New DVDs By Michael Snyder
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 By recklessly printing, borrowing and spending money, our authorities are absolutely shredding confidence in the U.S. dollar. The rest of the world is watching this nonsense, and at some point they are going to give up on the U.S. dollar and throw their hands up in the air. When that happens, it is going to be absolutely catastrophic for the U.S. economy. Right now, we export a lot of our inflation. Each year, we buy far more from the rest of the world than they buy from us, and so the rest of the world ends up with giant piles of U.S. dollars. This works out pretty well for them, because the U.S. dollar is the primary reserve currency of the world and is used in international trade far more than any other currency is. Back in 1999, the percentage of foreign exchange reserves in U.S. dollars peaked at 71 percent, and since then it has slid back to 62.2 percent. But that is still an overwhelming amount. We can print, borrow and spend like crazy because the rest of the world is there to soak up our excess dollars because they need them to trade with one another. But what will happen someday if the rest of the world decides to reject the U.S. dollar? At that point we would see a tsunami of U.S. dollars come flooding back to this country. Just take a moment and think of the worst superstorm that you can possibly imagine, and then replace every drop of rain with a dollar bill. The giant currency superstorm that will eventually hit this nation will be far worse than that.
Most Americans don’t realize that there are far more dollars in use in the rest of the world than in the United States itself. The following is from a scholarly article by Linda Goldberg…
The dollar is a major form of cash currency around the world. The majority of dollar banknotes are estimated to be held outside the US. More than 70% of hundred-dollar notes and nearly 60% of twenty- and fifty-dollar notes are held abroad, while two-thirds of all US banknotes have been in circulation outside the country since 1990
For decades we have been exporting gigantic quantities of our currency.
So what would happen if that process suddenly reversed and massive piles of dollars started coming back into the country?
It is frightening to think about.
Well, I guess the key is to get the rest of the world to continue to have confidence in the U.S. dollar so that will never happen, right?
Unfortunately, there are lots of signs that the rest of the world is accelerating their move away from the U.S. dollar.
For example, it was recently announced that the BRICS countries are developing their own version of the World Bank…
The BRICS (Brazil, Russia, India, China and South Africa) bloc has begun planning its own development bank and a new bailout fund which would be created by pooling together an estimated $240 billion in foreign exchange reserves, according to diplomatic sources. To get a sense of how significant the proposed fund would be, the fund would be larger than the combined Gross Domestic Product (GDP) of about 150 countries, according to Russia and India Report.
And as I noted in a previous article, over the past few years there have been a whole host of new international currency agreements that encourage the use of national currencies over the U.S. dollar. The following are just a few examples…
1. China and Germany (See Here)
2. China and Russia (See Here)
3. China and Brazil (See Here)
4. China and Australia (See Here)
5. China and Japan (See Here)
6. India and Japan (See Here)
7. Iran and Russia (See Here)
8. China and Chile (See Here)
9. China and the United Arab Emirates (See Here)
10. China, Brazil, Russia, India and South Africa (See Here)
Will this movement soon become a stampede away from the U.S. dollar?
That is a very important question.
But you don’t hear anything about this in the U.S. media and our politicians are not talking about this at all.
Meanwhile, our “leaders” seem to be doing everything that they can to destroy confidence in the U.S. dollar. The Federal Reserve is printing money like there is no tomorrow, and the federal government continues to run up trillion dollar deficits year after year.
They do not seem to understand that they are systematically destroying the U.S. financial system.
Other world leaders get it. For example, Russian President Vladimir Putin once said the following…
“Unreasonable expansion of the budget deficit, accumulation of the national debt – are as destructive as an adventurous stock market game.
During the time of the Soviet Union the role of the state in economy was made absolute, which eventually lead to the total non-competitiveness of the economy. That lesson cost us very dearly. I am sure no one would want history to repeat itself.”
Wow.
Why can’t most of our politicians see how destructive debt is?
What the federal government continues to do is absolutely insane. The national debt increased by more than 24 billion dollars on the day after Thanksgiving this year. But utter disaster has not struck yet, and most Americans are not really that concerned about the debt. So things just keep rolling along.
And of course our national debt of $16,309,738,056,362.44 is nothing when compared to the future liabilities that our federal government is facing. Just check out what a recent article in the Wall Street Journal had to say about all this…
The actual liabilities of the federal government—including Social Security, Medicare, and federal employees’ future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure.
Other economists paint an even gloomier picture. According to economist Niall Ferguson, the U.S. government is facing future unfunded liabilities of 238 trillion dollars.
So where are we going to get all that money?
Well, why don’t we just print more money than ever before so that the U.S. government can borrow and spend more money than ever before?
Don’t laugh. That is actually what some of the top economists in the country are actually recommending.
The most famous economic journalist in the entire country, Paul Krugman of the New York Times, is boldly proclaiming that the solution to all of our problems is to print, borrow and spend a lot more money. He insists that there is no reason to fear that the giant mountain of debt that we are accumulating will someday collapse the system…
For we have our own currency — and almost all of our debt, both private and public, is denominated in dollars. So our government, unlike the Greek government, literally can’t run out of money. After all, it can print the stuff. So there’s almost no risk that America will default on its debt — I’d say no risk at all if it weren’t for the possibility that Republicans would once again try to hold the nation hostage over the debt ceiling.
But if the U.S. government prints money to pay its bills, won’t that lead to inflation? No, not if the economy is still depressed.
Now, it’s true that investors might start to expect higher inflation some years down the road. They might also push down the value of the dollar. Both of these things, however, would actually help rather than hurt the U.S. economy right now: expected inflation would discourage corporations and families from sitting on cash, while a weaker dollar would make our exports more competitive.
Of course what he is prescribing is complete and utter madness.
At some point this con game is going to collapse and the rest of the world is going to say a big, fat, resounding “NO” to the U.S. dollar.
Why should they continue to use a currency that is becoming extremely unstable and that is constantly being manipulated?
And when the rest of the world rejects the U.S. dollar, the value of the dollar will drop like a rock because there will be far less global demand for it.
In addition, if the rest of the world is not using the U.S. dollar for trade any longer, other nations will cease to soak up our excess currency and huge mountains of our currency that are floating around out there will start flooding back to our shores.
At that point we will be looking at inflation unlike anything we have ever seen before. The era of cheap imports will be over and we will pay far more for everything from oil to the foreign-made plastic trinkets that we buy at Wal-Mart.
Most Americans don’t even know what a “reserve currency” is, but when the U.S. dollar loses reserve currency status it is going to unleash a nightmare that most economists cannot even imagine.
So enjoy this holiday season while you can. There are still lots and lots of cheap imports filling the shelves of our stores.
Once the coming giant currency superstorm strikes, we will dearly wish for the good old days of 2012.
Yes, the U.S. dollar is alive and ticking for now. But at the pace that our authorities are abusing it, I would not say that things are looking good for a long and healthy lifespan.
 The future of the United States of America is being systematically destroyed by our politicians, but unfortunately most Americans don’t really grasp exactly what is happening. 30 years ago, our national debt had just crossed the one trillion dollar mark. Just recently, it crossed the 16 trillion dollar mark. Prior to every election, politicians from both parties swear up and down that they will do something about our exploding debt, but it never happens. Once again this year, our politicians are making all kinds of grand promises about getting U.S. government finances under control. But they are also promising all kinds of new plans and programs which are going to cost a lot more money on top of what we are already spending. For the average American, all of this can be incredibly confusing. That is why I have put together a list of facts about the debt and U.S. government finances below. These are things that every voter should know. The federal government is stealing more than a trillion dollars a year from our children and our grandchildren, and they are spending that money in some of the most foolish ways that you could ever imagine. We have accumulated the largest mountain of debt in the history of the world, but our politicians just can’t help themselves – they appear to be absolutely addicted to spending money. If we continue on the path that we are currently on, our entire financial system and our entire economy will be destroyed by all of this debt. Time is running out and urgent action is needed to address this crisis.
Many of our founding fathers attempted to warn us about the dangers of government debt. For example, Thomas Jefferson once said the following…
I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.
Where would we be today if such an amendment had been added to our Constitution?
How much brighter would our future be if the federal government had been forced to only spend what it took in all these years?
Those are very good questions.
The following are 55 facts about the debt and U.S. government finances that every American voter should know….
#1 While Barack Obama has been president, the U.S. government has spent about 11 dollars for every 7 dollars of revenue that it has actually brought in.
#2 During the fiscal year that just ended, the U.S. government took in 2.449 trillion dollars but it spent 3.538 trillion dollars.
#3 During fiscal year 2011, over a trillion dollars of government money was spent on 83 different welfare programs, and those numbers do not even include Social Security or Medicare.
#4 Over the past four years, welfare spending has increased by 32 percent. In inflation-adjusted dollars, spending on those programs has risen by 378 percent over the past 30 years. At this point, more than 100 million Americans are enrolled in at least one welfare program run by the federal government. Once again, these figures do not even include Social Security or Medicare.
#5 Over the past year, the number of Americans getting a free cell phone from the federal government has grown by 43 percent. Now more than 16 million Americans are enjoying what has come to be known as an “Obamaphone”.
#6 When Barack Obama first entered the White House, about 32 million Americans were on food stamps. Now, nearly 47 million Americans are on food stamps. And this has happened during what Obama refers to as “an economic recovery”.
#7 The U.S. government recently spent 27 million dollars on pottery classes in Morocco.
#8 The U.S. Department of Agriculture recently spent $300,000 to encourage Americans to eat caviar at a time when more families than ever are having a really hard time just trying to put any food on the table at all.
#9 During 2012, the National Science Foundation spent $516,000 to support the creation of a video game called “Prom Week”, which apparently simulates “all the social interactions of the event.”
#10 The U.S. Department of Agriculture gave the largest snack food maker in the world (PepsiCo Inc.) a total of 1.3 million dollars in corporate welfare that was used to help build “a Greek yogurt factory in New York.”
#11 The National Science Foundation recently gave researchers at Purdue University $350,000. They used part of that money to help fund a study that discovered that if golfers imagine that a hole is bigger it will help them with their putting.
#12 If you can believe it, $10,000 from the federal government was actually used to purchase talking urinal cakes up in Michigan.
#13 The National Science Foundation recently gave a whopping $697,177 to a New York City-based theater company to produce a musical about climate change.
#14 The National Institutes of Health recently gave $666,905 to a group of researchers that is studying the benefits of watching reruns on television.
#15 The National Science Foundation has given 1.2 million dollars to a team of “scientists” that is spending part of that money on a study that is seeking to determine whether elderly Americans would benefit from playing World of Warcraft or not.
#16 The National Institutes of Health recently gave $548,731 to a team of researchers that concluded that those that drink heavily in their thirties also tend to feel more immature.
#17 The National Science Foundation recently spent $30,000 on a study to determine if “gaydar” actually exists. This is the conclusion that the researchers reached at the end of the study….
“Gaydar is indeed real and… its accuracy is driven by sensitivity to individual facial features”
#18 Back in 2011, the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.
#19 The U.S. government spends more on the military than China, Russia, Japan, India, and the rest of NATO combined. In fact, the United States accounts for 41.0% of all military spending on the planet. China is next with only 8.2%.
#20 In a previous article, I noted that close to 500,000 federal employees now make at least $100,000 a year.
#21 In 2006, only 12 percent of all federal workers made $100,000 or more per year. Now, approximately 22 percent of all federal workers do.
#22 If you can believe it, there are 77,000 federal workers that make more than the governors of their own states do.
#23 During 2010, the average federal employee in the Washington D.C. area received total compensation worth more than $126,000.
#24 The U.S. Department of Defense had just nine civilians earning $170,000 or more back in 2005. When Barack Obama became president, the U.S. Department of Defense had 214 civilians earning $170,000 or more. By June 2010, the U.S. Department of Defense had 994 civilians earning $170,000 or more.
#25 During 2010, compensation for federal employees came to a grand total of approximately 447 billion dollars.
#26 If you can believe it, close to 15,000 retired federal employees are currently collecting federal pensions for life worth at least $100,000 annually. That list includes such names as Newt Gingrich, Bob Dole, Trent Lott, Dick Gephardt and Dick Cheney.
#27 During 2010, the federal government spent $33,387 on the hair care needs of U.S. Senators.
#28 During 2010, U.S. Senators pulled $72,370 out of the “Senate Restaurant Fund”.
#29 During 2010, an average of $4,005,900 of U.S. taxpayer money was spent on “personal” and “office” expenses per Senator.
#30 In 2013, 3.7 million dollars will be spent to support the lavish lifestyles of former presidents such as George W. Bush and Bill Clinton.
#31 During 2011, the federal government spent a total of 1.4 BILLION dollars just on the Obamas.
#32 When you combine all federal government spending, all state government spending and all local government spending, it comes to approximately 41 percent of U.S. GDP. But don’t worry, all of our politicians insist that this is not socialism.
#33 As I have written about previously, less than 30 percent of all Americans lived in a home where at least one person received financial assistance from the federal government back in 1983. Today, that number is sitting at an all-time high of 49 percent.
#34 Back in 1990, the federal government accounted for just 32 percent of all health care spending in America. This year, it is being projected that the federal government will account for more than 50 percent of all health care spending in the United States.
#35 The number of Americans on Medicaid soared from 34 million in 2000 to 54 million in 2011, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
#36 In one of my previous articles, I discussed how it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.
#37 If you can believe it, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years. That comes to approximately $328,404 for each and every household in the United States.
#38 In the United States today, more than 61 million Americans receive some form of Social Security benefits. By 2035, that number is projected to soar to a whopping 91 million.
#39 Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.
#40 When Barack Obama first took office, the U.S. national debt was about 10.6 trillion dollars. Now it is about 16.2 trillion dollars. That is an increase of 5.6 trillion dollars in less than 4 years.
#41 The federal government has now run a budget deficit of more than a trillion dollars for four years in a row.
#42 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
#43 If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.
#44 Some suggest that “taxing the rich” is the answer. Well, if Bill Gates gave every single penny of his entire fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.
#45 If the federal government used GAAP accounting standards like publicly traded corporations do, the real federal budget deficit for 2011 would have been 5 trillion dollars instead of 1.3 trillion dollars.
#46 The United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.
#47 At this point, the United States government is responsible for more than a third of all the government debt in the entire world.
#48 The amount of U.S. government debt held by foreigners is about 5 times larger than it was just a decade ago.
#49 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.
#50 The U.S. national debt is now more than 37 times larger than it was when Richard Nixon took us off the gold standard.
#51 The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.
#52 The U.S. national debt jumped more on the very first day of fiscal year 2013 than it did from 1776 to 1941 combined.
#53 Historically, the interest rate on 10 year U.S. Treasuries has averaged 6.68 percent. If the average interest rate on U.S. government debt rose to that level today, the U.S. government would find itself spending more than a trillion dollars per year just on interest on the national debt.
#54 A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.
#55 Boston University economist Laurence Kotlikoff is warning that the U.S. government is facing a gigantic tsunami of unfunded liabilities in the coming years that we are counting on our children and our grandchildren to pay. Kotlikoff speaks of a “fiscal gap” which he defines as “the present value difference between projected future spending and revenue”. His calculations have led him to the conclusion that the federal government is facing a fiscal gap of 222 trillion dollars in the years ahead.
Please share this article with as many people as you can. Time is running out to fix these problems.
 Barack Obama has destroyed the future of America in order to improve his chances of winning the next election. Under Obama, 5.3 trillion dollars has been ruthlessly stolen from our children and our grandchildren. That money has been used to pump up the debt-fueled false prosperity that we have been experiencing. When the U.S. government borrows money that it does not have from someone else (such as China) and spends that money into the economy it is going to make our economic numbers look better. Even if the government spends that money on incredibly stupid things, it still gets into the hands of average Americans who in turn spend that money on food, gas, clothes, etc. If we were to go back and take that extra 5.3 trillion dollars out of the U.S. economy, I guarantee you that we would be in a rip-roaring depression right now. We would look a lot like Greece at this point. For several years Greece has been raising taxes and cutting government spending in an attempt to balance the budget and these austerity measures have resulted in an unemployment rate of over 23 percent and an economy that has contracted by close to 25 percent. Most Americans don’t want to go through pain like that so they are okay with continuing to financially rape our children and our grandchildren. Just imagine how you would feel if your parents died tomorrow and you found out that they had left you with a million dollar debt that you were legally obligated to pay off. How would you feel, knowing that you had just been sold into debt slavery for the rest of your life? Well, that is how our children and our grandchildren are going to feel. We are destroying the greatest economic machine the world has ever seen, we are accumulating the biggest mountain of debt in the history of the planet, and the coming economic collapse that we have caused is going to wipe out the promising future that our children and our grandchildren were supposed to have. If they get the chance, future generations of Americans will curse us bitterly and will spit on our graves. What we are doing to our children and our grandchildren is the kind of stuff that horror movies are made of. You should be ashamed of yourself America.
The federal budget deficit for 2012 will be larger than the entire U.S. national debt was 30 years ago. In 1982 Ronald Reagan was in the White House and the U.S. national debt was considered to be a tremendous national crisis. But somehow we have allowed our national debt to grow from about a trillion dollars back then to approximately $16,000,000,000,000 today.
By the end of Obama’s first term, the U.S. national debt will have grown more than it did from the time that George Washington became president to the time that George W. Bush became president.
That is hard to believe.
Obama is going to outdo all the presidents from George Washington through Bill Clinton in just one term.
Amazing.
At this point, the U.S. national debt is more than 22 times larger than it was when Jimmy Carter became president.
This has allowed us to enjoy a standard of living far beyond what we deserved to. We have stolen from the future to make the present more pleasant.
But hardly anybody wants the party to end. Especially not our Congress critters – they are living like kings and queens at our expense. Our “representatives” in Washington D.C. love to give speeches about being “financially responsible”, but most of them never take any serious action about the debt because the way things are working now has been incredibly good to them.
And the truth is that both political parties have been responsible. In 2010, Republicans took control of the House of Representatives with a clear mandate to get government spending under control. Not a single penny of government money can be spent without their permission. But since they took control, the U.S. national debt has increased by another 1.8 trillion dollars.
At this point, this current Congress (controlled by both Republicans and Democrats) has added more to the national debt than the first 97 Congresses combined.
We expect this kind of nonsense from the Democrats, but the Republicans are supposed to know better.
Of course our entire financial system is designed to permanently entrap our federal government in an endless spiral of debt, but neither political party ever talks about that.
Sadly, the U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.
But we never hear about the link between the Federal Reserve and our national debt from either political party or on the mainstream news.
So most Americans do not even realize that our system is designed to create government debt.
It is absolutely disgusting.
We say that we care about our kids, and yet we are passing down a $16,000,000,000,000 debt to them.
Talk about child abuse.
Most people have a really hard time grasping how much money 16 trillion dollars actually is.
If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
And it would take you more than half a million years to spend 16 trillion dollars.
This is a debt that is impossible to pay back. Just look at how it has exploded over the past 40 years….
In a previous article I discussed the distressing rate at which our debt is growing….
It took more than 200 years for the U.S. national debt to reach 1 trillion dollars. In 1986, the U.S. national debt reached 2 trillion dollars. In 1992, the U.S. national debt reached 4 trillion dollars. In 2005, the U.S. national debt doubled again and reached 8 trillion dollars. Now the U.S. national debt is about to cross the 16 trillion dollar mark. How long can this kind of exponential growth go on?
If we can’t even slow down the growth of our debt, how do we ever expect to repay a single penny?
The sad truth is that we aren’t ever going to start paying down our debt. We have gotten to the point where if we take our foot off the debt accelerator we plunge directly into a depression and the entire system collapses. It is like a really sick version of the movie “Speed”.
Where is Keanu Reeves when you need him?
Since Barack Obama entered the White House, he has approved a whole host of measures that have been good for the economy in the short-term. TARP, the stimulus packages, the auto industry bailout and the payroll tax cut are just a few examples.
Barack Obama has wanted to do everything he possibly can to stimulate the economy in the short-term so that he can win again in 2012.
But what about the future?
Barack Obama could not care less about the future. He is just like so many of our other politicians. He is blinded by selfish ambition.
Since Barack Obama became president, the U.S. national debt has increased by an average of more than $64,000 per taxpayer.
Are you willing to write a check for your share?
No?
Oh, let’s just pass this horrific debt on to our children, right?
The path that we are on as a nation cannot go on too much longer. The truth is that we are headed for financial oblivion.
A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.
Of course we will never get to the point. Our financial system will collapse long before then.
Sadly, the United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.
So why are we not like Greece or Spain yet?
Well, it is because we are still able to borrow huge piles of money very, very cheaply.
But at some point that will come to an end, and when it does the consequences are going to be nightmarish.
Historically, the interest rate on 10 year U.S. Treasuries has averaged 6.68 percent. If the average rate of interest on U.S. debt rose to that level today, we would be paying more than a trillion dollars a year just in interest on the national debt.
And when you consider our future unfunded liabilities things get even more frightening.
According to Boston University economist Laurence Kotlikoff, the “fiscal gap” is “the present value difference between projected future spending and revenue”. His calculations have led him to the conclusion that the United States is facing a fiscal gap of 222 trillion dollars.
And this gap is rising at a breathtaking pace.
The following is an excerpt from a recent article co-authored by Kotlikoff….
In 2007, the first year the CBO produced the Alternative Fiscal Scenario, the gap, by our reckoning, stood at $175 trillion. By 2009, when the CBO began reporting the AFS annually, the gap was $184 trillion. In 2010, it was $202 trillion, followed by $211 trillion in 2011 and $222 trillion in 2012.
But if we interrupt this debt cycle we immediately go into a depression.
We are a debt addict that will die without more debt.
Meanwhile, our national ability to produce wealth is going down the toilet.
All over the country businesses are shutting down, factories are being closed and millions of jobs are being sent overseas.
As I wrote about the other day, American families are steadily getting poorer. The middle class is shrinking and the tax base is shriveling up.
Many Americans end up flat broke at the end of their lives these days. In fact, one study found that nearly half of all retirees end up with $10,000 or less when they die.
So where is all of the money for servicing this gigantic national debt going to come from?
Even if Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.
So what is the solution?
If we keep spending money like this we are doomed, but if we stop spending money like this we are doomed.
And debt is not just a problem that the federal government is facing.
Posted below is a chart that shows the growth of all forms of debt in the United States over the past several decades. 40 years ago, there was less than 2 trillion dollars of total debt owed in the United States. Now there is nearly 55 trillion dollars of debt owed. This generation has destroyed the future and has set the stage for an unprecedented economic collapse. Shame on you America….
 The U.S. government has stolen $15,876,457,645,132.66 from future generations of Americans, and we continue to add well over a hundred million dollars to that total every single day day. The 15 trillion dollar binge that we have been on over the past 30 years has fueled the greatest standard of living the world has ever seen, but this wonderful prosperity that we have been enjoying has been a lie. It isn’t real. We have been living way above our means for so long that we do not have any idea of what “normal” actually is anymore. But every debt addict hits “the wall” eventually, and the same thing is going to happen to us as a nation. At some point the weight of our national debt is going to cause our financial system to implode, and every American will feel the pain of that collapse. Under our current system, there is no mathematical way that this debt can ever be paid back. The road that we are on will either lead to default or to hyperinflation. We have piled up the biggest debt in the history of the world, and if there are future generations of Americans they will look back and curse us for what we did to them. We like to think of ourselves as much wiser than previous generations of Americans, but the truth is that we have been so foolish that it is hard to put it into words.
Whenever I do an article about the national debt, Democrats leave comments blaming the Republicans and Republicans leave comments blaming the Democrats.
Well you know what?
Both parties are to blame. Both of them get a failing grade.
If the Republicans really wanted to stop the federal government from running up all this debt they could have done it.
If the Democrats really wanted to stop the federal government from running up all this debt they could have done it.
So let’s not pretend that one of the political parties is “the hero” in this little drama.
The damage has been done, and both parties will go down in history as being grossly negligent on fiscal issues during this period of American history.
Sadly, neither party is showing any signs of changing their ways.
Neither Barack Obama nor Mitt Romney is promising to eliminate the federal budget deficit in 2013. They both talk about how the budget will be balanced “someday”, but as we have seen so many times in the past, “someday” never comes.
I didn’t mean to get all political in this article, but the truth is that the national debt threatens to destroy everything that previous generations have built, and our politicians continue to give us nothing but excuses.
The following are 27 things that every American should know about the national debt….
#1 It took more than 200 years for the U.S. national debt to reach 1 trillion dollars. In 1986, the U.S. national debt reached 2 trillion dollars. In 1992, the U.S. national debt reached 4 trillion dollars. In 2005, the U.S. national debt doubled again and reached 8 trillion dollars. Now the U.S. national debt is about to cross the 16 trillion dollar mark. How long can this kind of exponential growth go on?
#2 If the average interest rate on U.S. government debt rises to just 7 percent, the U.S. government will find itself spending more than a trillion dollars per year just on interest on the national debt.
#3 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
#4 Since Barack Obama entered the White House, the U.S. national debt has increased by an average of more than $64,000 per taxpayer.
#5 Barack Obama will become the first president to run deficits of more than a trillion dollars during each of his first four years in office.
#6 If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.
#7 The U.S. national debt has increased by more than 1.6 trillion dollars since the Republicans took control of the U.S. House of Representatives. So far, this Congress has added more to the national debt than the first 97 Congresses combined.
#8 During the Obama administration, the U.S. government has accumulated more new debt than it did from the time that George Washington became president to the time that Bill Clinton became president.
#9 If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.
#10 As Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.
#11 Today, the government debt to GDP ratio in the United States is well over 100 percent.
#12 A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.
#13 The United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.
#14 At this point, the United States government is responsible for more than a third of all the government debt in the entire world.
#15 The amount of U.S. government debt held by foreigners is about 5 times larger than it was just a decade ago.
#16 The U.S. national debt is now more than 22 times larger than it was when Jimmy Carter became president.
#17 It is being projected that the U.S. national debt will surpass 23 trillion dollars in 2015.
#18 Mandatory federal spending surpassed total federal revenue for the first time ever in fiscal 2011. That was not supposed to happen until 50 years from now.
#19 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.
#20 The U.S. government has total assets of 2.7 trillion dollars and has total liabilities of 17.5 trillion dollars. The liabilities do not even count 4.7 trillion dollars of intragovernmental debt that is currently outstanding.
#21 U.S. households are now actually receiving more money directly from the U.S. government than they are paying to the government in taxes.
#22 The U.S. government is wasting your money on some of the stupidest things imaginable. For example, in 2011 the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.
#23 If the federal government used GAAP accounting standards like publicly traded corporations do, the real federal budget deficit for last year would have been 5 trillion dollars instead of 1.3 trillion dollars.
#24 The Federal Reserve purchased approximately 61 percent of all government debt issued by the U.S. Treasury Department during 2011.
#25 At this point, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.
#26 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 480,000 years to completely pay off the national debt.
#27 The official government debt figure does not even account for massive unfunded liabilities that the U.S. government will be hit with in the years ahead. According to Professor Laurence J. Kotlikoff, the U.S. government is facing a future “fiscal gap” of more than 200 trillion dollars.
As the U.S. economy continues to crumble, even more Americans are going to become financially dependent on the federal government.
For example, spending on food stamps has doubled since 2008. Millions of Americans have lost their jobs and have needed some assistance from the government. Since Obama became president the number of Americans on food stamps has gone from 32 million to 46 million.
But the Obama administration believes that a lot more Americans should be enrolled in the food stamp program. The Obama administration is now spending millions of dollars on ads that urge even more people to sign up for food stamps. In fact, their efforts to get even more Americans to sign up for food stamps have become very creative….
The government has been targeting Spanish speakers with radio “novelas” promoting food stamp usage as part of a stated mission to increase participation in the Supplemental Nutrition Assistance Program (SNAP), or food stamps.
Each novela, comprising a 10-part series called “PARQUE ALEGRIA,” or “HOPE PARK,” presents a semi-dramatic scenario involving characters convincing others to get on food stamps, or explaining how much healthier it is to be on food stamps.
I’m all for helping those that cannot feed themselves, but do we really need to run ads urging more people to become dependent on the government?
Of course Obamacare is going to cause our debt to balloon in size as well. It is being projected that Obamacare will add more than 2.6 trillion dollars to the U.S. national debt over the first decade alone.
So where are we going to get all this money?
We can’t keep spending money that we do not have. We have got to prioritize. Every single category of government spending needs to be cut.
But instead we feel like we can keep ripping off future generations of Americans and that we will always be able to get away with it.
What we have done to our children and our grandchildren is beyond criminal.
The truth is that we should have listened to the warnings of our founding fathers about government debt. For example, Thomas Jefferson once said that if he could add just one more amendment to the U.S. Constitution it would be a complete ban on all borrowing by the federal government….
I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.
Where would we be today if we had taken the advice of Thomas Jefferson?
That is something to think about.
 What is the biggest economic problem that the United States is facing? Very simply, our biggest problem is that we have way too much debt. Over the past 30 years, household debt, corporate debt and government debt have all grown much faster than our GDP has. But no nation on earth has ever been able to expand debt much faster than national output indefinitely. All debt bubbles eventually burst. Right now, we are living in the greatest debt bubble in the history of the world. All of this debt has fueled a “false prosperity” which has enabled many Americans to live like kings and queens. But no nation (or household) can pile on more debt forever. At some point the weight of the debt becomes just too great. It is amazing that the United States has been able to pile up as much debt as it has. Over the years, many authors have predicted that U.S. government finances would collapse long before the U.S. national debt ever got to this level. So the mountain of debt that we have accumulated is quite an “achievement” if you want to look at it that way. But the clock is ticking on this debt bubble and when it collapses we will say “bye bye” to our vastly inflated standard of living and we will discover that we have destroyed the economy for all future generations of Americans.
Household Debt
Sometimes a picture is worth a thousand words. When most Americans think of the “debt problem” in this country, they think of the debt of the federal government.
But that is not the only debt bubble that we are facing.
Thirty years ago, household debt in the United States was approaching the 2 trillion dollar mark. Today, it is sitting at about 13 trillion dollars….
We have been trained to pay for everything with debt.
We pay for our homes with debt, and mortgage debt as a percentage of GDP has more than tripled since 1955.
We pay for our cars with debt, and at this point about 70 percent of all auto purchases in the United States involve an auto loan.
We pay for higher education with debt, and the total amount of student loan debt in America recently surpassed the one trillion dollar mark.
Wherever we go we pay with plastic.
If you want a heated cat bed and a cute little cat sweater for your little kitty just put it on your Visa or Mastercard.
Amazingly, consumer debt in America has risen by a whopping 1700% since 1971, and if you can believe it, 46% of all Americans carry a credit card balance from month to month.
We are absolutely addicted to debt and we do not know how to stop.
State And Local Government Debt
Our state and local governments are also addicted to debt.
30 years ago, state and local government debt was approaching the 400 million dollar mark. Today, state and local government debt is hovering around the 3 trillion dollar mark….
In the United States today, we don’t just have one “government debt problem” – the truth is that we have hundreds of them. All over the country, state and local governments are facing bankruptcy because of too much debt.
For example, according to Fox News the city of Stockton, California is right on the verge of declaring bankruptcy. In fact, an announcement could come as early as this week….
Stockton, Calif., is set to declare bankruptcy as early as this week, according to local officials, a move that would make it one of the largest U.S. cities ever to file for reorganization.
On Monday, a state-required mediation with creditors to find a fiscal solution is scheduled to expire. Stockton’s City Council is then slated to meet Tuesday to decide whether to adopt a budget for operating in bankruptcy, a move widely considered the last step before the city formally submits a Chapter 9 petition to federal bankruptcy court.
Federal Government Debt
Of course the biggest offender of all is the federal government. 30 years ago, Ronald Reagan was running around proclaiming what a nightmare it was that the U.S. national debt was reaching the one trillion dollar mark.
Well, now we are about to blast through the 16 trillion dollar mark with no end in sight….
Running up debt at a much faster rate than our GDP is rising is a recipe for national financial suicide. Our politicians continue to steal about 150 million dollars an hour from future generations and everybody just acts like this is perfectly normal.
We are going down the same path that Greece, Portugal, Italy, Ireland and Spain have gone.
In fact, we already have more government debt per capita than all of those nations do.
Both political parties have been doing this to us, and it just keeps getting worse and worse.
Incredibly, the national debt has grown more under Obama in less than 4 years than it did under George W. Bush during his entire 8 year term.
Since Barack Obama entered the White House, we have accumulated more than five trillion dollars of additional debt.
We are on the road to national financial oblivion, and most Americans don’t seem to care.
Debt From Sea To Shining Sea
Now let’s add up all the debt in the country. When you total up all household debt, business debt and government debt, it comes to more than 300% of our GDP….
In fact, if current trends continue we will hit 400% of GDP before too long.
As you can see from the chart, there was a little “hiccup” during the last recession, but now the debt bubble is growing again.
So how high can it go before the entire system collapses?
Total credit market debt owed is roughly 10 times larger than it was about 30 years ago.
How in the world did we accumulate 10 times more debt in just 30 years?
If we do that again in the next 30 years, our total debt will be more than 500 trillion dollars in the 2040s.
Unfortunately, that is the way that debt spirals work. They either have to keep expanding or they collapse.
So will the U.S. debt spiral continue to expand?
Or will we soon see a collapse?
Sadly, this exact same thing is happening all over the world. The government debt to GDP ratio in Japan (the third largest economy in the world) blew past the 200% mark quite a while ago, and almost every country in the EU is absolutely drowning in debt.
The world has never faced anything quite like this. There is way, way too much debt in the world, but the only way we can continue to enjoy this level of prosperity under the current system is to pile up a lot more debt.
The western world is like a debt addict in a deep state of denial. Some debt addicts end up with dozens of credit card accounts. They will keep opening more accounts as long as someone will let them. Most debt addicts actually believe that they will be able to get out of the hole at some point, but most never do.
Most Americans still believe that we are experiencing “temporary” economic problems that will eventually go away. Most Americans still believe that even greater prosperity is still ahead.
Sadly, what the mainstream media and the two major political parties are telling them is a bunch of lies.
We have enjoyed the greatest prosperity that we will ever see in the United States, and when the debt bubble bursts there is going to be an immense amount of pain.
That is a very painful truth, but it is better to come to grips with it now than be blindsided by it later.
 Why isn’t the U.S. economy in a depression right now? The number one reason is because the federal government has stolen more than five trillion dollars from future generations since Barack Obama was elected and has used that money to pump up our grossly inflated standard of living. Whether the federal government spends money wisely or foolishly, the truth is that the vast majority of it still ends up in the pockets of the American people who then use it to buy the things they need for their daily lives. If the U.S. government had not borrowed and spent an extra five trillion dollars that we did not have over the past several years, we would be in the middle of a rip-roaring economic depression right now. So any talk that Barack Obama is “improving the economy” is a total farce. It is a five trillion dollar lie. The reality is that Barack Obama and the U.S. Congress have been stealing trillions of dollars from future generations in order to make things tolerable in the present. If the federal government adopted a balanced budget next year, the debt-fueled prosperity that we are currently enjoying would start disappearing very rapidly and all hell would break loose in America.
At this point, the U.S. national debt is over 15.7 trillion dollars.
When Ronald Reagan took office it was less than a trillion dollars.
If you were to divide the national debt up equally, it would come to more than $50,000 for every man, woman and child in the United States.
So the share of the national debt for an average family of four would be about $200,000.
When the government borrows and spends money that it does not have, that increases the amount of dollars in circulation and it causes GDP to go up.
That is one of the reasons why our politicians like to borrow and spend money that we do not have. It makes the economic statistics look good. They can point to those economic statistics as a reason to send them back for another term.
This is a major flaw in our system. Most of our politicians do not care about how they are raping future generations financially. Most of them just care about getting elected again.
If you will notice carefully, neither Mitt Romney nor Barack Obama are promising to balance the budget any time soon. Like so many politicians in the past, they promise to do it “eventually”, but “eventually” never arrives.
According to a recent article in the Washington Times, Mitt Romney declared during a recent campaign appearance that he has no plans to balance the federal budget in his first year….
“My job is to get America back on track to have a balanced budget. Now I’m not going to cut $1 trillion in the first year”
Why would he say that?
Why wouldn’t he want to balance the budget?
He went on to explain that….
“The reason,” he explained, “is taking a trillion dollars out of a $15 trillion economy would cause our economy to shrink [and] would put a lot of people out of work.”
Romney is right about this. Taking a trillion dollars out of a 15 trillion dollar economy would plunge us into an economic nightmare.
And that would make him look bad.
Of course if Obama wins the election we can just expect more of the same from him as well.
For example, just check out what White House Chief of Staff Jack Lew had to say about balancing the budget recently….
“The time for austerity is not today,” Lew told NBC News “Meet the Press.” “If we were to put in austerity measures right now, it would take the economy in the wrong way.”
Why is the time for austerity not today?
It is because the 2012 election is coming up and Obama wants the economic statistics to look good.
But can you blame our politicians for being cowardly?
Just look at what is happening in Greece. After several years of austerity they are in the midst of a full-blown economic depression and they still have not balanced their budget.
Do we want to end up like Greece?
Most Americans do not realize this, but the U.S. already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.
So why haven’t we collapsed yet?
Well, because we continue to borrow larger and larger amounts of money.
It took from the founding of America until 1995 for the federal government to accumulate 5 trillion dollars of debt.
Under Obama, we have accumulated more than 5 trillion dollars of new debt in just over 3 years.
Amazingly, Obama has added more to the national debt than George W. Bush did during his entire 8 year term.
And let there be no mistake – George W. Bush was a wild spender. A fiscal conservative he most certainly was not.
But Barack Obama does not seem troubled by any of this.
Barack Obama is prancing about the countryside touting his great “economic plan”, but the truth is that the only reason the economy has not totally collapsed is because he is stealing 150 million dollars an hour from our children and our grandchildren.
Sadly, most Americans don’t understand that the current level of prosperity that we are enjoying is a grand illusion. Most Americans still expect things to return to the way that they used to be, and they are increasingly becoming angry that it is taking so long to get back there.
In fact, a whole host of recent surveys have shown that Americans are very dissatisfied with the direction the economy is heading in….
Four recent surveys have found that on average only 28% of Americans are satisfied with the condition of the country, while 70% are dissatisfied. Three recent surveys have found that between 69% and 83% of Americans believe that the country is still in recession (it isn’t), and only half believe that a recovery is under way.
What they don’t realize is that if we were not massively ripping off our kids and our grandkids things would be much, much worse.
Thomas Jefferson understood that government borrowing is essentially the same as theft from future generations.
He once made the following statement….
And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.
What we are doing to our children and our grandchildren is so immoral that it is hard to put into words.
We are running up trillions upon trillions of dollars of debt in their name just so that our lives can be more comfortable right now.
How could we be so selfish?
The sad thing is that even with all of this reckless spending our economy is still not in great shape.
In fact, the middle class continues to shrink at an alarming rate. The following are just a few statistics from a recent article I did about this phenomenon….
-Today, approximately 48 percent of all Americans are currently either considered to be “low income” or are living in poverty.
-Back in 1960, social welfare benefits made up approximately 10 percent of all salaries and wages. In the year 2000, social welfare benefits made up approximately 21 percent of all salaries and wages. Today, social welfare benefits make up approximately 35 percent of all salaries and wages.
-The United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.
-Every year now, we see millions of Americans fall out of the middle class. In 2010, 2.6 million more Americans descended into poverty. That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.
-At this point, approximately 22 percent of all American children are living in poverty.
-When Barack Obama took office, there were 32 million Americans on food stamps. Now, there are more than 46 million Americans on food stamps.
So how much worse would things be if a trillion dollars of federal spending was suddenly removed from the economy?
Are you starting to get the picture?
As bad as things are right now, they are about to get a whole lot worse.
So why can’t we just keep on borrowing and spending forever?
Well, just like Greece found out, debt always catches up with you eventually.
During fiscal 2011, the U.S. government spent over 454 billion dollars just on interest on the national debt.
But just like we are seeing in Europe, if confidence in U.S. government debt starts to disappear the U.S. government could end up facing much higher interest rates to borrow money.
If the average rate on U.S. government debt only rose to 7 percent (in the past it has actually been much higher than that), then the U.S. government would be spending about 1.1 trillion dollars a year just on interest on the national debt.
During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in about 2.4 trillion dollars.
So if we were spending 1.1 trillion dollars just on interest, that would be close to half of all the revenue the federal government brings in.
Right now, the Federal Reserve is manipulating the system in a desperate attempt to keep interest rates down. During 2011, the Federal Reserve bought up approximately 61 percent of all government debt issued by the U.S. Treasury Department.
But most Americans have no idea how fragile our financial system is.
Most Americans just assume that we will always be the greatest economy on the planet and that there is nothing to be worried about.
Sadly, one way or another this debt bubble is going to burst and then our debt-fueled false prosperity is going to disappear.
Most Americans are not going to understand what is happening and they are going to go absolutely nuts.
 You are not going to believe how much money is being spent on our former presidents. At a time when U.S. government spending is wildly out of control, a total of 3.6 million dollars is being used to support the lavish lifestyles of former presidents such as George W. Bush and Bill Clinton in 2012. For 2013, the plan is to increase that amount to 3.7 million dollars. But do any of them really need this kind of welfare? The truth is that all of them are very wealthy. So what justification is there for giving them so much money? You can see the GSA budget proposal for former presidents for 2013 right here. The 3.7 million dollars for 2013 does not even include the cost of Secret Service protection. Rather, it only covers expenses such as office rentals, travel, phone bills, postage, printing and pension benefits. Certainly it is not unreasonable to grant former presidents a small pension, but should we be showering them with millions of dollars each year? At a time when the federal government is drowning in so much debt, the fact that these former presidents are willing to take such huge amounts of taxpayer money really does make them look like parasites.
So why are these former presidents getting this money?
Congress passed The Former Presidents Act of 1958 because they didn’t want other presidents to end up as poor as Harry Truman did.
Well, these days former presidents are definitely not in danger of ending up poor. But this law does enable former presidents to stick the U.S. taxpayer with some absolutely outrageous bills.
For example, George W. Bush is scheduled to get $1,356,000 from U.S. taxpayers in 2013.
$85,000 of that will be for phone expenses.
He must have a really, really bad calling plan.
Bill Clinton is scheduled to get $1,019,000 from U.S. taxpayers in 2013.
A whopping $442,000 of that will be for office space.
That breaks down to more than $36,000 a month.
I hope that office space is nice.
Perhaps he needs a lot of office space to hide from Hillary.
George H.W. Bush is scheduled to get $879,000 from U.S. taxpayers in 2013.
$63,000 of that total will be going toward “equipment”.
How many iPads does he really need?
Even the old peanut farmer, Jimmy Carter, will be getting $518,000 from U.S. taxpayers in 2013.
But do they even need this money?
Exactly how wealthy are these former presidents?
Well, it turns out that they are very, very wealthy.
Bill Clinton earned an estimated $41 million in speaking fees during the first six years after he left office. He also received a $12 million advance for for his memoir, “My Life”.
George W. Bush earned an estimated $15 million in speaking fees during just the first two years after he left office.
So why are we spending millions to support these guys?
Perhaps this is yet another question that we don’t have an answer to. We can add it to the list….
-Why do chimps throw poop?
The federal government has spent $592,527 to try to find the answer.
-Do unhappy people spend more time on Twitter or on Facebook?
The federal government has spent $198,000 in an attempt to get an answer.
-How do rats respond to jazz music when they are high on cocaine?
Your tax dollars are being spent to get to the bottom of it.
-Does cocaine cause Japanese quail to engage in sexually risky behavior?
The federal government has spent $175,587 to find out the truth.
Right now there are more than 100 million working age Americans that do not have jobs, and this is the kind of nonsense that the federal government is spending money on.
Shame on these former presidents for taking this money.
If our Congress critters are looking for a place to cut the federal budget, this would be a good place to start.
 In recent days, New York Times economist Paul Krugman has been doing a whole bunch of interviews in which he has declared that the solution to our economic problems is very easy. Krugman says that all we need to do to get the global economy going again is for the governments of the world to start spending a lot more money. Krugman believes that austerity is only going to cause the economies of the industrialized world to slow down even further and therefore he says that it is the wrong approach. And you know what? Krugman is partly right about all of this. The false prosperity that the United States and Europe have been enjoying has been fueled by unprecedented amounts of debt, and in order to maintain that level of false prosperity we are going to need even larger amounts of debt. But there are several reasons why Krugman is mostly wrong. First of all, we have not seen any real “austerity” yet. Even though there have been some significant spending cuts and tax increases over in Europe, the truth is that nearly every European government is still piling up more debt at a frightening pace. Here in the United States, the federal government continues to spend more than a trillion dollars a year more than it brings in. If the United States were to go to a balanced federal budget, that would be austerity. What we have now is wild spending by the federal government beyond anything that John Maynard Keynes ever dreamed of. Secondly, Krugman focuses all of his attention on making things more comfortable for all of us in the short-term without even mentioning what we might be doing to future generations. Yes, more government debt would give us a short-term economic boost, but it would also make the long-term financial problems that we are passing on to our children even worse.
It is important to understand that Paul Krugman is a hardcore Keynesian. He believes that national governments can solve most economic problems simply by spending more money. His prescription for the U.S. economy in 2012 was summarized in a recent Rolling Stone article….
The basic issue, says Krugman, is a lack of demand. American consumers and businesses, aren’t spending enough, and efforts to get them to open their wallets have gone nowhere. Krugman’s solution: The federal government needs to step in and spend. A lot. On debt relief for struggling homeowners; on infrastructure projects; on aid to states and localities; on safety-net programs. Call it “stimulus” if you like. Call it Keynesian economics, after the great economic thinker (and Krugman idol) John Maynard Keynes, who first championed the idea that government has an essential role in saving the free market from its own excesses.
So is Krugman right?
Would the U.S. economy improve if the federal government borrowed and spent an extra half a trillion dollars this year for example?
Yes, it would.
But it would also get us half a trillion dollars closer to bankruptcy as a nation.
Krugman claims that “austerity” has failed, but the truth is that we have not even seen any real “austerity” yet.
When a government spends more than it brings in, that is not real austerity.
People talk about the “austerity” that we have seen in places such as Greece and Spain, but the truth is that both nations are still piling up huge amounts of new debt.
So let’s not pretend that the western world is serious about austerity.
The goal for most European nations at this point is to get their debts down to “sustainable” levels.
But for economists such as Krugman, this is a very bad idea. Krugman insists that cutting government spending during a recession is a very stupid thing to do. The following is from one of his recent articles in the New York Times….
For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets.
Critics warned from the beginning that austerity in the face of depression would only make that depression worse. But the “austerians” insisted that the reverse would happen. Why? Confidence! “Confidence-inspiring policies will foster and not hamper economic recovery,” declared Jean-Claude Trichet, the former president of the European Central Bank — a claim echoed by Republicans in Congress here. Or as I put it way back when, the idea was that the confidence fairy would come in and reward policy makers for their fiscal virtue.
Yes, Krugman is correct that government austerity measures will only make a recession worse.
Just look at what has happened in Greece. Wave after wave of austerity measures has pushed Greece into an economic depression. If you want to see what austerity has done to the unemployment rate in Greece, just check out this chart.
As other nations across Europe have taken measures to get debt under control, we have seen similar economic results all across the continent.
The overall unemployment rate in the eurozone has hit 10.9 percent which is a new all-time high, and youth unemployment rates throughout Europe are absolutely skyrocketing.
Right now there are already 12 countries in Europe that are officially in a recession, and in many European nations manufacturing activity is slowing down dramatically.
So, yes, austerity is not helping short-term economic conditions in Europe.
But what are the nations of the western world supposed to do?
According to Krugman, they are supposed to run up gigantic amounts of new debt indefinitely.
And that is what the United States is doing right now. But at some point the clock strikes midnight and all of a sudden you have become the “next Greece”.
U.S. government debt is already rising much, much faster than U.S. GDP is.
Between 2007 and 2010, U.S. GDP grew by only 4.26 percent, but the U.S. national debt soared by 61 percent during that same time period.
Today, the U.S. national debt is equivalent to 101.5 percent of U.S. GDP.
But Paul Krugman does not consider this to be a major problem.
The Obama administration is currently stealing approximately 150 million dollars from our children and our grandchildren every single hour to finance our reckless spending, but for Paul Krugman that is not nearly good enough.
To Krugman, the only thing that is important is what is happening right now. Apparently the future can be thrown into the toilet as far as he is concerned.
The founder of PIMCO, Bill Gross, told CNBC on Tuesday that the U.S. government is likely to be hit with another credit rating downgrade this year if something is not done about our exploding debt.
The United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.
But Krugman insists that the solution to our economic problems is even more debt and even more spending.
In a previous article, I detailed how we are doomed if the U.S. government keeps spending money wildly like this and we are doomed if the U.S. governments stops spending money wildly like this.
If we keep running trillion dollar deficits every year, at some point our financial system will collapse, the U.S. dollar will fail, and we will essentially be facing national bankruptcy.
But if the federal government stops borrowing and spending money like this, our debt-fueled prosperity will rapidly disappear, unemployment will shoot well up into double digits, and we will soon have mass rioting in major U.S. cities.
The truth is that we have already been following Paul Krugman’s economic prescription for the nation for decades. Our 15 trillion dollar party has funded a standard of living unlike anything the world has ever seen, but the party is coming to an end.
The Federal Reserve is trying to keep the party going by buying up huge amounts of government debt. The Fed actually purchased approximately 61 percent of all government debt issued by the U.S. Treasury Department in 2011.
It is a shell game that cannot go on for too much longer.
The national debt crisis can be delayed for a while, but at some point the house of cards is going to come crashing down on top of us all.
If Paul Krugman wanted to talk about real solutions he could talk about shutting down the Federal Reserve and he could talk about going to an entirely debt-free currency.
But we all know that is not going to happen, don’t we?
As I have written about before, the Federal Reserve was designed to be a perpetual government debt machine. The system was designed to have the amount of money and the amount of government debt constantly expand.
And it has been working quite well in that regard. At this point, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.
But Paul Krugman is not going to talk about the real issues. Instead, he is just going to keep running around declaring that more government spending and more government debt will solve all of our problems.
It is a very big lie, but millions of people are going to believe it.
 Why do chimpanzees throw poop? The federal government would like to know and is using your tax dollars to investigate the matter. Every single year, we all send huge amounts of our hard-earned money to the federal government. We hope that they will spend that money wisely. Unfortunately, that is simply not the case. You are about to read some examples of how the government is wasting your money that are absolutely mind blowing. Anyone that claims that there is not a lot of waste that can be cut out of the federal budget is lying to you. Our politicians have racked up the biggest pile of debt in the history of the world and they are spending our money on some of the stupidest things imaginable. It is imperative that the American people be educated about all of this outrageous government waste, because right now the political will to change this corrupt system is simply not there among the current crop of politicians in Washington. We are stealing trillions of dollars from future generations and many of the things that our politicians are wasting that money on are almost too bizarre to believe.
The following are 30 mind blowing ways that the government is wasting your money….
#1 In 2011, the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.
#2 The National Institutes of Health has spent more than 5 million dollars on a website called Sexpulse that is targeted at “men who use the Internet to seek sex with men”. According to Fox News, the website “includes pornographic images of homosexual sex as well as naked and scantily clad men” and features “a Space Invaders-style interactive game that uses a penis-shaped blaster to shoot down gay epithets.”
#3 The General Services Administration spent $822,751 on a “training conference” for 300 west coast employees at the M Resort and Casino in Las Vegas.
The following is how the Washington Post described some of the wasteful expenses that happened during this “conference”….
Among the “excessive, wasteful and in some cases impermissable” spending the inspector general documented: $5,600 for three semi-private catered in-room parties and $44 per person daily breakfasts; $75,000 for a “team-building” exercise — the goal was to build a bicycle; $146,000 on catered food and drinks; and $6,325 on commemorative coins in velvet boxes to reward all participants for their work on stimulus projects. The $31,208 “networking” reception featured a $19-per-person artisanal cheese display and $7,000 of sushi. At the conference’s closing-night dinner, employees received “yearbooks” with their pictures, at a cost of $8,130.
You can see some stunning pictures of GSA employees living the high life in Las Vegas right here.
#4 Do you remember a few days ago when credit rating agency Egan Jones downgraded U.S. government debt from AA+ to AA? Well, someone in the federal government apparently did not like that at all. According to Zero Hedge, the SEC plans to file charges against Egan Jones for “misstatements” on a regulatory application with the SEC.
Normally, the SEC does not go after anyone. After all, when is the last time a major banker went to prison?
No, the truth is that the SEC is usually just a huge waste of taxpayer money. According to ABC News, one investigation found that 17 senior SEC officials had been regularly viewing pornography while at work. While the American people were paying their salaries, this is what senior SEC officials were busy doing….
One senior attorney at SEC headquarters in Washington spent up to eight hours a day accessing Internet porn, according to the report, which has yet to be released. When he filled all the space on his government computer with pornographic images, he downloaded more to CDs and DVDs that accumulated in boxes in his offices.
An SEC accountant attempted to access porn websites 1,800 times in a two-week period and had 600 pornographic images on her computer hard drive.
Another SEC accountant used his SEC-issued computer to upload his own sexually explicit videos onto porn websites he joined.
And another SEC accountant attempted to access porn sites 16,000 times in a single month.
#5 According to InformationWeek, the federal government is spending “millions of dollars” to train Asian call center workers.
#6 If you can believe it, the federal government has actually spent $750,000 on a new soccer field for detainees held at Guantanamo Bay.
#7 The U.S. Agency for International Development spent 10 million dollars to create a version of “Sesame Street” for Pakistani television.
#8 The Obama administration has plans to spend between 16 and 20 million dollars to help students from Indonesia get master’s degrees.
#9 The National Science Foundation spent $198,000 on a University of California-Riverside study that explored “motivations, expectations and goal pursuit in social media.” One of the questions the study sought an answer to was the following: “Do unhappy people spend more time on Twitter or Facebook?”
#10 The federal government actually has spent $175,587 “to determine if cocaine makes Japanese quail engage in sexually risky behavior”.
#11 In 2011, $147,138 was given to the American Museum of Magic in Marshall, Michigan. Their best magic trick is making U.S. taxpayer dollars disappear.
#12 The federal government recently spent $74,000 to help Michigan “increase awareness about the role Michigan plays in the production of trees and poinsettias.”
#13 In 2011, the federal government gave $550,000 toward the making of a documentary about how rock and roll contributed to the fall of the Soviet Union.
#14 The National Institutes of Health has contributed $55,382 toward a study of “hookah smoking habits” in the country of Jordan.
#15 The federal government gave $606,000 to researchers at Columbia University to study how heterosexuals use the Internet to find love.
#16 A total of $133,277 was recently given to the International Center for the History of Electronic Games for video game preservation. The International Center for the History of Electronic Games says that it “collects, studies, and interprets video games, other electronic games, and related materials and the ways in which electronic games are changing how people play, learn, and connect with each other, including across boundaries of culture and geography.”
#17 The federal government has given approximately $3 million to researchers at the University of California at Irvine to fund their research into video games such as World of Warcraft.
#18 In 2011, the National Science Foundation gave one team of researchers $149,990 to create a video game called “RapidGuppy” for cell phones and other mobile devices.
#19 The U.S. Department of Agriculture once handed researchers at the University of New Hampshire $700,000 to study methane gas emissions from dairy cows.
#20 In 2011, $936,818 was spent developing an online soap opera entitled “Diary of a Single Mom”. The show “chronicles the lives and challenges of three single mothers and their families trying to get ahead despite obstacles that all single mothers face, such as childcare, healthcare, education, and finances.”
#21 The federal government once shelled out $2.6 million to train Chinese prostitutes to drink responsibly.
#22 Last year, the federal government spent $96,000 to buy iPads for kindergarten students in Maine.
#23 The U.S. Postal Service once spent $13,500 for a single dinner at Ruth’s Chris Steakhouse.
#24 In 2011, the Air Force Academy completed work on an outdoor worship area for pagans and Wiccans. The worship area consists of “a small Stonehenge-like circle of boulders with [a] propane fire pit” and it cost $51,474 to build. The worship area is “for the handful of current or future cadets whose religions fall under the broad category of ‘Earth-based’, which includes Wiccans, druids and pagans.” At this point, that only includes 3 current students at the Air Force Academy.
#25 The National Institutes of Health once gave researchers $400,000 to study why gay men in Argentina engage in risky sexual behavior when they are drunk.
#26 The National Institutes of Health once gave researchers $442,340 to study the behavior of male prostitutes in Vietnam.
#27 The National Institutes of Health once spent $800,000 in “stimulus funds” to study the impact of a “genital-washing program” on men in South Africa.
#28 The National Science Foundation recently spent $200,000 on a study that examined how voters react when politicians change their stances on climate change.
#29 The federal government recently spent $484,000 to help build a Mellow Mushroom pizzeria in Arlington, Texas.
#30 At this point, China is holding over a trillion dollars of U.S. government debt. But that didn’t stop the United States from sending 17.8 million dollars in foreign aid to China in 2011.
Do you feel good about paying your federal taxes after reading all of those examples of wasteful government spending?
All over America, middle class families are scratching and clawing in an effort to survive in this economy, and the oppressive levels of taxation imposed on those families certainly does not make things any easier for them.
It is tremendously immoral for the federal government to take money out of the hands of hard working families and spend it on such ridiculous things.
So what do you all think about the list above?
Do you have any things that you would add to that list?
Are you disgusted by how the federal government is mismanaging our money?
Feel free to leave a comment with your opinion below….
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