Great Analogy of the US National Debt

Again you're just trying to avoid actual economic relationships: Inflation and growth found to be positively related. You might not like how that growth is delivered but you're ultimately asking for a coerced result where that growth is denied those that benefit from it

 

Yet the Democrats are willing to only address about 47 billion of that 740 billion, why? Votes.

 

Today in the news is an article saying 46% of American families do not pay any federal income taxes. So those who believe the US federal income tax system IS NOT progressive are not paying attention to data.

It is not intuitive to me that we can sustain our nation when only 54% are paying income taxes? I would say that because we have $15 trillion in debt, and $1 trillion deficits, this indicates the current tax system is bankrupting the USA.

Although I don't necessarily agree with the following numbers, if we assume we MUST spend $3.5 trillion annually, yet our current income is $2.2 trillion, we really need to increase the tax rates on EVERYONE in order to find another $1.3 trillion in taxes.

It is not conscionable, and cannot be done without cause and effect, to expect ONLY the 54% to fork over this $1.3 trillion. At some point, based if nothing else but on the math and cause and effect, the 54% will need to pay a little more and the 46% must come up with some level of support. If $3.5 trillion cannot be raised, then it is imperative to lower the expenditures in line with income...or much closer than the current delta of $1.3 trillion.

If the USA cannot fathom bankruptcy. If the USA cannot simply write-off all of this debt. Then logic dictates that Americans have no choice but to fork over some more tax money! There are no indicators I am aware of that show significant GDP growth. Or Americans can greatly reduce the cost of all government levels...from local to federal...

 

No one benefits from theft except the thief if the thief goes unpunished.

All commerce is based upon the voluntary exchange of commodities for commodities or commodities for services. Money is a commodity. Federal Reserve notes are a promissory note (contract) where the Federal Reserve has promised that it will redeem that note in lawful money which, under US law, is American Eagle coins but it did so fraudlently as it has no intention of ever redeeming Federal Reserve notes in American Eagle coins. Many mistakenly believe that a $50 Federal Reserve note establishes the value of money in the United States but that is false. A $50 American Gold Eagle is the actual money and the Federal Reserve note is just a promise of payment. Under Title 31 of US Statutory code the Federal Reserve is responsible for ensuring that a $50 Federal Reserve note has the same purchasing power as a $50 American Gold Eagle but it is not complying with this statutory requirement. If it was then a Federal Reserve note and a $50 American Gold Eagle would have the same purchasing power but they do not.

As I have noted the Federal Reserve, a private banking institution, is in gross violation of Contract Law and US Statutory law and is not being held accountable.

A couple of additional notes. A Federal Reserve note is just like any other promissory note in enterprise and when it is transferred between parties in the free market it is done so at a discount. Similiar to a bank mortgage note which is commonly discounted by about 6% or a credit card note which is commonly discounted at about 50% based upon the ability of the holder of the note to redeem the note. Because the Federal Reserve is not redeeming the promissory notes they issue they are discounted by roughly 97% today. That means that 97% of the value of the note has been lost.

Additionally, since 1977 the gold clause can be invoked in contracts in the United States. We're already seeing the preliminary phases of that happening where banks are going to be created that only deal in gold "legal tender" coins being produced by the US Mint. Contracts are being drafted and commerce is taking place that is based upon the "lawful money" of the United States. Wise Americans are abandoning Federal Reserve notes except when it's advantagous to use them. For example, earned income based upon Gold Eagles creates a much lower income in "dollars" and so a person owes less in income taxes and can pay those taxes with Federal Reserve notes. From a government perspective a $50 Federal Reserve note and a $50 American Eagle are identical as both are $50 in legal tender.

Federal Reserve notes are going to fail. It is a foregone conclusion because all fiat currencies eventually fail. We can save the monetary system of the United States but we can't do so without enforcing Title 12 and Title 31 staturory requirements related to Federal Reserve notes.

 

Yep, that awful Bush tax cut for the rich took another 5% off the tax roles at the bottom.

 

Bull, that is historically not true.

Up until the CARD act and rules of the FED "they no longer can consider household income when assessing the creditworthiness of an individual who applies for his or her own card," which means that an involuntary spouse's property cannot be considered for an individual's credit card, when it could before that even in States that are not community property, where there existed the making of an involutary "consumer"; as is proved by the Visa National Treasure Sweepstakes advertisement mentioned in my other post where the irresponsible lender thought it was funny to have hidden purchases where it was equally legal under law for a spouse to without the knowledge and consent of the other spouse to obtain two Capital One cards, two Discover cards, and two Chase cards without the knowledge and consent of the one whose income and property would have to be used to pay them off; as is proved by the irrefutable fact that up until the current crisis by law a spouse was only an involuntary "consumer" for purposes of debt collection, not for knowledge and consent to the debt before the household debt (see law provided in other post). I got way to many phone calls after the 2004 hurricanes, where I was hugging the phone waiting for the insurance guy to call, and the callers repeatedly hung up, or refused to tell me why they were calling, to allow anyone to ever say I was not an involuntary "consumer." Fact, Bank of America of bailout fame first instituted the giveaway of 60000 unsolicited credit cards. Fact is when "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,'" it means they are against knowledge and consent to all household debt. {period} It means, should Sandy Adams be right, that household debt is a State matter, that there can be an involuntary household debt, an irresponsible household Debt-to-Income ratio, or commerce based upon the involuntary exchange of commodities where one part of the "one flesh" of marriage is in the dark as to the household debt; it also means if Sandy Adams supports the defense of marriage act she is a (*)(*)(*)(*)able hypocrite who is really against the sanctity of marriage, but hey, that is your other topic. Anytime there is an irresponsible debt, the drain on household spending exists, when household spending is decreased by slavery to debt it affects business, employment figures, the ability of people to pay income taxes, and in time the value of money. It is not "the current tax system [that] is bankrupting the USA" it is all irresponsible debt supported by Republican Feeney, Democrat Kosmas, Tea Party Sandy Adams, and Tea Party Dorothy L. Hukill.

The actual value of Gold cannot be regulated by the United States, only the value of our money can--gold is only worth what cowards can get for it in the world market--so as long as We the People are willing to fight for the US there is no difference whether we have $50 in Gold or $50 dollars in promises.

The goals of the Federal Reserve are set by Congress, and so are all the laws they go by, and the FED could not even lower the the criminal "50% debt-to-income ratio for borrowers," or include other back ratio creditors, because Congress would not give them the laws to do it; by all means do your own searches for the debates at the FED on that 50% DTI.

The Federal Reserve cannot be held accountable for not being able to have a lower than a criminal "50% debt-to-income ratio for borrowers," and have it also apply to an overall DTI of back ratio debts included, because of Congress.

So feel free at any time to contact your Congressperson and demand they pass and maintain reasonable laws to restrict debt (the slavery to the private institutions and vampire usurers who historically only needed the invite of one into the household to make another an involuntary "consumer" in their blood bank in the attic).

Too much debt held by We the People individually or collectively through our Government can affect the ability of the FED to comply with its goals given by Congress of full employment.

If too many of We the People have too much slavery to debt they cannot spend, if they cannot spend the banks cannot afford to loan to small business, if the banks refuse loan to small business (as they have done under Obama) the small business can lose everything by not being able to compete and need to sell their hair to a wig shop, don't sell your hair to a wig shop, contact your Congressperson.

Feel free at any time to debate the core topic of irresponsible debt, willfully and with malice of forethought given by all creditors to debtors including involutary "consumers" under law, which effects the goals to the FED of full employment, which if dealt with could fix a huge percentage not paying income taxes, and not just going on about the FED who is by law subservient to Congress.

 

Again, you're just using dogma to hide from the observed economic relationships. This is a common aspect amongst American neo-libertarianism, where they are effectively demanding a coercion that harms economic opportunity. Here you've deliberately ignored the economic growth associated with inflation (which ofcourse means you're happy with destroying economic exchange)

 

Economic growth measured by what? GDP?

 

GDP per capita in constant prices, but with an averaging method to remove business cycles effects

 

There's no reason why anyone should put too much emphasis on such a measure. It's questionable how effectively this measures actual economic growth - let alone standard of living. It's at best a proxy for growth.

Example - the reconstruction that occured after Katrina wiped out a substantial portion of New Orleans generated considerable economic activity which increased real GDP per capita. Example - an abundance of sick individuals receiving complicated treatment which require high expenditures, would result in an increase in real GDP per capita.

It also doesn't say anything about how sustainable the growth is.

 

I knew you were going for this tired line. Of course we aren't referring to living standards.

 

I tend to use GDP per capita in accordance with the gini index to analyze a nation's standard of living.

 

Then you're on a loser. Its a raw data comparison measure, nothing more. It certainly isn't a measure of standard of living

 

One thing is certain and that is the GDP isn't a good measurement of government debt to income but it's used by the government to hide the seriousness of the national debt and deficit spending. By analogy it would be like me using the corporate earnings of the company I work for when calculating my personal debt as opposed to using my actual wages. I don't own the corporate earnings and I cannot use them to pay my personal debt. I only own my personal income and it's my personal income that is used to pay my personal debt.

When it comes to the US government it has two revenue sources. It has FICA/Payroll taxed that it collects and those are dedicated taxes used to fund Social Security and Medicare/Medicaid. Those funds cannot be used to service the national debt under US law. The government also has general revenues which come from income taxes (private and corporate) and other fees and taxes unrelated to FICA/Payroll taxes. This is the income that is used to service the national debt and it's only about 1/10th of the amount of the national debt. The US debt to income ration is somewhere between 800% and 1000% while financial experts recommend that the debt to income ratio should not exceed about 80%. The US government debt to income ratio is basically 10-times or more than what any rational financial expert would recommend.

People need to simply imagine the following happening.

If interest rates go above 10%, which is possible and has happened in the past, then 100% of all disposable federal reveneues (i.e. excluding FICA/Payroll taxes) would be required just to pay the annual interest on the national debt. That leaves zero dollars for any government agency, including the Dept of Defense, and every federal department except Social Security and Medicare/Medicaid would close. Border partrol and the US military would not be paid for example. The FBI would close it's doors. On the bright side Congress wouldn't get paid either and they don't deserve a dime of our money anyway.

 

Maybe you have loan-to-value ratio LTV or Debt/Worth ratio mixed up with debt-to-income ratio, just a typo (it happens); 36% DTI is okay, but more than 50% is considered horrible.

See my previous post:

http://www.politicalforum.com/budge...alogy-us-national-debt-10.html#post1061163804

No financial expert would recommend a debt to income ratio anywhere near 80%, so your point is still valid.

"Your loan-to-value ratio (LTV) is simply the amount you are borrowing divided by the value of the subject property you are purchasing or refinancing. This gives you a simple ratio. For example, a house valued at $100,000 which you intend to purchase with an $80,000 loan (and a $20,000 down payment of your own cash) is said to have an LTV of 80 percent - that is, the loan represents 80 percent of the value of the house." http://loan.yahoo.com/m/faq4.html

80% LTV is considered okay.

According to this site the US Debt/Worth ratio is 91.7% and the debt to income ratio is 667%: http://thefactotumsrostrum.blogspot.com/2011/08/us-debt-to-income-ratio-is-667.html

Actual worth though of a country is kind of hard to measure, we still have the "Brazilian Option," where if you remember Brazil threatened to write off it's debt during the Reagan administration and immediately got better terms. If the Brazilian Option is ever used, better have all the resources we want here because buying them will be harder.

 

It's not going to happen sans a constitutional amendment. There's simply not enough people who truely get it enough to demand an end to the welfare state, the "free" programs, and so on that take up 1/3 of our budget. We have to end SS, medicare, and FAFSA, and welfare to even hope that our grandkids won't drown in our debt. We won't do that, as we "like" those programs. Not the issue -- we cannot afford any of those programs, we can't afford to subsidize industries, WE HAVE NO MONEY. And until we get that though our heads, we'll keep digging until China cuts up our credit cards.

 

Regarding interest rates, as long as the US is the world's largest personal consumer, over 600% greater than China, China and other nations are not going to make demands on the USA which might greatly reduce the US economy. If anything, China and others, assuming the US goes further into the crapper, for an interim period of time, will probably let the US off the hook until things get better. In other words China is not going to kill the goose laying 'today's' golden eggs! But even if there might be a little pressure to increase interest rates, on $15 trillion of debt, each 1% of interest rate increase might be another $150 billion per year in interest payments. The US is already in trouble in this area and all it takes is another 3-4% interest rate increase to make things horrific.

No matter, there appears to be zero reduction in the US budgets over the next ten years and zero plan to pay off any debt...in fact...the budgets increase and so does the debt...

 

Very interesting but I wonder where they are coming up with the $15.81 trillion worth of assets for the federal government. This seems to be related to the GDP but the US government doesn't own the GDP. The GDP belongs to the American People and not to the US government.

The US government could list real estate it "owns" such as the national parks and BLM land as well as government buildings. It could also list the gold reserves but would have to convert those into US Minted coins and we don't have all that much gold when compared to the national debt (i.e. the national debt representes something like 300 billion ounces of gold if we convert our gold into $50 American Gold Eagle coins).

So where are all of these "assets" because "worth" is determined by held assets. As noted, a home loan of $80K on a $100K home reflects the value of the $100K home the individual owns.

What assets does the US government actual own that it could sell to repay the debt if it had to. If I own a $100K home I can sell it to payoff the $80K mortgage if I had to.

 

I don't know the precise accounting definition of assets, but I'm guessing if an asset cannot be converted to money, then it's not an asset. In other words, it makes no difference if the government has $5 trillion in land if there can be no legitimate buyers.

 

The US government "owns" a lot of premium land that would sell for quite a bit of money if it decided to sell it. I'd pay a pretty penny to have this view out of my front window.

 

I'm just saying how do you find people with $5-$15 trillion in cash to buy government assets? Especially if the buyers are restricted to US residents. I don't think there is this kind of money for these types of asset purchases, therefore, the US asset value might only be $1-$2 trillion or less. And consider if the US was having a fire-sale of assets this might mean the economy is in the crapper meaning investors will disappear. I'm thinking the concept of US assets having much value is a moot point...

 

On that site the GDP of $15.81 trillion is figured as the Net Worth, not "worth of assets." It does not really make much sense, because GDP is not our full worth and it is not our Net Worth either. "Actual worth though of a country is kind of hard to measure."

The GDP, and the US government, belongs to the American People.

The actual worth of the American people, or US government, cannot be easily calculated: what are nukes worth, what is a 180 grain jacketed hollow point in the brain of a dictator worth, what is that stuff under the old lady's farm worth if she does not know it is there, what is from sea to shining sea including Seward's folly and the islands worth, and what is the pioneer spirit worth?

If I own a $100K home, and I am the American people, I can keep the home, because I have eminent domain, and I can tell the guy who loaned me the $80K to go take a flying leap.

What assets does the [American people] actually own that it could sell to repay the debt if it had to? Lives. "Had to" is the operative. Our assets will be determined by whether we can suffer pain and what lives are forfeit.

Greece does not have to sell Greek's possessions, not a single acre of land, Greeks just have to suffer pain.

Paying off a debt will be painful, just as not paying will be painful. We just have to determine who is going to suffer the most pain or who is going to have the crap beat out of them.

We the People own a lot of premium land, but we do not have to sell any of it, we simply own it, and the people who are running these debts up know you can suffer more pain for having money to buy it. Telling them you have a pretty penny to buy the land is not helping them understand the seriousness of the situation; all you did was tell them you got a pretty penny worth of assets that belongs to them. They only know you got a pretty penny, do not understand your pretty penny could be putting them to work as much as it is. And worst of all they think that Obama the Master will beat you with many stripes, and take that pretty penny you were given, because he said, "for unto whom much is given, much shall be required." The parable is all about beating a bad servant who was given much instruction and failed to do the work of his Master, but don't tell them they cannot read.

You just told them where the held assets are to pay off the debt; your pretty penny.

 

I feel I must expand on why I believe the Obamanation's supporters believe they have a right to your pretty penny, and explain why it is the fault of the Tea Party.

"He who thus considers things in their first growth and origin, whether a state or anything else, will obtain the clearest view of them...The family is the association established by nature for the supply of men's everyday wants, and the members of it are called by Charondas 'companions of the cupboard,' and by Epimenides the Cretan, 'companions of the manger.' But when several families are united, and the association aims at something more than the supply of daily needs, the first society to be formed is the village. And the most natural form of the village appears to be that of a colony from the family, composed of the children and grandchildren, who are said to be suckled 'with the same milk.'" http://www.constitution.org/ari/polit_01.htm

The household is the first origin of the Nation/State, and whatever the Tea Party supports for household management by Great Analogy society supports. The US Congress Tea Party, according to my Tea Party representative Sandy Adams, supports that debt in a marriage is a State matter, and the State Tea Party, according to my State representative Dorothy L. Hukill's lack of response to the letter sent her by me and Sandy Adams, supports that one individual using someone else's income for too high of a Debt-to-Income ratio in the household is okay. You see prior to the FED rules changes on Credit Cards requiring that "only an individual's own salary or other income -- rather than combined household income -- can be considered" for a debt, the Tea Party (that is also as it existed in 2005, when I had a topic on it), was against simple no frills knowledge and consent to all household debts by both spouses before such debt was acquired. In essence the Tea Party was and is for by Great Analogy society sucking the same milk or taking your pretty penny to acquire and pay debts without your consent.

 

The GDP does belong to the People but the federal government is a contracted entity of the States and not of the People.

Let me present a hypothetical situation and question. If the States called a Constitutional Convention and at that Convention decided to abolish the US Constitution, which would abolish the US government, how would the national debt created by Congress be paid off?

The people don't own this debt as the people did not borrow the money. What collateral does the US government actually have for the national debt?

We could also assume that the States are responsible and would choose to settle the debt of the Federal government but as with any "bankruptcy" it would come down to a selling of the assets of the Federal government to repay the lenders to it. It is the assets and only the assets that can be considered during a bankruptcy and dissolution of the federal government would be effectively handled as a bankruptcy. What is obvious to me is the first thing I would go for is the redemption of the promissory notes issued by the Federal Reserve banks. The Federal Reserve banks are a private entity albeit with a government charter but they have been issuing promissory notes. Can the Federal Reserve redeem the promissory notes it's issued? Highly doubtful that it can but the law states the Federal Reserve must have the assets to do so. Federal Reserve notes are only worth what the Federal Reserve will redeem them for in lawful money (i.e. species money).

I don't see the selling of some federal assets, such as real estate, as being a problem such as my willingness to purchase a piece of property with view of Half-Dome in Yosemite. With 20% down I could easily obtain a loan for that purchase. We also confuse the GDP with the wealth of America but American has far more wealth than the GDP. The GDP only represents the "interest" or "earnings" on the wealth of America but that wealth belongs to the People and not the government. If I have $1 million in American Gold Eagles in my possession they don't have anything to do with the GDP. They are not earning interest nor at they generating earnings. They are the stored wealth of labor I've expended over time. The GDP would have nothing to do with my ability to purchase my little plot of real estate in Yosemite but the price would be determined by who else might have actual money, not Federal Reserve promissory notes, to purchase it.

When I look at all of the factors I conclude that the US government is already bankrupt. It simply can't cover it's debt by liquidating it's assets.

The root problem with the United States and the debt it's incurred is the corrption of our monetary system.

http://www.wealthdaily.com/articles/gold-backed-bank/2496

We do have a small element that is now using the laws of the United States to fight this corruption of our monetary system and I'm one of those. Whenever possible I resort to the "gold clause" for contracts which has been back in force since 1977. I will sell anything for American Eagle coins which are legal tender in the United States while limiting expendatures to Federal Reserve notes which are also legal tender. A $50 Federal Reserve note is, under the law, equal to a $50 American Gold Eagle coin but in the free market they are not the same as a Federal Reserve note is discounted (like any promissory note) by a staggering 97%.

I'm currently in the process of selling a piece of commercial real estate I own for example. I'm selling it for $8,850 in American Gold Eagle $50 gold coins. That's 177 ounces of gold and on the free market, at $1700/oz that equates to $300,900 in Federal Reserve notes but it's only $8,850 in American Gold Eagles and both are legal tender for all debts public and private. The property is worth the $300K and I paid $250K for it but if I accept the $300K in Federal Reserve notes I will show a $50K profit on the sale and would have to pay income tax on it. Instead I'm selling it for $8,850 in American Eagles and that will reflect a $241,150 loss on the sale and that amount is deductable as a loss on my income tax return. Is it "legal" some will ask and the answer is absolutely legal. The laws of the United States do not establish any legal difference between a $50 FRN and a $50 AGE coin because $50 = $50 whether it's in US minted coins or US currency including Federal Reserve notes.

The people are going to learn, little by little, that using gold coins minted by the US mint can be advantageous as the "gold clause" was fully reinstated in 1977. We're even seeing the early development of banks that will only deal in Gold. Bank of America, for example, has it's Egold accounts that only deal in gold.

http://www.ehow.com/how_4531981_fund-egold-account-bank-america.html

 

That could be argued to be true under Articles of Confederation, not the US Constitution, which is all about WE THE PEOPLE.

"If the States called a Constitutional Convention and at that Convention decided to abolish the US Constitution, which would abolish the US government, how would the national debt created by Congress be paid off?"

If the STATES abolished the Union, then foreign holders of any debt would have a field day collecting from a disunited bunch of easy to pick off cowards. Whatever debt the States (as the new holders of the debt) owed, would be fought over endlessly, as they would never be able to agree as to an equitable division, and eventually would be written off.

It would NOT come down to a selling off the assets of the Federal government, it does not exist under your senario, all debts become the States debts all assets their assets, and they would never be able to agree on what to do. It would come down to either States selling the assets of the States or the States writing that debt off, they would choose the latter option.

"What collateral does the US government actually have for the national debt?"

"Collateral security; that which is pledged or deposited as collateral security." [1913 Webster]

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