US, world headed for 25 year depression: Jim Rickards

US, world headed for 25 year depression: Jim Rickards

“When I use the phrase 25 year depression, it sounds extreme but it’s not. We had a 30 year depression in the United States from about 1870 to 1900…The Great Depression lasted from about 1929 to 1940. The U.S. is in a depression today.” Well, it's been in the works for

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Canadian banking haven myth exposed

Canadian banking haven myth exposed

"One of the reasons that Canadians (and international commentators, other finance ministers and global financial institutions) buy this Canadian banking fairy tale is the way the government accounts for the money borrowed to support the banks." The sorry spectacle of Conservat

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Get rid of your mortgage, loans, because interest rates set to rise

Get rid of your mortgage, loans, because interest rates set to rise

Get rid of your loans, guys and gals, because we are going into a high interest rate period. Very high. It will be the equivalent of going into the double digit interest rates we had in the 80s where many people threw their house keys at the bank and we had record numbers of ba

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E-cigarettes save lives, money

E-cigarettes save lives, money

"We know that cigarettes have thousands of chemicals in them and we know that they are killing us. They have been for over a hundred years. So now, the e-cig industry comes along with only one or two chemicals in their mixture and people are freaking out over these as well. Whe

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US inches closer to big bank charges

US inches closer to big bank charges

Federal prosecutors are nearing criminal charges against some of the world’s biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades. In doing so, prosecutors are confronting

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Canada’s home sales top predictions; why a real estate crash is inevitable

Canada’s home sales top predictions; why a real estate crash is inevitable

“The assurance of relatively low borrowing costs has likely given home buyers confidence while rising home values have kept new listings at a healthy level. Stable employment has provided some assurance to owners and buyers alike.” Our website is back after many months of

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Comparing today’s recession/depression to the 1980 recession

Comparing today's recession/depression to the 1980 recession

"Much like today, Americans were concerned not only with high unemployment but increasing budget deficits in the early 1980s. A September 1983 Gallup poll found that three-fourths of the public agreed that the federal government's budget deficit was a great threat (42%) or some

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Why savers are getting screwed

Why savers are getting screwed

"Without the intervention of economic policymakers, interest rates would be naturally higher. That would increase the cost of borrowing for businesses and consumers, but there would be some offsetting economic benefits. Savers are getting screwed by the current monetary policy

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Geithner admits USA bankrupt to US Senate

Geithner admits USA bankrupt to US Senate

"Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses

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World economies on verge of currency revaluations to deal with debt

World economies on verge of currency revaluations to deal with debt

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford Basically what the world central banks are doing is increasing their money by devaluin

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Is Obama the next Mugabe of Zimbabwe?

Is Obama the next Mugabe of Zimbabwe?

"America, Britain, Japan, Germany, France, Sweden, Holland, Norway, Canada and Australia make up the Fishmongers Group and their meeting on Tuesday will deliberate on the state of the inclusive government, debt relief, public finance administration and the controversial economi

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US raiding foreign countries with dollars, not soldiers

US raiding foreign countries with dollars, not soldiers

""The United States is going to China and saying: we want you to commit economic suicide, just like Japan did. We want you to follow the same thing: we want you to revalue your currency, we want you to squeeze your companies, we want you to go bankrupt,” says Michael Hudson,

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Content By: The Coming Depression Editorial Staff (dates cited below)
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“I still don’t see a sense of urgency from the president about the massive federal debt,” said Sen. Lamar Alexander, Tennessee Republican. “His budget calls for too much government borrowing – even though the debt is already at a level that makes it harder to create private-sector jobs.” — Washington Times

President Obama projects that the gross federal debt will top $15 trillion this year, officially equalling the size of the entire U.S. economy, and will jump to nearly $21 trillion in five years’ time.

Amid the other staggering numbers in the budget Mr. Obama sent to Congress on Monday, the debt stands out — both because Congress will need to vote to raise the debt limit later this year, and because the numbers are so large.

Mr. Obama‘s budget said 2011 will see the biggest one-year jump in debt in history, or nearly $2 trillion in a single year. And the administration says it will reach $15.476 trillion by Sept. 30, the end of the fiscal year, to reach 102.6 percent of gross domestic product (GDP) — the first time since World War II that dubious figure has been reached.

us debt per gdp

In one often-cited study, two economists have argued that when gross debt passes 90 percent it hinders overall economic growth.

The president’s budget said debt as a percentage of GDP will top out at 106 percent in 2013, but only if the economy booms. Source: Washington Times (1)

We wish that the media could lead a reasoned conversation about government debt and intervention in the economy. There’s a nugget of a worthwhile discussion out there, buried in hyperbolic sky-is-falling hooey.

For example, how about a look at what’s driving the increasing debt? Increased spending? Sure, but that’s only a small part. Unemployment is up, massively, all over the world, and the unemployed can’t pay taxes. This loss of government revenue is by FAR the biggest driver of increasing debt today. If we can lower unemployment then we’ll create more taxpayers and lower deficits without having to raise anyone’s tax rates. But the media never talks about this because it’s much more sensationalistic to describe the situation as some kind of moral sickness.

Fractional reserve banking is the real culprit as it creates ONLY the principal amount of loans, while the INTEREST which is not created, and is therefore payable ONLY through an escalating level of new and bigger loans too keep the money supply liquid enough to sustain an economy, naturally accumulates as DEBT until the debt pyramid grows so large there is no more viable collateral for banks to loan against.

It should be obvious that we have now reached that tipping point given the publicly available facts, underlined by the general unwillingness to borrow more money even at current low rates, so who steps in, GOVERNMENTS as the borrower of last resort, which is just fine with the banksters because they can get no better security for their loans than the taxing power of the government.

We had at least one honest Central Banker in Graham Towers who testified before a Commons Finance Committee in 1939 that; “every bank loan is a new creation of money, and when it is paid back it ceases to exist” and what this proves in the first instance is that banker propaganda that they loan out only a PORTION of their depositors money is a complete fiction.

The real truth is that the “Bank Act” turns a liability (bank deposits still belong to the actual depositor, not the banks) into an asset (Reserves) against which the bankers can create out of thin air 20X or more times NEW (counterfeit in my books) currency (under legal tender laws) that ACTS as substitute money in the form of newly created loans as Graham Towers correctly testified.

What 99.9% of the brainwashed public does not get is that if you do the math, interest is only possible under a Ponzi scheme setup like our fractional reserve banking system. Because the interest is NEVER CREATED, only the principle amount of a loan, payment of interest is only possible as long as new loans exceed the interest being syphoned off! Using a standard 25 year mortgage (French for death gamble) at an average 5-6% interest means that over that 25 year period, approximately TWICE as much circulating medium is REMOVED as what was originally created and must be REPLACED for an economy to function, hence my label of a Ponzi scheme. The result, PERPETUAL DEBT for the masses exactly according to design.

Without deflecting blame from the banksters and the greedy corporations that are largely responsible for bringing about the current crisis, the average American needs to look inwards at their own values and attitudes.

People have to stop demanding that government take care of their every need without imposing taxes. We have to decide as a society if we want to buy the latest junk from China, dress in the latest style, take our kids to Disney or if we want roads, schools and health care. Not only have we been living above our means, we have been living by the wrong values. Unemployment could be largely mitigated if we all agreed to work shorter hours. This would take some adjustment – like not buying such a big home – but it would greatly reduce stress levels and permit quality time with family. We need to stop valuing things over essentials such as health care and infrastructure and pensions. These things are not free. Our whole society needs an attitude and value adjustment and it seems that it is about to be forced upon us by a world economic crash. Bring it on. Our lifestyle is unsustainable both environmentally and economically and the sooner we are forced to deal with it the better off we will be.

References:

(1) Washington Times

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This entry was posted on Monday, February 14th, 2011 at 8:38 pm and is filed under Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1 Comment

  1. February 16, 2011 @ 7:49 pm


    The greatest issue facing the United States is mounting interest payments on the debt which is now set to rise at a record rate with the release of the new budget deficit projection of $1.5 trillion. The Congressional Budget Office calculates that, under their best case scenario, interest payments could rise to 4 percent of GDP (or one-sixth of federal revenues) by 2035. Interest payments, which absorb federal resources that could otherwise be used to pay for government services, currently amount to more than 1 percent of GDP. Under their worse case scenario, interest payments on the debt will amount to 9 percent of GDP or one-third of federal revenues.

    Here’s an article outlining the interest rate spiral that is facing the Obama administration and the American people:

    http://viableopposition.blogspot.com/2011/01/interesting-look-at-interest-on-us-debt.html

    Posted by Viable Opposition

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