US DEBT SHOOTING PAST $12 TRILLION

EASY READING CULTURE OF LIFE NEWS:  US DEBT SHOOTING PAST $12 TRILLION « Culture of Life News 2

immigrants-nyc

The US budget mess is infinitely worse this month than last year.  The immense mess left by both political parties is endangering our nation.  At every step of this road to perdition, Congress or the Presidents will talk out of one side of their mouths while preaching to us and then turn around and do the exact opposite.  Tonight’s news makes it CRYSTAL CLEAR that the DNC leaders are working in tandem with the gnomes, not us.  They have betrayed the voters.  They are destroying America so a bunch of gnomes can keep their illicit wealth!

U.S. debt limit hike to $12.1 trillion in stimulus | Markets | Bonds News | Reuters

U.S. borrowing authority would rise to $12.1 trillion under an economic stimulus bill rapidly moving through Congress, congressional aides said on Thursday.

Congress must authorize any increases in the federal government’s credit limit, which currently is set at $11.3 trillion….

When President George W. Bush took office in 2001, the U.S. debt limit was around $5.7 trillion and debt rapidly rose through the eight years of his presidency.

Well, here we go!  To the moon!  If we add $2 trillion a year to our debts, in just 10 years, we will be at $22 trillion.  Bush and Congress doubled our debts.  This is a serious problem.  For this wasn’t debt spending because we were waging a major war like, say, WWI or WWII.  The last world war saw the US fighting on two fronts, the world’s biggest empires [in 1941, both Germany and Japan were both quite huge in size].  The US  and Russia handily beat back the German empire and America and England fought off the Japanese empire.  America funded much of that war’s munitions and equipment for all of our allies, big and small. 

 

We also paid down the debts from that war, afterwards.  We imposed on ourselves very steep Federal taxes.  The country thrived.  As the US built up its infrastructure and industries, unemployment fell and the middle class grew due to government initiatives coupled with strong union activities and the GI Bill opening the doors of the small academic elites wide to a flood of children of the laboring classes.

 

From Truman to Kennedy, the national debt barely grew at all, despite the Korean War and the Cold War.  Below, I have some charts clearly showing how we fared under each President.  The time scale is retrograde, starting in 2008 and working backwards.  I chose to have this chart go from my birth in 1950 to modern times.  The different color blocks show when the deficit doubled.  There are 5 doublings during my lifetime.  

 

It took from 1950-1975 for the deficit to double.  It went from a quarter trillion to half a trillion dollars.  1974 is also the year of the Bretton Woods II Accords whereby the US strong armed the two empires we defeated in WWII, Germany and Japan, to strengthen their currencies so they would cease trying to flood the US with their industrial production.  1971 is when Nixon and Burns of the Fed Reserve dropped the gold peg.  

 

We went through 7 Presidential elections and the budget deficit was increasingly an issue as time passed.  During the 1960’s the silver in our coins began to rapidly vanish and gold was rapidly drawn down out of Fort Knox.  Yet, our debts didn’t double due to one very simple thing: taxes were high.

 

 

Government – Historical Debt Outstanding – Annual 2000 – 2008

history-us-debt-doubling

 

A quarter century passed for the US to add a quarter trillion to the budget deficit. From 1975- 1981, in just 6 years, it doubled from half a trillion to a trillion dollars.  It took Ronnie Reagan just 5 years to double it to 2 trillion.  It took 7 years to double it to 4 trillion.  Then, it slowed down.

 

This was due entirely to Clinton fighting a Republican majority in both houses.  Stingy was the code.  For the last three years of the Bush Sr. reign saw an extra trillion added very swiftly which increased the public debt by a third!  It took Clinton nearly 7 years to raise his extra trillion in debt.  In all, it took 12 years to double the immense debt to over $8 trillion, nearly all of this was done under Bush Jr’s reign of wars on terrorists.  Today, we are entering Year Three of doubling the debt again.  It has already risen by a trillion in just one year.  And will add more than $2 trillion in 2009.  

If we keep adding over $2 trillion a year, this will double the debt before 7 years is up.  A law of nature is, nothing can double in size forever.  And certainly, this is true of debts.  Doubling debts are a red-hot warning sign.  Especially if this is faster than doubling every 10 years!  

 

Now for some subtraction:  today’s debt is now $11,000,000,000,000 minus the 1950 Truman debt which is $257,000,000,000 we get a $10,743,000,000,000 differential.  That is, a quarter trillion from eleven trillion means a differential of 10.7 trillion.  One trillion is less than a tenth of the present deficit.  So the old debt is a quarter of one tenth in size. See how tiny it is?  The national debt has grown to be 44 times bigger than in 1950.  This entire period spans only 58 years!  

 

It grew from half a trillion in 1974, after the gold peg was dropped and after the Bretton Woods II Accords, to eleven trillion today.  This is a period of only 33 years saw it grow 22 times bigger.  The differential is still immense: $10,500,000,000,000.

 

In 1983, it grew from slightly more than a trillion to three trillion.  That is 3.666 times bigger.  Now, let’s go to the US Treasury, the place where we channel these immense debts to banks and hostile foreign powers seeking to destroy American power:  http://www.treasurydirect.gov/govt/reports/pd/feddebt/feddebt_ann2008.pdf

FINANCIAL AUDIT 

Bureau of the Public 

Debt’s Fiscal Years 

2008 and 2007 

Schedules of Federal 

Debt 


Debt Held by the Public

As of September 30, 2008, $5,210 billion, or 90 percent, of the securities that constitute debt held by the public were marketable, meaning that once the Federal Government issues them, they can be resold by whoever owns them. Marketable debt is made up of Treasury bills, Treasury notes, Treasury bonds, and Treasury Inflation-Protected Securities (TIPS) with maturity dates ranging from less than 1 year out to 30 years. Of the marketable securities currently held by the public as ofSeptember 30, 2008, $3,429 billion, or 66 percent, will mature within the next 4 years (see Figure 3). As of September 30, 2008 and 2007, notes and TIPS held by the public maturing within the next 10 years totaled $3,004 billion and $2,767 billion, respectively, an increase of $237 billion.

Debt held by the public primarily reflects how much of the nation’s wealth has been absorbed by the Federal Government to finance prior federal spending in excess of total federal revenues. As of September 30, 2008 and 2007, gross debt held by the public totaled $5,809 billion and $5,049 billion, respectively (see Figure 1), an increase of $760 billion. The borrowings and repayments of debt held by the public increased from fiscal year 2007 to 2008 due to an increase in short-term debt issuances by Treasury.

maturity-of-public-us-debts

What do we see here?  Look at that spike!  Too the moon!  We owe a LOT of short-term debts.  The entities who needed this loot are easy to find: they are the gnomes on Wall Street and they ruined all the banks on earth and need to be bailed out. They also promised on a stack of Bibles to pay this back.  If they can.  And if they can’t an unknown amount of this lending will have to be paid for by the US taxpayers.  The gnomes, of course, bend all their wills towards two things: cutting their taxes and getting bonuses no matter how badly they do their jobs.

 

Congress kills plan to recover Wall Street bonuses – Yahoo! Finance

U(AP) — Congressional leaders have killed a plan that would have forced financial institutions to compensate taxpayers if they paid their executives large bonuses after receiving federal bailout money.

The Senate had approved the repayment plan as part of an effort to crack down on Wall Street firms that paid huge bonuses — some in the millions of dollars — to their top executives even as they received taxpayer money in the federal bailout last fall.

The provision was removed as House and Senate negotiators hammered out final details of the $789 billion economic stimulus legislation this week.

A spokeswoman for Sen. Ron Wyden, D-Ore., said no one spoke against the amendment when Wyden introduced it on the Senate floor. “Somehow, it got stripped out behind closed doors,” said the spokeswoman, Jennifer Hoelzer.

 

Hang it all!  This is what happens behind our backs when a bunch of slimy, stinky, nasty little gnomes get to operate behind the scenes and behind closed doors!  This is treasonous!  These same filthy little amoral monsters who birthed the Derivatives Beast and who destroyed all banks on this planet, want their loot!  No matter what!!!

 

Everyone involved in this should be arrested for treason.  Consorting with criminals who are abusing our economic system to enrich themselves via bribery and fraud should be arrested!  And punished.  Chinese-style.  

 

China airport executive sentenced to death – MarketWatch

A Chinese court has sentenced the former chairman of a state-owned holding company overseeing 30 airports, including Beijing International, to death for bribery and embezzlement amounting to more than 100 million yuan ($14.6 million), according to a report late Tuesday by the state-run Xinhua News Agency.

The Jinan Intermediate People’s Court found Li Peiying, 59, former chairman and general manager of Capital Airports Holding Co., guilty of seeking or accepting bribes totaling 26.61 million yuan during an eight year period from 1995, the report said.
Li was also found guilty of misappropriating 82.5 million yuan in funds for personal use during a three-year period from 2000.

 

 

 

 
*

That is under $15 million.  Chump change for all the gnomes who have been steadily looting our banking systems and screwing up everything, royally.   Quick trial and certain death await this guy.  We should have an exchange program.  China exports its criminal white collar guys and gets ours.  This will put real fear into the many Madoffs we have littering the landscape.

 

I guess our Congress critters, many of whom at the very top are very rich and make oodles of money from the military/industrial complex, think they can get away with this total rip-off.  Making loud noises about how they intend to rein in the greedy bastards and then, snickering as they undo all the public work, hoping no one will notice.  I have long hated Pelosi and Reid.  Many on the left, despise them.

 

But soon, the entire nation will hate them with greatest passion.  Why are they protecting a bunch of rapists and robbers?  Is it, perhaps, because they, themselves, are rapists and robbers?  They are raping the US public by increasing our national debt while not punishing the very rich who refuse to pay taxes and want endless bonuses so they can own many castles and boats and jets while they live like kings and queens!

 

And what did Marie Pelosi and King Reid XVI say as they pulled this stunt?  ‘Let them eat cake!’
  

U.S. National Debt: 53-Yr High

In Fiscal Year 2008, the U. S. Government spent $412 Billion of your money on interest payments* to the holders of the National Debt. Compare that to NASA at $15 Billion, Education at $61 Billion, and Department of Transportation at $56 Billion.

And there is more, check this article about the debt, Where Does the Money Go; and this one about how the debt is growing.

The U. S. Dollar is being replaced by the Euro as the international trade standard. Could our large national debt be part of the reason? And now (2009) Congress is planning a program (Economic Stimulus) that will shift us from an “economic crisis” to a debt crisis! Are you ready? It’s your money Congress is spending!

Comparing this to the war money: $61 billion a year is about one third of what we are spending on our futile wars in Iraq and Afghanistan each year.  Maybe we should demand Pelosi quit all her holdings in defense contracts and take up making profits from text books!  

  
Two parts of the federal government are running big surpluses.
  
We hit a 53-year high for debt as a percent of the economy (GDP).
 

The eye-popping $10 trillion gross national debt is owed by the “General Fund.” That’s the part funded by our income taxes. Half of that goes for the military and to pay interest on the debt. Fortunately, two huge parts of the budget, Social Security and Medicare, are running huge surpluses.

  Accumulated Debt/Savings
In the last
104 secs.
Borrowed by the General Fund – $ 10,770,031,766,323* 9,941,780
   Income: Income taxes.            Outgo: Defense 30%, Interest 19%, …
Saved by the Social Security Trust + $ 2,398,149,383,909 571,652
   Income: FICA Payroll taxes.    Outgo: Benefits and disability
Saved by other Gov. Trust Funds + $ 4,823,871,265,377 8,617,535
   Income: FICA & gas taxes.      Outgo: Medicare, highways, etc.

Debt Held by the Public (net debt) – $ 5,946,160,500,945 1,324,245
 
* Gross National Debt        † Debt Held by the Public        Debt Clock Source Data

 

Bloomberg.com: Worldwide

U.S. Housing Plan to Fund Interest-Rate Reductions

The Obama administration’s housing plan will use government money to help reduce interest rates for struggling borrowers, while asking lawmakers to approve more ways to modify mortgages, according to a person briefed on the proposal.

U.S. Treasury Secretary Timothy Geithner intends to make the plan public in coming days, possibly within a week, said the person, who declined to be identified before the announcement. Some elements can begin immediately, and others must be considered by Congress.

Foreclosure filings in the U.S. surged 81 percent last year to 2.3 million, the highest on record, as home prices fell and tighter mortgage standards made it harder for homeowners to sell or refinance, according to RealtyTrac Inc. of Irvine, California, a provider of real estate data. The administration has pledged to use $50 billion to $100 billion for housing relief, taken from the $700 billion bank rescue package enacted last year.

This is NOT ‘government money.’  This is US taxpayer DEBT OBLIGATIONS.  So, to help a bunch of people go deep into debt, buying grossly overpriced houses, we will take on even more debt?  This $50-$100 billion will be given to banks to subsidize lending!  We spend about half that much, on schools.  Schools are PUBLIC, houses for individuals are PRIVATE.  A huge, huge difference.  Why should I pay taxes after I fought long and hard and suffered greatly, to get totally out of debt and pay off my mortgage.  While others get to simply get a free deal at a cheap price which I have to subsidize?  This is welfare.  Of the worst sort.  There is no need for me to put people into $600,000 homes when I lived in a tent for ten years so I could build a house with no loans at all.  

 

Either we tax everyone right now to pay for these mortgages for private homes or we make everyone face reality: these houses never were worth so much, they were bloated in price due to too much lending to too many people who were way over their heads in financial troubles and should never had gotten these loans in the first place.

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48 Comments

Filed under .money matters, Politics

48 responses to “US DEBT SHOOTING PAST $12 TRILLION

  1. PLovering

    Computers say, when U.S. debt exceeds GNP, Americans can KTAGBY.
    ~
    Little secret in Stimulus Bill: Americans can KTAGBY twice.
    http://www.bloomberg.com/apps/news?pid=email_en&refer=columnist_mccaughey&sid=aLzfDxfbwhzs

  2. Karmaisking

    Gold would have stopped this madness. It’s too late now

  3. Simon

    ok, suppose worse comes to worst and you have to pay back the money owed, principle and interest
    lets see, thats 11 trillion vs 0.3 billion population
    so each owes about 35k. To pay it back would require years of work,
    but still doable

  4. OC

    I see lots of job opportunities for the security sector!!

  5. nah

    so george bush is at a big meeting G7 or something, lots of important people… and condi comes up and is like mr. prez hate to bother you but in the news today 4 brazilian people died in a flood you mite want to bring it up with the BRIC folks… bush being curious says, yo’ condie how many people is a brazilian anyways
    .
    hard to believe economically speaking we have no self control anymore… the debt makes us look more productive because we can still pay doctors and lawyers what they used to make… at the cost of being less productive as the money is just papering over loss… that is real loss in production and lifestyle… debt is a diminishing return always and here we go for 1 more free ride ‘drinks are on me’ style… gawd if i were born 20 years ago i mite be rich enuf too just not to care anymore… noone would understand me either but my rich 50+ year old friends
    .
    http://www.dailymotion.com/video/x7gqts_immortal-tyrants-graspop-2008_music
    .
    its an enormous problem and we have to do ‘something’

  6. milo

    again with the tent bit..when living without a certificate of occupancy or permits is a crime set about to control you and your lands and steal them ……..and having lost mine..i am forced to agree with those sh*ts

    its

  7. milo

    careful they dont rico your fortune

  8. Pingback: US DEBT SHOOTING PAST $12 TRILLION « Culture of Life News | debtdeficit.com

  9. “Former Northern Rock shareholders have lost their legal challenge to the government’s plan to compensate them”…
    .
    http://tinyurl.com/al3e3p

  10. scarletfire

    I have a feeling that this debt will never be repaid and those in charge know it. In which case it makes some sort of weird sense to let the debt run as high as possible, limited only by the willingness of other idiots (china, japan, the rest of the world) to part with their money.
    And why not? I’ll take the money if they are willing to give it. Of course it could mean war when we refuse or are unable to pay. But what if we were to crash the system first as a way out of the debts?
    We could use the cover of global crisis, state that all debt is just too much for the system to handle (global bankruptcy) and start a “new world order” where all past debts are null and void. (Of course with added IMF stipulations that gut any remaining labor protections that currently exist).
    Just a thought of how this may play out. Welcome all opposing view points!
    Good day all

  11. flash

    All GOVERNMENT debts, including the ones they’ve assumed from the gnomes, will be null and void. You and I will still be on the hook for our mortgages, credit cards, car loans, etc. We’ll be on a cash only basis with worthless money.
    There’s a start for a playout scenario. My take is that it goes downhill fast from there for decades.

  12. criticalcontrarian

    scarletfire: I understand your view on debt forgiveness and crashing the system. But you had better rethink who the real beneficiaries of that would be. Further, it will only work if allowed to by the “new rulers”.

    First rule of World Domination: He who has the gold rules! Unfortunately for the Old World Order, they have minimal gold, no reserves to brag about, no real money, no savings, and follow no rules. Alas, they no longer make the rules. They can pretend and talk till they are blue in the face, but have you noticed of late, they seem to be talking tom themselves as anyone WITH money has stopped listening to them! They have proved to the world that they impose their rules on everyone but themselves. That = Zero credibility. Anyone who follows them after all this is, a mook.

    Three questions to Enlightenment:
    1.) Assuming that all world debt was forgiven, after all the debt paper ash and smoke has cleared, who would have the most money left on the table?
    2.) Assuming all the debt has been forgiven or reneged on, and everything reset to zero, who will the world choose to trust after seeing all that went on these past two years, which countries will have the credibility and moral ascendancy to dominate the financial landscape? (Tip: With a reset there is no control left, everyone is now free to decide what they want to do, no strings to pull, no rabbit to pullout of the bag)
    3.) Assuming that all the debt has been forgiven or reneged on, which economies in the world will drive world growth, and expand beyond the combined GDP’s of a now diminished West? (Tip: 3.2 Billion Asians, 300 Million Americans, 350 million Europeans, 900 million So. Americans, 900 million Africans)

    Answer these questions and you will know what you need to know.

  13. Gary

    Mathematicians discover the largest integer so far…….

    PALO ALTO, CA – An international mathematics research team announced today that they had discovered a new integer that surpasses any previously known value “by a totally mindblowing shitload.” Project director Yujin Xiao of Stanford University said the theoretical number, dubbed a “stimulus,” could lead to breakthroughs in fields as diverse as astrophysics, quantum mechanics, and Chicago asphalt contracting.

    “Unlike previous large numbers like the Googleplex or the Bazillionty, the Stimulus has no static numerical definition,” said Xiao. “It keeps growing and growing, compounding factorially, eating up all zeros in its path. It moves freely across Cartesian dimensions and has the power to make any other number irrational.”

    Jean-Luc Brossard, a researcher with the European consortium CERN, said the number is so staggeringly large that it is difficult for even mathematicians to grasp, let alone lay people.

    “The number itself is incomprehensible by human minds, and can only be theoretically understood in a fractional parallel universe which we refer to as the DC dimension,” said Brossard. “The best way to understand a stimulus is to imagine a dollar sign followed by a packed string of hexidecimal nanodigits, wound into a triple helix, woven into a dodecahedron, and stacked on top of one another. Now imagine you were a black hole on the far edge of the universe, trying to escape the stimulus at 30 times the speed of light. The stimulus would still catch up to you and ram your black hole with such furious, repeated force that it would cause your entire reality itself to collapse.”

    Xiao said the team discovered the number with the help of an international network of 24 nitrogen-cooled Cray Ultracluster supercomputers, the CERN particle accelerator, and “three pounds of Humboldt County Chronic.”

    “The exciting news is that with more powerful computers and drugs, we believe we are on the verge of discovering an even larger number, which we refer to as a ‘stimulusconferencebill,'” said Xiao. “Speaker Pelosi has already promised us the funding.”

  14. Bear of Little Brain

    Gary:
    😆 Brilliant!!

  15. criticalcontrarian

    Gary: You made my night! 😉

  16. Had to come back. Tip of the hat to Gary with no reservations.

  17. Bear of Little Brain

    cc:
    “First rule of World Domination: He who has the gold rules! ”
    Over the years (typed “tears”, first!) the name NM Rothschild keeps cropping up when investigating gold stocks, mostly as advisers. The CFR has already floated the idea of a gold-linked world currency. Until proven incorrect, my assumption is that Rothschild and friends have accumulated gold and gold equivalents (miners), playing a multi-generational gold-fiat-gold-fiat switch game. Probably fantasy, but it’ll do as a working model!
    ~
    Your points:
    1) “who would have the most money left on the table?”
    That depends on what constitutes ‘money’, then.
    2) “who will the world choose to trust”:
    Anyone who can offer salvation/order? “Ordo ab Chao” (Order out of Chaos) ?
    History is not short of examples.
    3) “which economies in the world will drive world growth”:
    Growth is not synonymous with Power. “Limits to Growth” may have been several decades too early, but not necessarily wrong. Growth is not relevant, I would suggest. Power and control are.
    ~
    I tend to agree with Scarletfire, with the proviso that a failure to repay debt to certain parties (but not necessarily all) may result in those creditors taking possession of the collateral (remember that odd stuff about US government land, waters, and their resources being collateral for US debts?). My guess is that “Crown” interests may take the collateral; in the face of superior military forces, foreign debtors will have to take the loss.
    ~
    I’m often struck by just how many “think tanks” there are. They must be doing more than “running flags up flagpoles to see who salutes”. Maybe some detailed planning for implementing their ideas.
    Just musing.

  18. Rowan

    Anyone wondering about the future of money will perhaps find this article of interest.
    .
    http://www.afn.org/~govern/foreclosed.html
    .
    The world currency won`t be gold-backed…Look out! is all I can say.

  19. Bear of Little Brain

    What is wrong with me?
    The Chosen One speaks: my concentration drifts; my eyelids become heavy. His voice lilts; I become tired of hearing it. I want it to go away.
    Crash Gordon speaks: my eyes glaze over; I try to concentrate; the words become meaningless; there is just a drone. I want him to go away.
    Napoleon S. pouts, shrugs, and gesticulates. He reminds of one of those wind-up clockwork monkeys with clashing cymbals. He refuses to go.
    The Loathsome Geithner wants me to buy some automobile owned by just one little old lady who only ever used it to drive to the mall. It looks worn out and rusty, smoke pours from the exhaust, but the odometer shows 3,000. “Would I lie to you?”, he asks. He keeps asking. He wants to make a deal. I cannot get away. His hands will not stop moving. He will not stop talking. He has an explanation for everything. I buy the auto. “You won’t be sorry”, he says. But I know I will.
    ~
    Sorry, just watched an Obama mini-speech. I’m feeling better now.

  20. MCC

    It appears to me that the table showing the growth of US debt demonstrates exponential growth. Consider that this means that the rate of growth is accelerating and out of control. Also, every time the debt doubles, the new debt is equal to the sum total of all previous debt combined. That means that the Debt created by George Bush Jr is equal to debt created by the previous 42 presidencies. And Obama is on track to out-do Dubya.

    I would submit that this exponential growth of debt mirrors the growth of many similar phenomena: the growth in energy consumption, the growth in food and water consumption, the growth in housing production and consumption, the growth of Wall Street securities, etc. The term we’ve created to describe these things is “Bubble”. They keep inflating and inflating until the bubble bursts catastrophically and spectacularly.

    I further submit that there is one overall root cause to all of these bubbles and their subsequent collapse: the out of control rate of human population growth. It’s completely clear to me that we are selfishly breeding ourselves out of a planet. This isn’t just a “developing nation” problem. The US has one of the larger rates of population growth. We’re growing at a pace to have over a billion people in this country by the middle of this century. Given the massive proportion of our consumption of the planet’s resources in this country alone, a billion Americans would be unconscionable, and horrific to contemplate. There’s no such thing as “sustainable growth”. That term is an oxymoron. Even 1% population growth is so unsustainable that the results are what you see every night on the news: war, famine, disease (who were those Four Horsemen again??)

    This is what I would like to see happen in the US: change the tax structure to encourage people to NOT have children, rather than rewarding them for being baby factories (see Nadya Suleman). Ensure that everyone has free access to birth control up to and including sterilization (if the recipient chooses it). Entirely eliminate immigration until world population growth comes under control.

    I chose to have a vasectomy, and adopt two children. I want my children to have a world worth living in. We can’t do that if we all climb into Hummers and McMansions, and fill them up with broods of babies crying for more of the limited resources of our planet.

  21. DrKrbyLuv

    Does anyone really think that we have any chance to repay this debt?
    .
    One thing that really bothers me is how completely careless we are being in spending the money of our grandchildren and great children. More importantly, we are enslaving them to debt – this is extremely immoral and should be illegal.
    .
    Antal E. Fekete has an interesting article posted at Financial Sense
    http://www.financialsense.com/editorials/fekete/2009/0212.html
    .
    GROWTH AND DEBT: IS THERE A TRADE-OFF?
    .
    “The liquidation value of debt is the amount that would liquidate it here and now. It obviously depends on the rate of interest. The liquidation value of total debt is inversely proportional to the prevailing rate of interest. In particular, halving the rate of interest by the central bank is equivalent to doubling the liquidation value of total debt.”
    .
    “I have been writing about this Iron Law of the Burden of the Debt for many a year and have met with an almost total lack of understanding, judging by the feedback from readers. The lack is due to the reluctance of the mind to admit that cutting interest rates increases the burden of debt contracted in the past, because it contradicts one’s intuitive expectation that it should decrease the burden of debt to be contracted in the future. To be sure, cutting interest rates does increase the burden of debt contracted in the past because liquidation value is calculated by capitalizing the stream of future interest payments. Since at the lower rate the present value of that stream is smaller, a shortfall is created that has to be amortized upon liquidation.”
    .
    “In order to understand the Iron Law let us consider the market value of perpetual debentures (or perpetuals for short; consols in British parlance). They are marketable securities that never mature: they convert a lump sum into a stream of annual payments in perpetuity. For example, a $1000, 4% perpetual pays $40 per annum to its holder, who can sell it in the secondary market at any time. The catch is that he may recover only part of his original investment if the interest rate has fallen in the meantime.”
    .
    “In calculating the present value B of a perpetual with face value A, paying interest at a percent per annum, we have to discount the annual interest payments at the prevailing rate of interest b. Since the annual interest payment is Aa, the discounted value of the nth interest payment is Aarn, where r = 1 – b is the discount factor. We have 0 < r < 1, hence rn approaches zero as n gets arbitrarily large. The discounted value of the string of interest payments is:
    .
    “We conclude that Aa = Bb. For example, the 4% perpetual with face value $1000, yielding $40 per annum, can be traded in the secondary market for $1000 as long as the market rate of interest b is 4%. However, if it is halved to 2%, the same perpetual can be sold for $2000, because at the lower rate it would take two debentures to generate the same income stream.”
    .
    “According to this pleasantly simple formula Aa = Bb, if the rate of interest b is halved to ½b, then the liquidation value of the perpetual is doubled. In case of a serial halving of the rate of interest from 4 to 2, from 2 to 1, from 1 to ½, from ½ to ¼ percent, etc., the liquidation value will be multiplied 2-fold, 4-fold, 8-fold, 16-fold, 32-fold, etc.”

  22. Bear of Little Brain

    MCC:
    Thank you. I get to link, once again, to Part 1 (of 8 ) of Dr. Albert Bartlett’s “Arithmetic, Population and Energy, – the most important video you will ever see” (groans from the gallery!):

    As everyone here knows by now, it explains the implications of the exponential function. (Boo, hiss, “Get off!”. Heh™.)

  23. DrKrbyLuv

    Yesterday, Bear of Little Brain said:

    “About energy systems: there is no ‘free’ energy out there. ”
    ~
    No, but we know that a conductor (like wire, not von Karajan 🙂 ) moving in a magnetic field generates electricity. We are all whizzing around the universe, spinning merrily as we go. If the universe is an electromagnetic entity, I cannot see that it is impossible that there would be electrical energy available, just by virtue of our movement through it.”
    —————————————————
    .
    Interesting point. I just wanted to add that we have lots of technology already available that does provide, to varying degrees, free energy. There may be some costs in applying and utilizing this energy, but the fact remains that it is still free (some parasitic loads may apply).
    .
    For example, a shallow geothermal heat pump (suitable for residential use) may provide 300-450% efficiency. To me, that means that the greater portion of the “energy-out” is free.
    .
    This is mature technology and has been available for at least 20 years – we just never get serious about applying these things.

  24. Gary

    Hey Elaine and others.
    Finally some “mainstream” media is discussing the nature of “derivatives” like you have. Ck into http://www.villagevoice.com and you’ll see the article.

    Basically these hedge funds were poised to make trillions off the failure
    of Joe and Mattie SixPacks and their economic life blood,ie their incomes.
    Most of these secretive hedge funds were run out of London and about
    10ys ago they started to refuse participation to almost everyone but a
    few select circle of people.

  25. MCC

    Bear of Little Brain:

    I agree that the title of that utube video is ridiculous. I mainly linked it for those who don’t have a background in math, because it does of good job of explaining the math.

    The brainchildren from both parties who rule our government are mentally bankrupt. They keep pursuing the same agenda over and over without noticing how badly it keeps working out for everyone, including themselves. They keep preaching the cult of “constant growth”. I for one am not drinking the cool-aid.

  26. Bear of Little Brain

    MCC:
    Sorry, my brain frequently lags behind my actions. Foolishly, I had not checked your link. Now I have. Imagine my surprise! 😳
    I think it is a brilliant lecture.
    Apologies for attempting (unwittingly) to steal your thunder.
    ~
    All the best.

  27. emsnews

    About not paying debts: Germany unilaterally terminated its debts from WWI. This led directly to WWII. Russia didn’t start WWIII when they repudiated their debts but then, compared to the debts of the West, it was very insignificant and only hurt the Russians. But the US debt is held by the entire planet. And we import a tremendous amount of what we use, the primary thing being oil and necessary raw materials of exotic origins. Without these, we collapse. Kiss the Kar Kultur Gutenabend.

  28. MrT

    Russia and Turkey sign $60 Billion energy contract

    http://www.russiatoday.com/news/news/37279

  29. MrT

    Russia gaining influence in Ukraine

    http://tinyurl.com/bsh9ay

  30. MrT

    Ukraine could be next in line to default

    http://tinyurl.com/czxgzc

  31. openly hidden

    George Berkeley (1685 – 1753), Ireland’s most famous philosopher….

  32. openly hidden

    i herd my cows i chop my brush i build i seek. what else is there.

    its all so damn interesting!

  33. Matheus

    I see the thing developing, but lately the things are so calm,when comes the second wave ?

  34. Matheus

    Take a look at the latest from NR, he things the situation is the same as the Sweden !!!

    Nationalize the Banks! We’re all Swedes Now
    http://www.rgemonitor.com/financemarkets-monitor/255546/nationalize_the_banks_were_all_swedes_now

  35. openly hidden

    about our kids and grandkids being debt slaves paying off debts to the rest of the world….OR ELSE. or else what? the police and military will be paid and paid well to do what they are told. and what resource could the united states not be self-sufficient in i want to know. either we have it or we can easily get it or do without. including energy self-sufficiency. and in “intellectual” speculation about what form of government usa might take if things get bad enough, probably since imho people are all being deliberately degenerated so quickly, in the wet ass hour, most will basically be running free in a state of anarchy on “reservations” away from the people who really count and run things. the majority are at best of no earthly use and in the way and a needless expense….from a certain point of view. expect to live your miserable lives out on “reservations” run by inmate gangs is my expectation if you can’t pay your own way IN THE NEW WORLD ORDER! for old hippies, short and brutal will be the best that can be expected i am afraid.

  36. amplifiednathaniel

    It’s amazing to me how easy it is to add another 100 billion after you have 700 billion. I mean what’s another bunch of zeroes when it all seems so imaginary.

    If I had my druthers here’s how I would do the stimulus:
    http://amplifiednathaniel.wordpress.com/

  37. criticalcontrarian

    Bear: Sorry for the late response, am in the opposite side of the Pond. Allow me to address your musings. 😉

    “First rule of World Domination: He who has the gold rules! ”
    Over the years the name NM Rothschild keeps cropping up when investigating gold stocks, mostly as advisers. The CFR has already floated the idea of a gold-linked world currency. Until proven incorrect, my assumption is that Rothschild and friends have accumulated gold and gold equivalents (miners), playing a multi-generational gold-fiat-gold-fiat switch game. Probably fantasy, but it’ll do as a working model!
    .
    My comment: Agreed on the House of Rot its not a fantasy, however, that was yesterday and methinks they are in a great deal of flux today. Elaine repeatedly and emphatically tells us, and I heartily agree, that the elite do not like economic collapses, for in the end they are the biggest loosers. What is going on in Israel is a very good indicator of the financial health of this “House”. They have lost control and credibility at this point. Watching Sir Evelyn put on his best face without saying much of anything, even just his having to do so on Bloomberg, is a first; not very obscure anymore is he?

    Your points:
    1) “who would have the most money left on the table?”
    That depends on what constitutes ‘money’, then.
    (I said after debt has been paid or reneged on, so whatever is left will have a common standard of measure, and the ones with no debt will have a lot more of that “new measure” than the ones who wrote off or reneged)
    2) “who will the world choose to trust”:
    Anyone who can offer salvation/order? “Ordo ab Chao” (Order out of Chaos)?
    (Precisely my point. I expect that to be the one who has the most amount of credibility and financial capacity, not to mention the largest market)
    3) “which economies in the world will drive world growth”:
    Growth is not synonymous with Power. “Limits to Growth” may have been several decades too early, but not necessarily wrong. Growth is not relevant, I would suggest. Power and control are. (Agreed on growth not being synonymous with power. But demand drives growth and if you need to sell in order to survive you need to be nice to the one who has the demand, right? Which translates to power and control. The roles of producer and buyer between East and West will shortly be reversed)
    ~
    I tend to agree with Scarletfire, with the proviso that a failure to repay debt to certain parties (but not necessarily all) may result in those creditors taking possession of the collateral (remember that odd stuff about US government land, waters, and their resources being collateral for US debts?). My guess is that “Crown” interests may take the collateral; in the face of superior military forces, foreign debtors will have to take the loss.

    My comment: As said earlier, demand will drive growth. You no pay me, I no buy from you. You no money, no grow, no salary for your Army, you have coup. In other words, the debtors can afford to wait for you to die while they grow and everyone else sells, grows and deals with them. War is an anchronism. The idiots who created this economic debacle have unleashed the most efficient form of warfare, ECONOMIC TERRORISM! The new War on Terror is the War on Bankers! 😉
    .
    Kidding aside, if a nation implodes from within its very people will turn on their leaders and change them. That is a lot cheaper and more efficient way of war, don’t you think? Better to light up the sleeping people with Reality than with Hellfire missles and phosphorus ordnance, don’t you think? More humane too.

  38. scarletfire

    Just a quick note-my last post was intended to be a bit sarcastic in that I don’t think the changes coming will be good for any of us (unless your a member of one of the elite families). I think my tone made me sound a bit too supportive of the idea of default.
    But what is the old adage? If you owe your banker a thousand pounds, you are at his mercy. If you owe your banker a million pounds, he is at your mercy. ..
    Looks like China and the world are starting to worry a bit (as documented by ems in the following post- by the way– how the hell does ems produce so much well researched material- do you have a staff?)
    The suddeness of this world economic meltdown has me believing it’s
    not by accident. Perhaps I’ve had the tin foil hat on too tight, but I recall reading a story about a broker boasting of how he sold this cds stuff across the globe, saying how “clever” they were in selling this junk to others. Are we being “clever” in selling our debt to the world only to stiff them in the end? My guess is yes.
    It could lead to war, but I bet TPTB think that the US nuclear arsenal will prevent that.
    My guess is the end result will result in the wish list globalists have had for decades, increased world gov. and loss of sovereignty for the US if not all nation states. I would also guess the individual will be crushed in the process. Whether it’s orwell’s Nazi like society, or Huxley’s “Brave New World”, or a combination of the two I’m not sure of the exact mix. I also have a feeling population reduction is in the agenda as the “eugenics” movement and it’s ideas are far from dead in the minds of the elite.
    Ok, so not a short post I guess! Thanks for hearing me out- great day all!

  39. Bear of Little Brain

    cc:
    “… if a nation implodes from within its very people will turn on their leaders and change them. That is a lot cheaper and more efficient way of war, don’t you think?”
    ~
    Hmm. Don’t know. The pattern seems to be: unrest, repression/disorder, revolution, chaos, autocracy, repression/order, war, exhaustion, peace/desolation; all rounded off with a chorus of, “Happy days are here again”. Ho,hum.
    Just musing.

  40. emsnews

    The New World Order will be run by communists. Contrary to many very goofy conspiracy sites, the elites of the West do NOT want this. They hate this! They fear this. THEY want to be the rulers in the NWO. But the Chinese planned to be this long, long ago. They lured the West’s rulers into building a system that enables the communist Chinese government to take over.

  41. flash

    Amp. Nat., I heard on the local financial advisors’ radio show today that the bank bailout has exceeded the cost of all the residential mortgages outstanding in the USA. This makes your plan seem like a good idea, as it would have put spending power where it is needed. Unfortunately, the money’s already been given elsewhere.
    :
    Elaine, the 21st century will indeed be the Chinese century, but it looks like they’re evolving out of “communism,” although whatever they do westerners will still call it that. Just like US politicians decry socialism and fascism while throwing money at the corporatocracy.
    :
    One characteristic I hope remains is the summary method of dealing with corruption.

  42. scarletfire

    I think your right ems, but I put a slightly different twist on it, with full tin foil on, I would surmise (as have others) that we are ending the great experiment that was the USSR and the USA. Having learned the plusses and minuses of both systems TBTB are to unveil the new paradigm which will be based on China’s system. Thus we will have some limited economic choice but little political options. I think the USSR proved that people (slaves) work better when given some incentives and at least the illusion of economic freedom (the right to choose your profession, change jobs, start a business).
    the USA has perhaps proved that without proper state control capitalism will succom to it’s own greed and eventually implode. (the temptations from the cave of wealth are too great)
    Thus we are left with the Chinese system which will probably be the new model for nation-states. Appease the masses with ipods and other consumer items and let them choose their own economic destiny, but leave power centralized in the hands of the few elites to never be questioned. Elections are a waste of resources anyway (sarcasm intended!).
    throw in some brave new world mind control, heavy use of psychiatric drugs on the masses and do away with any political unrest.
    As for china becoming the new ruler of the world exclusively, I’m not so sure. clearly their influence will grow, as will India’s. but when I see the names of people like Henry Kissinger with their fingerprints on China

    http://www.fair.org/index.php?page=1528 (just for example)

    I’m not so sure the real power dynamic will change that greatly. Of course I could be wrong. Thanks for the discussion-
    peace out

  43. Duski

    What will happen to USA pension funds?

    http://reason.com/news/show/130843

    “The Next Catastrophe

    Think Fannie Mae and Freddie Mac were a politicized financial disaster? Just wait until pension funds implode.
    -…
    If the stock market remains in a funk for even a few more months, corporations that oversee union pension funds and state and municipal leaders responsible for public retirement pools may be faced with difficult choices. First on the docket might be postponing cost-of-living increases and reducing health care coverage for retirees. Over the longer term, benefits for new employees will have to be shaved and everyone is likely to see an increase in personal payroll contributions. Corporations will have to resort to more cost cutting and layoffs of their own just to guarantee the solvency of their pension funds. And things could go from bad to terrible if the managers of those funds do not quickly revise their investment practices.”

  44. hardrock

    Hey all you Democrats! Where’s the outrage? Not going after the scum who ripped off the taxpayers by taking bonuses out of the TARP money….not even going after the money. Do you Dem’s see how the provision was stripped behind closed doors? You rant and rave and act as if Wall Street and the banks are in bed with only Republicans….pull your heads out……Reid, Pelosi, Frank…all of the damn devils are controlled by the same powers. Obama is an empty suit…..just like Bush, and the Republicans and Democrats are treasonous bastards who are/have destroyed this country by betraying the fundamental premise of God and Country first. These lying, thieving scumbags have lined their pockets and have set up a fiefdom that they presume to pass on to others. The only way at this point to rectify the situation is to be ‘in the streets’, stop paying any taxes, take the economy ‘underground’, stop being Mr. & Mrs. Nice and raise holy shit everywhere you can. We all know something for certain now, democracy does not work. Working ‘within the system’ is a crock of shit……..we all just witnessed another election with all the promises made by the Dems…..nothing, nothing, nothing….unless you figure ‘something for nothing’ is something. The seeds of destruction have begun to sprout…..they’ve been laying dormant for 70 years….not ‘dormant’, but the activity that will spawn a revolution remained boiling beneath the surface, we knew it was going on but we chose to ignore it……..a folly that will cost us dearly.

    Whoever said, “Gold could have prevented this”, was right on target. But those who saw the restrictions of gold worked feverishly, in the dark of night to make sure the politicians we dumb enough to buy into a fraudulent system which promised them plenty of money to make promises with and assured the best chance of re-election….in other words….’career politician’……the cause of death, when the tombstone is erected.

  45. hardrock

    Sorry, TYPO…’we’ should read ‘were’. Corrected here:
    Whoever said, “Gold could have prevented this”, was right on target. But those who saw the restrictions of gold worked feverishly, in the dark of night to make sure the politicians WERE dumb enough to buy into a fraudulent system which promised them plenty of money to make promises with and assured the best chance of re-election….in other words….’career politician’……the cause of death, when the tombstone is erected.

  46. Simon

    The Chinese are not communists, but the term can be redefined

  47. criticalcontrarian

    scarletfire: Your sarcasm was not lost on me, no problemo, I myself love to repartee. 🙂 Regarding the status quo, au contraire, how can it be good for us??? Perhaps you confuse fear of the unknown with change? The current changes taking place are extremely bad the “Old World Order” elite. Elaine is 200% right on this! And she is 500% correct on their “luring the West”, and they did it without firing a shot! Bravissimo! (Real wisdom in action) What is bad for the status quo can only be good for the rest of the world. Believe me. The coming changes may not be convenient, it will not be a free lunch, nor will it be an uneventful ride, but all in all, it will allow for a more balanced and equitable system for the world.

    Your comparative on the US & USSR is a good one, I like the way you think. Also I agree with you that China will not be the ruler of the world. It will not be a uni-polar world. The world has learned that doesn’t work very well, thank you Dubya (possibly his one and only positive contribution).;-) It will instead be a tri-polar world (China, India, Brazil), and with Russia as the fourth leg if they can get their house in order and sync politically with the other three. As much as I admire Putin and hate to admit it, their tendency is to go Russian version of the US empire, a negative.

    Bear: That’s the old pattern, and the people who propagated that socio-political model can no longer afford to sustain it. Bye-bye Neo-Ziocon artists! Hello world. 😉

    flash: I believe it will be a hybrid socio-political system, drawing the best strengths from the different systems. We could and have been dong much worse for too long.

    Simon: “The Chinese are not communists.” Spot on! They are as much communists as Americans are democrats. Both systems are feudal in the guise of some “ism”. History and current events backed by critical thinking will support this.

  48. true… you know what they say…Bulls make money, bears make money. Now dont be a pig

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