#paying down debt
Submitted by Simon Black via Sovereign Man blog ,
Exactly 199 years ago, in 1815, a temporary committee was established in the US Senate called the Committee on Finance and Uniform National Currency.
It was set up to address economic issues and the debt accrued by the US government after the War of 1812.
Of course, because there s nothing more permanent than a temporary government measure, the committee became a permanent one after just one year.
It soon expanded its role from raising tariffs to having influence over taxation, banking, currency, and appropriations.
In subsequent wars, notably the American Civil War, the Committee was quick to use its powers and introduced the union s first income tax. They also detached the dollar from gold to help fund the war.
This was all an indication of things to come.
Over the subsequent decades there was a sustained push to finally establish the country s central bank that will control money and credit, as well as institute a permanent income tax to feed the expanding aspirations of government.
They succeeded in 1913 when the Federal Reserve Act was passed and the 16th Amendment ratified, binding the country in the shackles of central banking and taxation of income.
Over the century that followed, the US has gone from being the biggest creditor in the world to its biggest debtor.
Decades of expanding government programs, waste, endless and costly wars, etc. have racked up such an enormous pile of debt that it has become almost impossible to pay it down.
A lot of folks don t realize that, since the end of World War II, the US government s total tax revenue has been almost constant at roughly 17% of GDP.
In other words, even though the actual tax rates themselves rise and fall, the government s slice of the economic pie is almost always the same – 17%.
I ve worked out a mathematical model which shows that, even with absurd assumptions (7%+ GDP growth for years at a time, low interest rates, etc.), it is simply not feasible for the US government to grow its way out.
Default has become the only option. And that could mean a number of things.
They could default on their creditors (other governments like China who loaned money to the US government). But this would spark a global financial and banking crisis.
They could default on the Federal Reserve, which owns trillions of dollars of US debt. But this would create an epic currency crisis for the US dollar.
They could also default on their obligations to their citizens primarily to future beneficiaries of Social Security (who collectively own trillions of dollars of US debt).
Or they could choose to default on their obligations to every human being alive who holds US dollars and engineer rampant inflation.
None of these is a good option. And simply put, the US government has reached a point of no return.
I aim to demonstrate this to you in today s video podcast episode. It s a very sobering realization.
Join me to see it for yourself:
Stackers says “To contract the money supply by $17 trillion would send commerce and the econmy into a frozen death pit. “
As the debt would be paid down — Instead of endlessly debasing the currenc, harming existing holders’ purchasing power as fresh printing divorced those holders of wealth and redirected it to those who get to play with the fresh minted first (Blood Sucking Squid, et al), each unit of currency would regain wealth as old currency was contracted as debt was retired. The only difference between $ 0.75 bluejeans of the 1905 sears roebuck catelog and today is a century of Fed policy. As debt retired, pennys would again gain relevance and those who actual earned their money the old fashioned way ( by exchanging value for value using currency as a medium) would find their purchasing power / wealth again protected from the bankster-looters.
Sure, with our systme as structured, we’d have to eventually de-tach the dollar fromm government debt, orwe’d be forced to consider an alternative currency — perhaps gold and notes, like the days where this country lauched to unprecedented wealth.
But before that’d happen, we’d need to also restore a lot of our lost liberty. NeoConns and Progressives have too many wars to fight, most of which involves what’s fundamentally a war on your right to say “no thanks” / Liberty.
But what about all the natural resources the US Gov owns. thats got to be worth 100’s of trillions. I’m sure GS can figure out a way to do a LBO so they don’t defualt and heaven forbid can’t tap the international credit markets
And WHO buys all those resources? – the holders of all the $US created out of thin air over he past decade. you’ll have the bankers – and foreign holders of US debt converting their otherwise worthless oaoer nto TANGIBLE HARD ASSETS while the US taxpayer and citizen sees the little left in the US looted. Look at Russia after the collapse of the Soviet Union – the country was bought up by the oligarchs at rock bottom pirces.
The rich end up owning EVERYTHING either way. with rampant inflation the holdes of $US convert their paper holdoings into tangible assets sa well – only at MUCH higher prices. Better to pay 10x the price and get somethign tangible instead of getting stuck with worthless paper.