at the close of business yesterday."

Disembowel Regutlicans and stomp on their guts!!! But you're not bitter :-)!!!

You know, I have this theory ... if Wall St and the koch kiddies, and Grover Norquist can get the soon-2-be-disemboweled regutlicans to roll over as easily and completely as they have then they are the ones who are truly weak-kneed, lily-livered, shit-eating whiners and we really have no reason to pay any attention to them. Kinda like those stupid Subway commercials where the 'adults' talked in kids' voices and behaved like the 2-year-old reptards have been doing since Obama took office :-)!
Pwr 2 all of us who have been pee'd on since the advent of trickle-down economics! Dismember, disembowel, stomp out all reptards and their allies!

Great post!

That is the perfect example of how the "velocity of money" effects an economy......I use that example often. ^'d

I think it is also important to point out that our monetary system was not designed to allow the Federal Government to pay off its debt.