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Living Beyond Our Means: 3 Charts That Prove That We Are In The Biggest Debt Bubble In The History Of The World

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Do you want to see something truly frightening?  Just check out the 3 charts posted further down in this article.  These charts prove that we are now in the biggest debt bubble in the history of the world.  As Americans have enjoyed an incredibly wonderful standard of living over the past three decades, most of them have believed that it was because we are the wealthiest, most prosperous nation on the planet with economic and financial systems that are second to none.  But that is not even close to accurate.  The reason why we have had an almost unbelievably high standard of living over the past three decades is because we have piled up the biggest mountains of debt in the history of the world.  Once upon a time the United States was the wealthiest country on the planet, but all of that prosperity was not good enough for us.  So we started borrowing and borrowing and borrowing and we have now been living beyond our means for so long that we consider it to be completely normal. 

We have been robbing future generations blind for so long that it doesn’t even seem to bother most people anymore.  We have become accustomed to living in debt.  We go into massive amounts of debt to get an education, we go into massive amounts of debt to buy a home, we go into massive amounts of debt to buy our cars, and we even pile up debt to buy holiday gifts and to purchase groceries.

Just check out the chart posted below.  It shows the total credit market debt owed in the United States.  In other words, it is a measure of what everyone owes (government, businesses and consumers). 

30 years ago, total credit market debt owed was less than 5 trillion dollars.  Today, it is over 50 trillion dollars.  Total credit market debt is now at a level equivalent to about 360 percent of GDP.  This is what has been fueling the great era of “economic prosperity” that we have been experiencing….        

So what is the answer to this problem? 

The truth is that there is not an easy answer under our current system.  The only way that the U.S. economy continues to “grow” is if the debt bubble continues to “expand”. 

If our leaders allowed the debt bubble to “pop” and the U.S. economy went into a deleveraging cycle, it would mean that we would start living far below our means for an extended period of time and it would spawn a deflationary depression that would make the Great Depression look like a Sunday picnic.

Most Americans are in no mood to take that kind of hard medicine.

Do you really think that the American people are going to vote in politicians who tell them that it is time to live below our means and that we are going to have to experience a standard of living far below what our parents experienced in order to pay for all the debt that they racked up?

No, that is clearly a dog that isn’t going to hunt. 

The American people want to hear that better times are ahead.

One way to give the American people “better times”, for the short-term at least, is to crank the debt spiral back up.

By introducing another huge flood of paper money into the economy, the Federal Reserve and the U.S. government are hoping that banks will start lending again and that U.S. consumers will start going into more debt again.  Already, as you can see from the chart below, U.S. household debt has started to sink just a little bit.  But considering the fact that approximately 70 percent of our GDP is generated by U.S. consumer spending, that is not good news for “economic growth” statistics.

Three decades of “economic expansion” have been fueled by consumer debt that has spiralled completely out of control.  Over the past 30 years, total U.S. household debt has gone from less than 2 trillion dollars to almost 14 trillion dollars….

So where did the housing bubble come from?  It came from Americans going into insane amounts of debt that they could not afford.  The truth is that only the top 5 percent of all U.S. households have earned enough additional income to match the rise in housing costs since 1975.

Not only that, but Americans are going into staggering amounts of debt in order to pay for their educations.  Total student loan debt in the United States is climbing at a rate of approximately $2,853.88 per second, and today Americans owe an all-time record of more than $849 billion on student loans, which is actually more than the total amount that Americans owe on their credit cards.

The truth is that American families are stretched thinner financially than they ever have been in the post-World War 2 era.  According to a poll taken last year, 61 percent of Americans “always or usually” live paycheck to paycheck.  That was up significantly from 49 percent in 2008 and 43 percent in 2007.

Many Americans have come to the absolute breaking point.  1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.

But remember, approximately 70 percent of our GDP is generated by U.S. consumer spending, so without more consumer spending there won’t be more economic growth.

So, instead of Obama and the Federal Reserve encouraging Americans to get out of debt and to save money, they are trying to get the American people to spend even more money and to go into even more debt because they desperately need positive “economic growth” figures. 

The worst offender of all when it comes to debt, of course, is the U.S. federal government.  Over the last 30 years, the U.S. national debt has gone from about 1 trillion dollars to almost 14 trillion dollars….

This is the largest single debt in the history of the world.

So just how big is one trillion dollars?

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. 

Yet somehow the U.S. government has accumulated a debt that is well over 13 trillion dollars.

Unfortunately, it keeps getting worse month after month after month.

According to the U.S. Treasury Department, the U.S. national debt is rapidly closing in on 14 trillion dollars and and will climb to an estimated $19.6 trillion by 2015.

Should we all throw a big party when it crosses the 20 trillion dollar mark?

I can just hear the theme song now….

“I’m going to party like I’m 19.99 trillion in debt!”

But the cold, hard reality is that we are in far, far more trouble than what the official government numbers tell us.

In a recent article, Boston University economics professor Laurence J. Kotlikoff analyzed the financial condition of the U.S. government, and he summarized the horror we are facing by making the following statement….

“Let’s get real. The U.S. is bankrupt.”

After carefully going over Congressional Budget Office data, Kotlikoff came to the conclusion that the U.S. government is now facing a “fiscal gap” of $202 trillion dollars.

Now how in the world did that happen?

Well, it turns out that we have made promises to future generations that we cannot possibly even come close to keeping.

Social Security and Medicare are fiscal nightmares that are far more immense than anything that U.S. government has ever faced before.

According to an official U.S. government report, rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019.  That is before a single penny is spent on anything else.

That is just 9 years away.

When people speak of the financial situation of the U.S. government being “unsustainable”, they aren’t kidding around.

The truth is that the U.S. government has been running gigantic Ponzi schemes which are about to collapse.

Take the Social Security shell game for example.  Back in 1950, each retiree’s Social Security benefit was paid for by approximately 16 workers.  Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers.  By 2025, it is projected that there will be approximately two workers for each retiree.

So exactly how is that supposed to work?

For much more on the coming Social Security nightmare, please see an article that I posted earlier this year: 22 Statistics About America’s Coming Pension Crisis That Will Make You Lose Sleep At Night.

Sadly, Professor Kotlikoff is not exaggerating in the least when he proclaims that the U.S. government is bankrupt.

At our current pace, the Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.

Public debt at a level of 100 percent of GDP is supposed to be an absolute nightmare scenario.

Needless to say, the whole thing is going to come crashing down long, long before we ever get to 2080.

We have been living far, far beyond our means for decades, and it has been the greatest party in the history of the world.

But it is time to turn out the lights because the party is over.

  • We are in a balance-sheet recession. The right way to deal with it is deleveraging, which will be undoubtedly be very painful. But if we can’t get it right, the economy can never return to normal.

    Unfortunately, the Fed is only printing money to finance all these debt. It may be able to prevent the economy from collapsing, but the economy will be half-alive like Japan

    Also sprach Analyst

  • Besides an austerity/depression cure that no one seems ready to accept, there are only 2 ways out of the US financial mess:

    1. The Roman way, circa 300-400 AD = going into decadence, albeit at a much faster pace than the Romans, because things happen much faster these days…

    2. The German way, circa 1930-1940 = going into war: start blaming others for the mess one has created itself, create the impression of a threatening environment, start a war of words, follow up with economic sanctions, let the conflict escalate, wait for a major incident to happen or make the incident happen if necessary, and there you have it!

    My guess is that the US will chose the second way…


  • mondobeyondo

    One day, our children will not be happy about the predicament they find themselves in.
    They will be angry. Very, very angry.
    And who will they be angry at? Who will they blame for the situation they had no say in whatsoever?


  • Gary

    all the wealth and income gains were stolen by the rich, who were aided and abetted by the US Government they purchased.

    Unless we heavily tax the rich and start spreading the wealth the economy will not improve. People should not have to go into debt to maintain a decent standard of living.

    If the rich balk then they can leave. Where are they going to go-some third world dump? Most all other first/second world countries already tax the rich more than we do.

    I really do not have a problem with the government seizing their ill gotten gains and returning them to the working class. This is probably too radical for most readers so simply taxing the rich heavily will have to do.

  • alice

    Yeah more debt, that is what we need! NO, THAT IS NOT THE ANSWER! The career politician wants to be re-elected, and so for his own personal gain, the country gets flushed down the toilet. STOP THE CAREER POLITICIAN TO ONE TERM IN OFFICE. Do what has to be done FOR OUR COUNTRY, AND GET OUT! Go there to SERVE YOUR COUNTRY, NOT TO SERVE YOURSELF.

  • Bill

    I have to say that These are important topics and not many people know and understand what is coming.

    This blog is great and because of the admin here, and the guy over at FFT who is very accurate, I was able to pay off all my debts and now only owe $10k on my mortagage.

    Thankyou guys you really truly want to help people. thanks. Now i can use that extra money to buy more silver.

  • I’ve been preparing for this “Event” since 1981, and I’m still not quite ready. At least I haven’t been in any form of financial debt since 1990. I can’t imagine living in that pressure cooker. Paying with cash is a clean deal. No residue afterwards.

    The only way to be really prepared is to be living on the far side of a distant planet somewhere “west” of the Horse Head Nebula.

    I get to keep the lights on…I’m off the grid!

  • Quit bashing hard working Americans that have been forced deeper into debt to maintain the same standard of living. This debt expansion has resulted from:

    (1) Federal Reserve currency debasement (stealing wealth from US citizens) supported by politicians.

    (2) The evils of capitalism supported by politicians:

    (A) Executive compensation.
    (B) Distribution of excess profits.
    (c) Outsourcing – purchasing goods / services from foreign nations and non citizen employees.

    It is our politicians that have been living beyond their means.

  • el jefe

    the solution to the debt problem: devalue the dollar, stimulate manufacturing by having the government create the jobs, directly, and tax the living hell out of the rich.

    the fed is trying to not deflate the economy, but more importantly the fed is attempting to avoid inflation. inflation is the greatest risk to the profits of finance capital. as a professor of mine once told me, if one ever finds oneself in a hyper-inflation situation, go into heavy debt immediately. if the fed let the dollar collapse–as it should–then we can pay off our debts quicker–after which there can be a monetary reform. this is why greece is in such rough shape: the euro central bank will not allow this. like the greeks, we need hyper-inflation: consumers can pay off their credit cards, mortgages, student loans, etc. quicker. the only real losers are the banks. sure it might take a few decades for the dollar to regain some of its former prestige on the international market, but at least we would–overall–be in a better situation.

    if anyone has an alternative solution (that also works), then please correct me.

  • David M

    We’re boned.

    As to taxing the rich. I’m torn on this philosophy. If you put hundreds of Americans out of work when you shipped the factory overseas, hell yeah, pile on the taxes.

    If you work hard and aren’t raping the system, then you shouldn’t be penalized.

    A few hundred Dollars in food is not a bad idea. If 2 years from now we are all wrong and the economy is recovering, donate it to a church or homeless shelter.

    David M

  • James F.

    November 2nd, 2010 at 2:37 am

    “all the wealth and income gains were stolen by the rich, who were aided and abetted by the US Government they purchased.”

    Gary, what you need to learn is that there is something beyond what you are calling “rich”. THAT is who has stolen the wealth of this country. Your pigheaded railing against the “rich” is so much bs. Any average smart and hardworking American who has accumulated some wealth will suffer if people such as yourself ever wield power.

    It seems that admin won’t allow the “forum” of ideas here to go in a certain direction because I have been censored here…

    The admin doesn’t seem to want to allow a real discussion of this because I have been censored here.

  • JustanOGuy

    In my business.. debt is certainly the issue at hand. I deal with homeowners day in and day out that are buried in debt.

    The sad part is… when I give them an income analysis sheet for them to list their income minus their expenses… the vast majority of them do not even realize they are spending more then they make a month.

    Now the Federal Government wants to take all of their debt and make it everybody’s responsibility to pay for.

  • I think this article is an excellent summary with what I think are sound conclusions based on sound reasoning. Frankly, I find the author’s conclusions (and mine) highly disconcerting – but at the same time so obvious I am beginning to wonder (on U.S. Mid-term Election Day) why everyone doesn’t get it without it being said. I say virtually the same things about the same things regularly in comments I make on Seeking Alpha articles, and in e-mails I send most trading days to the over 10,000 ‘e-mail opt-in’ Subscribers to, an investment research website focused on Resource Stocks.

    On a different note, I suggest investors (1) who are concerned about the equity markets generally, (2) who believe (as I do) in investor education, investor empowerment in managing (or at least contributing in a meaningful way to managing) their own investments, and (3) believe that resources are an important ‘investment sector’ going forward visit and buy a ‘just published’ small book titled ‘Global Resource Depletion’ by Andre Diederen. I consider this book a ‘Must Read’ for those interest in Resource Stocks. For me, it is one of those serious ‘food for thought’ books that makes one ‘sit up and take notice’.

  • This is undoubtedly the biggest debt bubble blown in the history of the world. The first indications of the burst came in 2008. After that the bubble has got bigger due to central bankers making policies to benefit the very people who caused this whole mess, the banksters.

    The population in the developed world are suffering due to the hangover from excessive borrowings from lenders who lent to anyone on the street to maximise their own bonuses.

    The problems have been compounded by Outsourcing

    and Rampant Speculation allowed in all the exchanges.

    The problems are hereto stay as till date no one in the political arena has even acknowledged the problems let alone find solution to them.

  • Matt


    I have to thank you and people like you for if it wasn’t for people like you then the U.S.A would not have formed. I say tax the poor. There are more of them. They’re taxed relatively nothing and get almost all of the benefits. How convenient to be a slacker like you. Socialism works until you run out of other people’s money. When slack-*ss Gary runs out of other people’s money folks, what host-body is he going to migrate to? Some 3rd world dump? Hahaha! Gary, God bless you.

  • Mike

    If you taxed at 100% and even seized the wealth of the so called rich you wouldn’t have enough money to pay off our debt AND there would be no economy left once you did it. Why work or even live in the US if your property can be seized?

    Stop calling for Marxism as a cure for Marxism. How many historic violent failures of socialism must we witness before people stop begging for it.

  • kevinito

    Our country is like the 800-pound guy who hasn’t been able to get out of bed for years and couldn’t get thru the door even if he could. And the folks who keep feeding us – China, Japan, and our other creditors, are about to stop because they know we’re never going to get up and get back to work and start repaying them for all the food they’ve given us, and in fact we’re probably going to croak.

    The bailouts and QE are like eating more and more and telling ourselves “we need to keep our strength up so we can get back to work”. Austerity measures would be like a gastric bypass: A radical solution that might save us, but will only work with the our full cooperation.

    Our government only continues to try to convince us that being morbidly obese isn’t unhealthy. Face it: No one is going to solve this problem, certainly not any group of politicians. Through several opposing administrations and control-shifts the government has only served to multiply our problems over the past 30 years, expecting anything different from any new group of bureaucrats is senseless. And fewer and fewer individuals seem able (or willing) to take charge of the problem on a personal level: over forty million Americans now depend on food stamps and unemployment benefits now run almost two years.

    Human nature being what it is, the FED and the government and most Americans are going to do everything they can trying to maintain the status quo, however dysfunctional things grow, until our economy simply self-destructs.

  • David

    Sometimes I wonder whether the whole point of Quantitative Easing, etc., is for the expressed purpose of destroying the American Dollar, in order to facilitate something more “global”. I also think that QE is akin to applying economic “electro-shock” to an already dead body.

    We’re in serious trouble, to be sure…

  • Leslie Schroeder

    Alice has it right..

  • I’ve heard before that one primary reason Rome collapsed was that it ran out of lands to conquer and exploit, meaning that the Empire could no longer be maintained by the influx of new loot. America seems to have hit a similar problems — we’ve run out of economic markets to conquer and exploit and new ways of creating cash flow from debt and now our (economic) “empire” is poised to collapse as well. Anyone who thinks that there will be a political reckoning that attempts to address the debt before it reaches crisis proportion does not realize that the primary purpose of politicians in this era is to get elected; fixing the problems comes a very distant second and the first goal seldom squares with the second.

    As for whether or not we go the way of Rome or Weimar Germany, my vote is for the former. Americans have become too addicted to comforts to consider a world war — even the few thousand casualties in the wars in Iraq and Afghanistan have been more than the public can easily stomach. This is in line with the mindset of late Rome when the military was almost exclusively “barbarian,” because Roman citizens had little desire or stomach for war.

  • Ekim


    How novel. You advocate the 1789 French economic correction model. Why not just liquidate all the “rich”. The nation will then settle down to prosperity and peace, right. Or perhaps you are more partial to the Pol Pot economic plan. There would be lots of killing in that one too. Then the ignorant can run whatever companies are left after the holocaust. They who have no education will be elevated in authority and can eliminate those with degrees, those who speak more than one language, those who wear glasses…you get the idea. Then the “people” will have all the power and the benevolent government will administer all things in righteousness.

  • I have grappled with these issues for many years, and originally thought, the answer was a strong, paternalistic Federal Government. But the Obama years have turned me into a radical Libertarian. You can read my journey for Liberal to Libertarian here We can find freedom by bringing our armies home, eliminating all debt public and private, and striving for sustainable prosperity.

  • Gabby


    Are you on a repeat cycle? Every article I read here seems to have you commenting about taxing the rich. Tax the rich? They won’t be rich after you tax the heck out of them and then there will be no one to take up the slack that the rest of you (yes, YOU Gary) won’t be paying. If you have something to add to the argument please do so as I like to see both sides of the coin when possible but otherwise please stop regurgitating the same old stuff you say.

  • Backwoods Doc

    You sir are broken record. And to answer your question, yes the rich can go to a third world dump and live like kings. If they do that their money goes with them. I take it you’ve never visited Costa Rica or Argentina, Uruguay or the Baja peninsula of Mexico? There are huge numbers of American and European ex-pats in all of those places. MAybe they got tired of having their wealth CONFISCATED! Those third world counties let the rich spread their own wealth around in the local economies to their great benefit.

  • Gary

    I keep posting that we need to tax the rich and spread the wealth because until we reach a more level playing field regarding wealth and income none of our economic problems will be fixed. We have gone down the road of tax cuts for the rich before and it does not work. if it did where are all the jobs the bush tax cuts for the rich were supposed to create? With out even an estate tax this year we should be doing almost perfect on the jobs front-they have even more money this year!

    As anyone who can see tax cuts for the rich do nothing but give tax cuts to the rich.

    I keep saying to tax the rich hard and spread the wealth as this IS the solution to most of the posts that are on this site.

    I am sorry if the truth hurts but it is still the truth. Simply THINK about what the problems that would be solved with a much more equal wealth/income dist. Less folks on food stamps, living wage jobs instead of excess corporate CEO pay/profits/people would have more money to buy stuff/ economy grows etc.

    This is so obvious to me and many other people that I can not believe I need to spell it out and that we even need to debate its merits. I in no way mean to offend anyone.

  • Greg

    There is only one way: a) balance the budget; b) pay off all domestically-held bonds with freshly printed dollars; c) Become more self-sufficient as a nation. Everyone needs to produce more than they consume (de-emphasize parasite industries, focus on value-added). Let the economy equalize at a sustainable level and suck it up; d) Start a TVA-style works program as a safety net that provides subsistence living with a means to add to GDP. Hand-outs are bad for everyone, even the recipient; e)For crying out loud, start subtracting deficit spending from GDP so you can see the true picture! That money is not free, sheeple!

  • Tom

    The rich pay almost zero tax now. They use LLC companies and dodge most taxes. The republicans want to end the middle class and give what is left to the top 2%

  • Maria

    The state of the world’s economy is no accident. The whole situation has been a work in progress for generations. The banking apparatus used to bring this about has been perfected through trial and error…experimentation…with other countries as well as our own. The people behind this are diabolical.

    We are in the beginning phases of complete, worldwide economic meltdown. The severity of this depression will be great, because of our reliance on the conveniences of the modern world. The interconnectedness of all the countries of the world has created an interdependence…an inability to function without support from other countries. Trade is the web which binds us all.

    And trade is easily manipulated by those who control the money…massive amounts of money.

  • Matt

    There are no more unfettered, free ‘markets’. So there is no bond ‘market’. No stock ‘market’ either. The major economies of the world today are centrally controlled by the central banks and govts. The debt bubble is at their mercy. They created it, control it, and continue to control it into the future for as long as they want. The debt bubble will only pop if they allow it to pop, if they engineer it to pop, if they deliberately deflate it. If they do deflate it, there will be angry mobs and revolutions all over the globe. Therefore, to avoid an angry-mob revolution and losing their power they will always work to keep the bubble going – they will never work to deflate it. Its going to get so huge that it eventually explodes like Zimbabwe. There is no way we are headed for any other outcome than hyperinflation. I’m willing to bet anyone a lunch on it. If I win the lunch it will cost you $100Trillion! But if I lose it will only cost me 50 cents. Bet anyone?

  • David

    Star Trek quote

    Capitan Kirk,

    Kirk: yes Scotty!

    Scotty: Capitan, we are no longer in control of the ship!

    This is the way I am looking at the current crisis in America and beyond. Just fasten your seat belt for the big ride!

  • mondobeyondo

    America’s fiscal policy:
    “Even when you’re not in Rome, do as the Romans do.”

    Bread and circuses anyone?
    Or perhaps you prefer pound cake and Pittsburgh Steelers.

    Our descent into decadence is appalling. One need only look at Lady Gaga, Britney Spears and Lindsay Lohan to see what a teenage girl should aspire to in 2010…

  • mondobeyondo

    The three richest people in the world – Bill Gates (Microsoft founder), Warren Buffett (investment guru) and Carlos Slim Helu of Mexico (telecom executive) collectively have more money, than the world’s 48 poorest countries COMBINED!
    Warren Buffett’s pocket change alone could feed half of Ethiopia overnight.
    Something is seriously, desperately wrong here.

  • dippity doo

    “One day, our children will not be happy about the predicament they find themselves in.
    They will be angry. Very, very angry.
    And who will they be angry at? Who will they blame for the situation they had no say in whatsoever?”


  • I don’t there’s ever been a better time to get out of debt personally, and get independent, especially in energy production. “Thriving During Challenging Times, The Energy, Food and Financial Independence Handbook” is roadmap to guide you through these tough times and build your resilience to shocks the system will experience.

  • ehswan

    The solution is simple; let robots do the work.

  • Gary: Here is a better way to level the playing field.

  • Roderic Rinehart

    1. Increase tax on incomes over 100k to 45% and over one million to 55%.
    2. Capital gains taxes to 45%.
    3. decrease military spending by 90%.
    4. close all loopholes regarding offshore tax havens and the like.

    People will not move away. Taxes are higher in other developed countries.

  • Garyisacommiepinko!

    Gary is for redistribution of wealth because he is either too stupid or too lazy to compete in the real world. So, instead of trying to improve himself and become more marketable, he advocates forced redistribution. Man up, Gary!!!

  • JOHN


  • Backwoods Doc

    Simple arithmetic seems to be far too confusing for some of you. Get out a calculator and run the numbers before you post. 55% tax on incomes above 100k? Really? Leaving you with a take home of 45K, before paying state and local taxes? Are you nuts? Do you not understand the concept of dis-incentivizing sucess or innovation? You fools are lining up to live in the Socialist Republic of Amerika. Please explain to me ONE example of where there is a socialist society that has things like reliable electricity, automobiles for non-government employees, currency that is useful for anything but wiping yourself or a low crime rate? You’re damn right that taxes are higher in developed countries. Why would “the rich” move there when ANYWHERE in central or south America will welcome you with open arms and let you live like a king?

  • sharonsj

    You say we need to learn to live below our means. What do you think has been happening to tens of millions in the U.S. already? In fact, the seniors are the few who are still hanging on because they have learned to live on a lot less.

    Meanwhile, our debt is insane because few people can earn enough to pay all their bills. So they go into hock not only for the “toys” we’ve been told we need, but for stuff required for actual survival like food and energy.

    I don’t see a solution because the politicians–both corporate lackeys and the crazy newbies–are unable or unwilling to take real action. Yes, it involves taxing the super rich and cutting back on corporate welfare. Right now none of them are paying their fair share and it’s the middle and lower classes that are stuck with the bill.

  • lostinmissouri

    People like Gary are just a product of 40 years of the Dept. of Education indoctrination.

    Haiti is the best example of what you end up with in “Tax the hell out of the Rich” doctrine.

    The “rich” will simply leave, and go to friendlier countries.

    The solution is go back to ZERO TAXES, for ten years, and see where America is then. “Tax Haven” countries have no unemployment and are the most prosperous areas in the world. Think Singapore and Hong Kong.

    Instead of driving all the rich out of America, we should be doing what it takes, to cause the “Rich of the World” to want to move here.

  • richard in norway

    backwoods doc

    Please explain to me ONE example of where there is a socialist society that has things like reliable electricity, automobiles for non-government employees,

    i pay 36% tax on a manual workers wage and i love it. we got cars and discos and iphones and we also got FREE healthcare. i live better than most americans. have you traveled at all?

  • Baroness Elizabeth

    I have been lurking on this site for quite some time. I really appreciate the information you provide and believe you are dead on. We truly have passed the tipping point as failure is not only an option, but a certainty. Sad times for this once great nation.

  • Gary

    Dear Richard in Norway-please forgive the right wing posts. As you can see by the mid term election results that most Americans are low information fools and dolts.

    We should aspire to be like Norway (where my great grandpa is from)

    Norway is besting American on almost every category. Yes I would move there if my family was not in the USA. It can be quite trying to live among these right wing nuts.

  • Bevo

    Norway is a wonderful country that is completely ignoring the fact that all their new-found wealth is attributable to oil—which is being depleted rapidly. They are heading off of a cliff. As far as redistributing wealth goes, go ahead and tax me more if you’d like—that will just cause me to lay off workers.

  • End Game

    We’ve been watching the curves grow over the last 40 years, and everyone with eyes has seen that they are hyperbolic. But no one took them seriously, “naw, just a few percent”. Everyone was blinded into “dropping trade barriers” and was totally amazed as they watched their jobs leave for Japan, China and India. And we haven’t yet seen the coming oil strangulation. The end game is inevitable: Hyperinflation, perhaps some useless wars, U.S. default, return to trade barriers, high cost of fuels, everyone back to working long hours, including old folks. In 80 years, everything will be fine and we’ll all be dead. Relax and enjoy.

  • Garyisacommiepinko!

    Amen, Backwoods Doc.

    Gary, if you like Norway so much, then move there. Oh that’s right, you don’t have two nickels to rub together. I guess you should have made something out of your pitiful life. Then you could afford to move out of the US- the country you hate so much.

  • lostinmissouri

    Please explain why Norway cities have “gettos”, if Socialism is such a great society, for everyone?

  • You are right! Robert Kiyosaki agrees that we are In the biggest debt bubble In the history of the world. And so do I!

    In his book Conspiracy of the Rich he writes about it in great detail:

    Given the challenging and uncertain times which lay ahead, Rich Dad’s Conspiracy of The Rich – The 8 New Rules of Money by Robert T. Kiyosaki, has never been more relevant.

    Robert T. Kiyosaki is a renowned real estate investor and author of the #1 bestselling book Rich Dad Poor Dad: What the Rich Teach Their Kids About Money-That the Poor and the Middle Class Do Not!

  • John Galt

    Most of the wealth re-distributionists posting here are badly misinformed regarding who pays for government services in the USA. The top 5% of income earners pay 50% of all personal income tax collected. The bottom 50% of income earners pay 4%. The three wealthy people mentioned above provide many millions of dollars to foundations for medical research and for subsidies to the poor and ailing.

    Educate yourselves before making unfounded assertions!

  • DC

    Hey Backwoods. You really do have a math problem. Roderic said a 55% tax rate *above* 1 million. That doesn’t mean your tax bill is 55% of your entire income. Also, notice there was no advocating a lack of deductions. That means you are taxed on NET income, not gross.

    Let’s pretend the tax rates are: 20% on the 1st 100k, 45% on 100k to 1 million, and 55% on 1 million and up (the last 2 brackets from Roderic).

    Now let’s say your middle-class income is 150K. By your math, your income tax would be $67,500 (45% of 150k). Here’s a reality check.

    You contribute 10% to a 401(k) ($15,000), paid $12,000 on mortgage interest, paid $9000 in State Income tax, paid $2500 in property tax. Those simple deductions add up to $38,500 of gross, for a net income of $111,500. Your income tax is: $20,000 on the first $100k, then $5175 on the remaining $11,500 (at 45%), for a total tax of $25,175.

    Your effective tax rate on the whole $150 is 16.8%, not 45%.

    See how it works?

  • Pete

    Hey, nobody in my family or personal friends of mine can be included in this quote from your article: ‘We have been robbing future generations blind for so long that it doesn’t even seem to bother most people anymore. We have become accustomed to living in debt. We go into massive amounts of debt to get an education, we go into massive amounts of debt to buy a home, we go into massive amounts of debt to buy our cars, and we even pile up debt to buy holiday gifts and to purchase groceries.’ So, let’s set the record straight for future americans & other stupid people who don’t realize the truth. Greedy corrupts politicians forced that on america and many americans played the game. However, many did not. That’s me. btw: I never purchased anything I couldn’t afford. I’m middle class and got all those things you mentioned and much much more as long as you are keeping a list.

  • Brian


    Do you know what percentage the top 5% earn of total income? I have a feeling that it is much higher than 50%, which means they are underpaying…it makes since that the bottom 50% reflect a low percent when income is lower…

  • Mike

    According to the tax foundation, in 2008 the top 5% earned 34.7% of total income, and paid 58.7% of the total income taxes

  • Erwin Alber

    Living beyond our means really means:

    1. we can’t afford to feed the greedy Federal Reserve bankers who have hijacked America’s money system for their benefit in 1913 any longer. The Federal Reserve needs to be shut down, the Feds put in jail and the National debt cancelled.

    2. we need to get rid of/jail the rest of the crime syndicate that is running the USA for its benefit and to the detriment of ordinary Americans

    3. we need to install a government that is accountable to the people of America and works for their benefit.

  • Rodney

    You still gotta own a house because with the super high inflation, homes will sell for & 500,000 ea. Who can buy? We will have a society of renters.

  • Obviously the US is living beyond its means. And given that the bi-partisan bickering resumes with the 112th Congress, things won’t get better.

    President Obama pledged to work with the Republicans, but why should they want to work with him now? Paying lip service to bipartisanship has no practical implications. It certainly simplifies the blame-game if you can pin failures on the “ruling” party. President Obama will face the choice between rejecting GOP bills–which have a free pass at least in the GOP-controlled House–only to be seen as an obstructionist. Or he can sign them into law and be seen as though he betrayed his Democratic base.

    Democrats used to have a clear agenda during the Bill Clinton years. Clinton enacted his own edition of Keynesian economics, championed today by the likes of Paul Krugman (the 2008 sole Nobel Price winner in Economic Sciences) and Joseph Stiglitz (a 2001 Nobel Price winner in Economic Sciences), but not by the current White House.

    I think the Obama stimulus did not live up to its economic potential. And here is why:

    I think we didn’t apply Keynesianism, but rather reverse Keynesianism:

    We should do first things first!

    Obama’s stimulus bill wasn’t such a bad idea in general, but the practical implementation was “above his pay grade” as even many Democrats argue behind closed doors.

    Saving the banks and preventing the Great Recession from turning into Great Depression 2.0 was no doubt the right course of action, but–now comes the caveat–most of the money went straight to the banks without any requirements to lend it. The upside was the banks were able to pay TARP loans back quickly with interest, but the downside was that banks don’t lend right now and won’t lend in the foreseeable future. This defies the very idea of the Stimulus Bill.

    Keynesians point out that in order to get “the biggest bang for the buck” (in Obama speak) requires that the money flows to those consumers who have the highest propensity to spend (which is another way of saying that people with low income have no choice but to spend nearly all the money which goes through their hands; there is obviously no way around paying for these people and address their basic needs like shelter and food to avoid a spike in crime).

    The biggest returns–or shall we say in Obama speak “the biggest bang for the buck”–delivered programs such as “Cash for Clunkers” and the Federal Housing Tax Credit ($8,000 for first-time home buyers).

    If most of the $767 Billion of stimulus spending had gone through the hands of the middle class instead of filling bank vaults and gathering dust there, the very same amount of stimulus would have created a sustainable recovery. But instead, we went the route of saving the banks and nobody but the banks.

  • Craig

    @Rodney Who really owns their own house, its just a glorified rental unit. You pay property taxes, that is basically a form of rent to your landlords, you fail to pay it that property you think you own is confiscated, ugh land of the free my ass, land of the indebted, home of the robbed. Theres a reality check.

  • Katthleen Arffmann

    I stopped living beyond my means in the mid 1990’s. I am an ordinary person but since I worked with numbers I understood that the stock market was full of “hot air” or wishful thinking. Why didn’t Greenspan figure it out?

    I hardly ever missed a days work in 41 years and now my retirement money is play money for Wall Street. If you think I’m angry you are right!!!

    This crises preceded President Obama. The American people must have amnesia. Although I don’t have a solution I don’t think taking benefits away from the American people is the answer.

    When I was a child my mother had to sign so her could borrow $100.00 from a local bank because her salary gave the bank concern. That is not so today. That is why we are out of control Banks are greedy and there are no controls.

  • Pat

    No real manufacturing to produce a real GDP any longer, and fictional numbers for government spending, most for salaries, pensions, and wars.

    Consumer spening not nearly what it should be in a nation with a real economy. Paper shufflers have taken over the world and thefts rewarded, nearly without oversight or enforcement. No taxes to pay government, and insufficient credit to continue to pay expenses that years of government and special interests have created.

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