Great Analogy of the US National Debt

There are some that do profit from this and a good example was the part of the Stimulus Package used for infrastructure improvements. This work is subcontracted by the States to private corporations in most cases and the owners of these corporations made billions of dollars in profits. Yes, some workers were actually employed to do the work but they generally received "average" wages for their work while the owners of the corporations raked in billions of dollars in profits.

And all of this was funded with borrowing so the billions of dollars in profits the corporate owners raked in will be paid for by our children and they will continue to pay for those billions of dollars in borrowing forever. The debt is not being paid off, period, so a billion dollars spent today turns into trillions of dollars of taxes in the future just to continue to pay the interest on the borrowing because the "loan" is never paid off.

 

Are not those government-created wealthy individuals in the private sector? Is the government not creating private sector wealth?

 

In my scenario, the $1.5 trillion spent by the government definitely goes back to the private sector as wealth...although a net loss of wealth.

And that $1.5 trillion is subject to federal taxation so the private sector wealth gets smaller and smaller every time the government processes some money...

 

What will become of America's descendants? Will they be saddled with an impossible debt burden as all that compounding interest spirals out of control?

 

This seems like a silly question considering we are currently $15 trillion in debt with Obama forecasting $20+ trillion in debt by 2020. Between now and 2020, just 7+ years, deficit spending continues. And I suspect this deficit spending will increase as oil and water and energy issues worsen, as the economy suffers, as more people remain unemployed.

By 2020, the single largest line item in the US budget will be the interest payment on the debt! This MUST be paid before all other budget items unless the US wishes to default and/or see interest rates skyrocket. If we assume 160 million taxpayers, and if we assume a debt payment of $900 billion, in 2020 each of these taxpayers will be responsible for about $5625 in taxes each! and for this not a single road or bridge will be built, not a penny will go to public education, etc.

Gotta love the math! Today we spend about $3.5 trillion and take in $2.2 trillion. By 2020 spending might be $4 trillion but who can guess at the tax income? What if we add 5 million new jobs by 2020? Well, 5 million will be a 3.6% increase over today. So if we add 3.6% to the current tax income this is $2.28 trillion. Using these estimates, it is very clear to see that our expenses can increase $500 billion but income might only increase $80 billion. This leads me to believe that if we ever expect to touch deficit spending, this requires tax rate increases on all Americans to the tune of $420 billion per year.

If any of the above can be true, and if MIT and other research which shows economic collapse by 2030 comes to fruition, and global climate change effects, and horrific natural disasters, etc. etc. etc. linger in our future, then the guy in your picture won't even be able to afford the gun!!

 

There is no way we will make it to 2030 if deficit spending continues as it is unless the economy goes gangbusters and Fed revenues increase dramatically.

After the 2008 crash revenues dropped from 2.7 Trillion down to 2.15 Trillion. 2.7 T was achieved via a false market - the housing bubble and financial bubble - so we are not likely to return to those levels anytime soon. There is also a possibility of a recession where refenues could remain the same or decrease further.

I have little hope that congress can agree on meaningfull deficit reduction which means we will hit at least 20-23 Trillion by 2017.

If the two above assumtions hold true we are in big trouble. The best indicator of default is interest on debt as a ratio of income. This is what the IMF uses and when a country hits 30% red lights start flashing and they start issuing warnings.

Right now we are not doing to bad. Interest payments are running at around 450 billion annually which is roughly 3% on 15 Trillion in debt.

450 B interest/ 2150 B revenue = 21% .. a fair bit lower than 30%. "IFF" the interest rate stays the same then by 2017 the annual interest will be at least 20 T x 3% = 600 billion.

If revenues do not increase 600B/2150B = 28% of income which is closer to the tipping point (30%)

The big elephant in the room is "interest rates". Will foreigners continue to gobble up US debt at (3%) ?
As we have seen with Greece (25%) Spain (7%) and so on interest rates can rise quickly.

If demand for US debt weakens the interest rate will rise and could easily go to 4.5% or higher. We have been refinancing old debt on shorter and shorter terms (a 2 or 5 year T-Bill pays a lower rate of interest than a 30yr bill) so more and more debt comes up for renewal every year in addition to the defict that has to be bought up by someone.

If interest rates increase to 4.5 % this would be 900 Billion on 20 T in debt. 900/2150 = 42% = The ship has already sunk and they have given up searching for survivors.

Even if the economy were to boom and our income went to 3 T by 2017 (and this is highly unlikely - the housing and financial bubble only got us to 2.7 T) 900/3000 = 30% which means the ship is in danger of sinking.

China and other countries are already considering alternatives to the US dollar as the world reserve currency. This status is the main thing that is maintaining the demand for US paper.

If foreign demand for US debt falters it will not be pretty.

 

A person earning $75K annually, which might only be $60K take home pay, can purchase a property for $150-$200K, can purchase a new car for $25-$30K, can create $10-$20K in credit card debt. All of this economy can be created on $60K of income! I suggest that a huge portion of our economy is tenable at best...inflated on the value of credit and not on cash assets. If people keep their properties longer, and only buy a car every 5-7 years, and minimize credit card debt, it doesn't take much of this behavior to make big hits on the false-credit economy. I agree that the collective we will probably remain in this more frugal mode for several years or longer so it is unlikely, without tax rate increases, that federal tax revenues will increase much between now and 2020. All the BS talk about deficit spending yet the latest budget was submitted at $3.5 or $3.7 trillion...full knowing tax income would be $2.2-$2.3 trillion!

IMO if you wish to see some humor, check out this spread sheet from the CBO, showing federal expense and income out to 2021; http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/120xx/doc12039/budgettables[1].xls

They are showing 2012 revenue at $2.6 trillion, followed by $3.1 trillion, $3.4 trillion, $3.7 trillion, $3.8 trillion...and by 2021 $5 trillion. In ( short years we will go from $2.6 trillion to $5 trillion in federal income! And this can be achieved no matter we continue to linger in a recessionary-type economy, with the Euro-states imploding, with escalating military and HS budgets, with Obamacare kicking in, with high unemployment, etc.

Referencing this same CBO data, it is obvious the federal expenditures will not be reduced a penny. Expenditures range from $3.7 trillion in 2012 to $5.7 trillion in 2021. There is NO reduction of expenses in the federal budgets! So the ONLY possible way to attack a penny of deficit spending is to increase tax revenues. Tax rates on individuals won't increase without a mutiny! The economy is stuck in low gear. So...I guess Obama's crystal ball is telling him that the private economy is going to take off like crazy...and no matter how hard I try to find something positive in the economy, I simply do not see what Obama is seeing...

 

No. What will happen is that the US government, like all governments before it facing the same thing, will inflate the currency rapidly in order to create a virtual default on the debt. This will have a huge impact on the US economy and will destroy dollar hegemony. However, the government owes the debt, not the citizens of the US and those who hold the debt will be left high and dry. It's unfortunate, but it's sort of par for the course with almost all governments in the last 200 years. The US will recover, probably for the better as imperialism is washed away. It might not be the same US. Some predict that the US will become more a loose federation of nation states, regional nations made up of the various former states with a small federal entity as a go between.

 

We take in about 2.15 and after 450 Billion in interest we are left with roughly 1.7 Trillion to spead (without borrowing of course).

Total military spending is roughly 950 Billion when Homeland security and other related items are added. This is absurd. Back in 2000 the total was around 350 Billion and we were defended just fine.

Right now Social Security is cash flow positive on our balance sheets. Unfortunately they put this money into general revenue (and have been for sometime now) rather than letting the total build up for the eventual payout. Over the next few years the baby boomers will need to be paid out and SS will become a net drain.

In addition, as folks get older their use of medicare and medicade increases dramatically. I looked at some ratio's of old folks taking out vs folks putting in and the number over the next decade are downright scary. The worker to beneficiary ratio goes from 5.1 in 1960 to 2.6 in 2020. http://www.ssa.gov/policy/docs/ssb/v66n4/v66n4p37.html

This talk of 3 Trillion in cuts over 10 years is a joke. For one they will not likely achieve this but even if they did that is only 300 Billion a year. That would still leave a deficit of 1 Trillion a year and the cuts do not even kick in for a number of years. I will be shocked if we do not add at least another 5 Trillion to the debt over the next 5 years which gets us nearly to 21 Trillion.

 

Our current government is a 100% conflict of interest when it comes to solving our critical problems. A politician can only be elected and re-elected if they bring home the bacon! From Obama on down nearly everything these idiots say is pandering for votes. And the electorate is self-serving and greedy so they will always want someone else (like the so-called wealthy and government) to solve all of their problems. If this scenario can be somewhat accurate, then dealing with things like the budget, and deficit spending, and debt, in a fiscally responsible fashion, simply won't happen.

Yesterday in the news it was Obama talking about student loans and trying to change the rules because Obama is pandering for votes for re-election. What he always fails to talk about is how to pay for all the social programming that he wants to see. I'm perfectly fine if a majority of Americans wish to increase federal taxation in order to adjust or forgive student loans. But I am not fine with always spending and never off-setting with more income. But this reckless spending makes sense to me because all of them are pandering for votes!

Regarding SS, I assume there is a math formula for calculating FICA withholding, and the outcome of this calculation is supposed to provide enough SS income to offset the payouts. Because government is not creating a SS cash reserve, they must pay real-time which simply means American workers in the near future will be paying more and more FICA taxes. Based on your ratio we might guess FICA taxes will increase 50%-100% in the near future. This is also a huge hit on business which will cause negative issues like unemployment and bankruptcy and more off-shore sourcing.

Regarding the $3 trillion budget reduction over 10 years, in that CBO budget web-page I provided, it's not obvious with those numbers that even a $3 budget reduction is planned?? 50 years ago the federal government (in constant 2005 dollars) was spending about $2000 per US citizen; today they are spending around $11,290 per US citizen. Wouldn't it be great public debate if the government, this year on July 4th, sent an invoice to all 310 million Americans, for $11,290. A family of four would be responsible for $45,160...their 'fair share' of federal taxes! Obviously these numbers really become absurd for the remaining taxpayers when we factor in that 50-100 million Americans don't pay a dime of federal taxes!

Lastly, using that word 'absurd' one more time...our reckless spending is absurd, and it cannot be sustained, which means the ONLY reason we are not today paying our fair share is because we truly are self-serving and greedy...

 

While Federal taxes are at its lowest levels since 1950, an increase in Federal revenue (taxation) alone will not balance the Federal budget. Congress should first implement legislation that addresses crucial reductions in expenditure/entitlement spending to significantly curtail future debt and deficit spending. Authorized budgetary expenditures for 2010 equaled an estimated $3.552 trillion. Authorized budgetary expenditures for 2011 was nearly $3.729 trillion. Regardless of party affiliation, President Obama and the U.S. Congress should balance the Federal budget in 2012 and not champion empty promises to the American people.

 

The current politicians and Obama have been riding on the coat-tail excuse of the recession. They have given THEMSELVES a get-out-of-jail card because they can blame everything on the recession. And lots of people are truly struggling so it's very easy for Obama and Congress to find millions of American sympathizers.

But what sends the big red flag about greed for me is that Obama and Congress won't even discuss a budget reduction plan, a deficit plan, or a debt plan! Everything is business as usual with another $3.5 trillion budget submission while income is only around $2.2 trillion.

If you look at the CBO budget analysis I linked a few posts above, you will see the expenditures go up and up and up and up to $5+ trillion by 2021. Since this data comes directly from Obama and his boys, it is easy to see that at least between now and 2021, there won't be a single thing done about reducing government costs, the deficit or the debt...

As I mentioned a couple of posts above, this reckless spending IS NOT sustainable, therefore, the ONLY reason we continue this reckless spending is because most of us are greedy and self-serving, not will to pay our way, and lose no sleep passing $20+ trillion debt onto our kids and grand-kids and great-grand-kids and beyond...

 

Wow .. 45 K for a family of four. Something is really wrong with that picture.

As you had mentioned the current crop of circus clowns/politicians have presented no legitimate plan and seem to have no desire to seriously tackle the deficit. Any mention of plans for the deficit consist of grandstanding to the crowd . .. hence the clown analogy.

It is like they are passing a hot potato back and forth that no one wants to hold on to for long.

The piper is coming and the piper always gets paid. You can hear the sound of the pipes getting closer and close.

When the music stops in this game of musical chairs there will not be too many things left standing. Gold and perhaps a few others.

The US will go on of course but as a shadow of its former self. No longer will we be the sole dominant player but just one of many. We will have a say in global affairs, as Russia or France do, but we will no longer have the influence of the past decades.

With death comes rebirth ... I am hoping we can get this death phase over sooner rather than later so the rebirth can start.

Dragging this thing out just gets more painfull by the moment.

 

Say your name backwards and that sums up what a balanced budget for 2012 would do. Current income is roughly 2.15 Trillion. Using your number for 2011 this means we would have to reduce spending by 3.7 - 2.1 = 1.6 Trillion in one year.

To do this we would have to reduce military spending from 950 Billion to the 2000 level of 350 Billion (600 B), Cut welfare in half (200B), Fire at least 30% of the Federal civil service (??), Gut medicare and medicade (??) and so on.

Keep in mind that after these cuts were made revenues would drop significantly. Likely on the order of 20-30% reducing total revenue by some 500 Billion from 2.15 down to 1.65.

After paying the 450 Billion in interest this would leave roughly 1.2 Trillion left to spend.

At the same time we would be having to deal with massive civil unrest as unemployment rates skyrocked and poor folks started to starve.

Part of the problem with massive deficit spending is that you get a false economy/job creation due to deficit spending. This money is supporting many different industrial sectors. The spending from those working in those sectors supports subsidiary sectors .. restaurants, hot tub makers, maids, hotels, plumbers, farmers .. and so on.

Turning of the tap would also cause a large reduction in spending into the subsitiary sectors and there would be massive layoffs.

Mass psychology would turn severely negative and most of the middle class would hunker down and reduce spending hurting the economy and federal income even more.

The stock market would crash, housing prices would drop further due to increased supply (hard to pay the mortgage when you have no job), and the financial sector would be in ruin.

We have created a monster and that monster is not so easy to put back into the box. This is why most of the folks that have a clue about economic history recommend cutting the deficit slowly.

If we did not have such a high debt this would be a viable option but unfortunately we are in a bit of a catch 22. Even at the super low interest rates on our debt (ave 3%) continuing to run deficits increases the debt and the interest becomes unbearable.

In 5 years the debt will be 20 Trillion. At 3% that will be 600 billion /year in interest.

Assuming income rose to 2.4 Trillion (a big assumption given stagflation), in theory we could sustain 600 billion in interest as this is 25% of income.
The IMF gives warnings at 30% .. a ratio much higher than this and the ship sinks.

The big elephant in the room is interest rates. The above assumes interest rates do not go up. How much more of US debt can the world absorb without a decrease in demand ?

If there is a decrease in demand for US debt at (3% ave) the interest rates will have to rise to attract demand.

A small increase of 1.5 % = 4.5% 4.5% of 20 Trillion = 900 Billion in interest.

900 Billion/2.4 Trillion = 37.5% ... better get out your paddle because the ship has already sunk.

It is possible to envision a few senario's where default could be avoided. None of these are realistic IMO.

 

Should the Repubs get the senate and hopefully the executive, you will see change. They were handcuffed this go around, IMO, after 2010. The new congress went in with the best intentions, but simply buckled at the fear of the political backlash for hanging tough when they tried to do the right thing.

I think that will change, should they succeed this Nov.

 

The primary reason nothing is done about deficit spending and debt is that most people simply don't know that they personally owe the government $11,290 in taxes this year. And the reason most people don't know is because the government spends without consequence to the people so they have no dog in the fight. If 50-100 million Americans don't pay a dime of federal taxes, it's logical most of them could care less how much deficit spending there might be. And another 50+ million Americans who don't come close to paying the full $11,290 in taxes don't care much either. So the real question should be 'how do we get all US citizens to realize the critical nature of deficit spending and debt?'.

I am serious when I say every US citizen should receive an annual invoice for their 'fair share' of taxes!!

 

This is why I've advocated the raising of taxes to the point that we can have a balanced budget in 2013. If we don't not only repeal the Bush era tax cuts (which would increase revenues by about $370 billion) but also increase the tax rates to cover the rest of the projected 2013 deficit of over $800 billion (which would require an additional $500 billion in taxes) then Americans are not going to demand that our government cut spending. If the American People don't demand reductions in expendatures we're simply not going to see a reduction in spending, ever!

It is why I point out that the Republicans and Democrats are both hypocrites when they say they're for a balanced budget. They make proposals that the budget will be balanced in 5-10 year that we know will never happen. Remember that in 2001 when former President Bush proposed his tax cuts he stated that we could have the tax cuts and balance the budget at the same time. That obviously didn't happen and the national debt virtually doubled under his adminstration. Now we have President Obama that promises we'll have a balanced budget in about ten years or so but in the meantime the national debt is doubling again. Our national debt is growing at an astronomical rate and to stop that we have to force the American People to pay for the expendatures of government.

I hate to say this but even the poor are going to have to pony-up and start paying taxes. Some say that the tax increases necessary will hurt the economic recovery and that is true but remember it isn't the taxes that hurt the economy but instead the government spending that requires the taxation that hurts the economy. If our government is spending so much money that paying for those expendatures hurts the economy then that's the politicans' fault. Let's hold the politicans accountable for destroying the US economy because they are the cause, not the taxation.

Bottom line we know that the politicans have no intention of balancing the budget unless the People demand it and the People won't demand it if they don't believe they have to pay for these expendatures. We act like terminally ill individuals that live on our credit cards thinking no one will ever have to pay for the debt we run up but the truth is that our children will have to pay those credit card bills.

 

US citizens have become a bunch of pampered and spoiled adolescents!

Since 2001 all the Middle Eastern wars and fighting, and the carnage, and the costs, have basically been removed from the public eye and Americans were told to 'go shopping'. Except for a very small percentage of Americans, like .016%, those with friends and family who were killed or injured or screwed up from these wars, the remaining 309,950,000 Americans were sheltered from the realities of war and death.

Bush and Obama both are so politically motivated that neither of them had/have the balls to activate the national draft system!

Then we have endless deficit spending and mounting debt and literally those same 309,950,000 Americans don't care because they are not going to be asked to support the government that they are demanding. Again, this policy is 100% politically motivated!

Lastly, I firmly believe those same 309,950,000 Americans have no clue that each of them owe the current government $11,290 in federal taxation. And these same 309,950,000 Americans will surely refuse to allow government to increase taxes or greatly reduce government...unless the increasing and reducing ONLY effects others. A huge pile of monetary debt is being heaped upon our kids and for generations to come, SOLELY because today's so-called Americans refuse to increase taxes or reduce government; which means we're greedy and self-serving...and instead of being embarrassed by our failures, we just ignore them can continue down the same old path...

 

The poor already pay taxes in the form of inflation. You advocate raising taxes, but have no reason to believe that politicians will balance the budget. My guess is that they would just spend more. After all, if they can debt-finance government to the tune of $1.5 trillion year, why stop that gravy train just because taxpayers are stupidly willing to fork over more money in direct taxation?

 

Yes, Great Analogy.

I do not believe Congress can regulate the Value of Money when the amount of household debt in irresponsibe anymore than the national debt is.

Since according to my TEA PARTY member of Congress Sandy Adams "debt in a marriage" is a State matter, and the State Tea Party Member Dorothy L. Hukill did not respond to either the identical letter she got or the one forwarded to her by Sandy Adams. Therefore, I can only conclude that irresponsible debt is supported by the TEA PARTY.

Since neither Feeney or Kosmas responded to this:

"No creditor shall issue debt to any household which could exceed a 36% debt to income ratio, without the written knowledge and consent of both spouses or domestic partners in the household and each and every creditor the household already owes."

Therefore, I can only conclude that irresponsible debt is supported by the Republican and Democratic Party.

It must be assumed that Democrats, Republicans, and the TEA PARTY are against knowledge and consent to debt for both spouses, and the children that inherit it can just go take a hike. And historically they are for people who are not the individual party to their income or property being used for debt being "consumers" only for purposes of debt collection:

"805. Communication in connection with debt collection":

"For the purpose of this section, the term 'consumer' includes the consumer’s spouse, parent (if the consumer is a minor), guardian, executor, or administrator."
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf

"The Federal Reserve's rule told credit card companies that they no longer can consider household income when assessing the creditworthiness of an individual who applies for his or her own card. Under the rule, only an individual's own salary or other income -- rather than combined household income -- can be considered...U.S. Reps. Carolyn Maloney, D-NY, and Louise Slaughter, D-NY, both among the principal authors of the CARD Act, said the rule 'goes beyond the intent' of the law and "represents a serious risk for women in abusive domestic partnerships...The Federal Reserve also pointed out that in community property states -- including California and Texas -- nonworking spouses can assert joint ownership of property (including income) acquired by a working spouse. In those cases, issuers can consider the spouse's income when considering a credit card application solely in the name of the stay-at-home spouse, the board said."

Read more: http://www.creditcards.com/credit-c...cards-household-income-1282.php#ixzz1tLBu4PI2
Compare credit cards here - CreditCards.com

In essence, even the two authors of the law are for irresponsible debt. The guy in the video should have just said, "my wife will kill me if I do not get an irresponsible amount of debt my debt-to-income cannot sustain." The kids need not even have been a party to the signing, they can just take a hike and be homeless when they inherit it.

*****

A little history, starting first with the clear and present danger prediction:

2004 Democratic Platform:

"Average family debt is higher than ever. And as they lose the struggle to make ends meet, one out of every seven middle class families may be bankrupt by the end of the decade...over time, fiscal discipline saves families thousands of dollars on their mortgages and credit cards.”

Feel free at any time to explain how that works to prevent more debt. As a balance budget only makes a bailout easier and does not prevent Two Capital One cards, Two Discover cards, and Two Chase cards...where each one is to pay off another...like Nikki in HBO's "Big Love" with $30,000 worth of debt and no individual income to support it?

Back when they thought a hidden National Treasure Sweepstakes hidden in the attic was funny:

“You have probably caught that Visa credit card commercial in which a wily wife hides her many shopping sprees under the bed and up in the attic, all out of sight from her clueless husband.
The punch line is that she could have won all that stuff she rung up on the plastic. But the reality behind such behavior is hardly a laughing matter.” (Rene a. Guzman, San Antonio Express-News Jan. 12, 2005 12:00 AM)

Since you brought up debt to income ratio, lets take a look at it, this is front ratio not back ratio (including cards...), and this is right after Greenspan said in 2004 there was no bubble:

"BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM DivisIoN OF BANKING SUPERVISION AND REGULATION Date: September 30, 2005:"
"Another parameter that could be combined with LTV ratios to determine capital requirements might be a capacity measure such as a debt-to-income ratio." http://www.federalreserve.gov/BOARDDOCS/PRESS/BCREG/2005/20051006/Basel1Amemo.pdf

Big brains with big computers:

"The Charles Schwab Corporation ("Schwab,,)l appreciates the opportunity to comment on the Advance Notice of Proposed Rulemaking ("ANPR") issued by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision (together, the "Agencies") regarding proposed revisions to the Agencies' existing domestic risk-based capital rules..."

...P. 14 Another parameter that could be combined with LTV ratios to determine capital requirements might be a capacity measure such as a debt-to-income (DTI) ratio..."

...While we do support the use of combining LTV and industry standard FICO type credit scores in a risk-weighted capital guideline, as noted above, we do not support the inclusion of a capacity measure such as debt-to-income ratio (DTI)..."

...Banks are motivated to grant loans to generate revenue and profit, and most banks have very progressive mortgage programs for lower-income and fIrst-time homebuyers. The Community Reinvestment Act provides additional motivation for banks to reach out to meet the credit needs of the low-to-moderate income borrowers in their assessment areas" (January 17,2006, http://files.ots.treas.gov/comments/3173270d-dbd0-4b64-b398-487753ad9f27.pdf )

So we see that big brains with big computers did not "support the inclusion of a capacity measure such as debt-to-income ratio," because there is too much profit in loaning to people without the debt-to-income to support it. Could we assume the Banks knew what the Democrats meant by "fiscal discipline saves families thousands of dollars on their mortgages and credit cards," and were counting on a bailout? I think, YES.

People with bigger brains and bigger computers:

"Fed to discuss max 50% debt-to-income ratio for borrowers, prohibition on 'stated-income' loans to subprime borrowers, and other new rules" (May 29th, 2007, 3:38 pm) http://mortgage.freedomblogging.com...ns-to-subprime-borrowers-and-other-new-rules/

"Your debt-to-income ratio
36% or less: This is a healthy debt load to carry for most people.

37%-42%: Not bad, but start paring debt now before you get in real trouble.

43%-49%: Financial difficulties are probably imminent unless you take immediate action.

50% or more: Get professional help to aggressively reduce debt.

Source: Gerri Detweiler, author of The Ultimate Credit Handbook"
http://www.usnews.com/usnews/biztech/tools/modebtratio.htm

Well, isn't that Special?

 

Inflation is theft and we must force the Federal Reserve to stop creating promissory notes that it has no intention of redeeming. Unless we force the Federal Reserve to redeem Federal Reserve notes in lawful money (American Eagle coins being produced by the US Mint) as required by the statutory laws of the United States the theft will continue.

It can be noted that the Federal Reseve and US government cannot redeem Federal Reserve notes based upon the Gold Bullion Coin Act of 1985. There simply isn't enough gold in the world to do that. I calculated what it would require and it would require the Congress to overhaul the Gold Bullion Coin Act redefining an ounce of pure gold with a $5,000 denomination value. It is the only way to balance the amount of national debt with the gold reserves of the United States which do not belong to the US government but instead belong to the People of the United States.

Once back on the Gold Standard, which under the law we're still under, then inflation cannot occur. It is only the refusal of the US government to enforce the laws of the United States and the US Constitution which allows inflation (theft) to occur.

If the members of Congress do that which we elect them to do then they will not spend more than the revenues of the nation. Those members of Congress today that are not insisting on balancing taxation and expendatures are violating the very reason they were elected and that is to run the country in a fiscally responsible manner. None of them, Democrats or Republicans, should be re-elected by the voters. They are irresponsible and driving our nation into bankruptcy as well as stealing the wealth of every American in the nation.

It's time for the voter to become responsible and reject both the Democrats and Republicans in Congress. They are both the cause of the problem and re-electing them makes us also responsible for the destruction of America.

 

That doesn't actually make sense. We see, for example, a non-linear relationship between inflation and growth. Thus inflation can be associated with higher growth levels. Those coercing a result that stops that growth are therefore also denying economic exchange and destroying economic welfare

 

If I write a check, which is a promissory note, and in return receive goods or services based upon that promissory note but the check cannot be redeemed then I have stolen either the goods or services from the other person. If I do so intentionally with no intent of redeeming the promissory note then it is fraud that results in theft.

A Federal Reserve note is by definition a promissory note and under Title 12 USC § 411 it is redeemable on demand in lawful money (see bolded words below)

http://www.law.cornell.edu/uscode/text/12/411

We only have two forms of "legal tender" in the United States and one is "lawful money" while the other is "promissory notes" and Federal Reserve notes are the promissory notes as identified in Title 12 above. "Lawful money" are American Gold, Silver and Platinum Eagles being produced by the US Mint as authorized by the Gold Bullion Coin Act of 1985. The US Mint confirms that American Eagle coins are legal tender in the United States on their website:

http://www.usmint.gov/mint_programs/american_eagles/index.cfm?Action=american_eagle_platinum

American Eagle coins are lawful money (i.e. they are what they are and don't promise anything) while Federal Reserve notes, under the law, are promissory notes redeemable in lawful money. The US government is not enforcing statutory law requiring the the redemption of Federal Reserve notes in lawful money. The issuance of Federal Reserve notes where there is no intention of fulfilling the promise of the note is therefore fraud which results in the theft. The US government is not enforcing contract law when it comes to Federal Reserve notes.

 

You haven't addressed the point I made. "Inflation is theft" doesn't make sense when we're referring to a positive relationship with economic growth. People make these cliched comments whilst ignoring actual economic relationships

 

Is the issuance of a promissory note with no intention of fulfilling the promise fraud under the law? If I write a check with no money in the bank am I not commiting a criminal act and did I not commit theft related to that which I acquired through the fraud?