The Beginning Of The End
The Beginning Of The End By Michael T. Snyder - Kindle Version

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The 15 Trillion Dollar Party

If you knew that you could live in luxury for the rest of your life but that by doing so it would absolutely destroy the future for your children, your grandchildren and your great-grandchildren would you do it?  Well, that is exactly what we are doing as a nation.  Over the past several decades, we have stolen 15 trillion dollars from future generations so that we could enjoy a dramatically inflated level of prosperity.  Our 15 trillion dollar party has been a lot of fun, but what we have done to our children and our grandchildren has been beyond criminal.  We ran up the greatest mountain of debt in the history of the planet and we are sticking them with the bill.  Sadly, both political parties have been responsible for the big spending that has been going on.  Both Democrats and Republicans have run up huge budget deficits when in power.  But instead of learning the hard lessons of the past, both political parties continue to vote for even more debt.  They would rather continue to steal trillions of dollars from future generations than have the party end and have to face the consequences.

And the consequences will be dramatic when the party ends.  During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in 2.4 trillion dollars.  That means that the U.S. government spent about 1.3 trillion dollars that it did not have.  It is important to understand that even if the U.S. government spent that 1.3 trillion dollars on really stupid things, that money still got into the pockets of ordinary Americans who then spent it on things like food, gas, housing, etc.  In turn, most of those that received money from providing those goods and services would spend it on other things.

So extra government spending can definitely stimulate the economy.  The problem is that we have been doing it permanently.  Since 1975, we have added more than 15 trillion dollars to the national debt.  This has fueled a false prosperity that was way beyond what we could afford.

If the U.S. government tried to go to a balanced budget now, our standard of living would crash and there would be riots in the streets.  The American people have been enjoying false prosperity for so long that they have lost any notion of what “normal” actually is.

Think of it this way.  If your family makes $40,000 this year and you spend an extra $20,000 on your credit cards, your family would be enjoying a false sense of prosperity.

You could do that year after year as long as the credit card companies keep loaning you more money.

But debt always catches up with you in the end.

It is the same thing with the United States.

We have been running up our national credit card balance and the interest payments have become quite painful.

The U.S. government spent over 454 billion dollars just on interest on the national debt during fiscal 2011.

That is 454 billion dollars that the people of the United States do not receive anything in return for.

So in order to keep up with interest on the national debt and to enjoy a standard of living that is beyond our means we now have to run deficits that are in excess of a trillion dollars every single year.

And a trillion dollars is a staggering amount of money.

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.

Since Barack Obama was elected, the U.S. government has added about 5 trillion more dollars to the national debt.

That kind of debt is a recipe for national financial suicide.

How are we supposed to explain to our children that we are passing a debt of $15,579,852,946,457.64 down to them?

At this point, the United States government is responsible for more than a third of all the government debt in the entire world.

The 15 trillion dollar party that we have been enjoying has been amazing, but all of that debt is soon going to bring us a tremendous amount of pain.

And there is really no way out under our current financial system.  As our population ages, government budget deficits are projected to spiral wildly out of control in future years.

Already, entitlement programs are starting to cause massive problems.  For example, 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.

If the federal government used GAAP (Generally Accepted Accounting Principles) like all publicly-traded corporations are required to do, the situation would be much worse.

The truth is that the U.S. government never had a “balanced budget” during the end of the Clinton administration.  The federal government was borrowing gigantic amounts of money from the Social Security trust fund to finance regular government operations.  It was a big fraud.  Under GAAP, there would have been huge budget deficits during those years.

And even under the non-GAAP numbers used by the U.S. Treasury Department, the U.S. national debt still increased every single year during the Clinton administration.

So let’s get real.

Our national financial situation has always been much worse than we have been told.

It has been estimated that our current budget deficits would be in the neighborhood of 4 to 5 trillion dollars under GAAP.

And looking down the road a bit, we are facing a tsunami of unfunded liabilities that is absolutely nightmarish.

In other words, we have committed ourselves to tens of trillions of dollars of expenses that we don’t have any money for.

According to Professor Laurence J. Kotlikoff, the U.S. is facing a “fiscal gap” of over 200 trillion dollars in the coming years.  The following is a brief excerpt from a recent article that he did for CNN….

The government’s total indebtedness — its fiscal gap — now stands at $211 trillion, by my arithmetic. The fiscal gap is the difference, measured in present value, between all projected future spending obligations — including our huge defense expenditures and massive entitlement programs, as well as making interest and principal payments on the official debt — and all projected future taxes.

And it just keeps getting worse.  Recently it was revealed that Obamacare will add 17 trillion dollars more to our long-term unfunded obligations.

Basically what we have done is we have committed future generations to a life of endless debt slavery to pay for our debts and for the financial promises that we have made.

How could we be so stupid?

Of course this entire fraudulent system is going to completely collapse before we get too much farther down the road anyway.  Right now the whole thing is essentially being held together by chicken wire and duct tape.

Most Americans do not realize this, but the Federal Reserve bought approximately 61 percent of all government debt issued by the U.S. Treasury Department in 2011.

Normally, the Federal Reserve is not supposed to be doing this.

But right now there are not nearly enough buyers of U.S. government debt at the super low interest rates that the U.S. government wants to pay.  A recent Money News article explained that foreigners have been increasingly shying away from U.S. debt….

“In 2009, such foreign purchases of U.S. debt amounted to 6 percent of GDP and has since falled by over eighty percent to a paltry 0.9 percent.”

Instead of interest rates on U.S. Treasuries rising to attract additional investors, the U.S. Federal Reserve has been intervening to make up the difference.

This is essentially “monetizing the debt” and it is something that Ben Bernanke promised that he would never do.

But he is doing it.

If the Federal Reserve was not buying up all this debt, interest rates on U.S. debt would soar and so would U.S. government interest payments.

Yes, this is a giant Ponzi scheme and it cannot last for long.

Of course all of this could have been avoided if our politicians had not been running up such massive amounts of debt all these years.

Some have suggested that our problems could be solved by simply increasing taxes on the wealthy.

Well, the truth is that the top 5 percent of all income earners already pay nearly 50 percent of all federal taxes and soaking them even more will not even come close to solving the federal budget crisis.

For example, 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.

And 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.

So taxing the wealthy will certainly not solve all of our problems.

In fact, when you tax the wealthy and the “somewhat wealthy” it slows economic growth in a number of different ways.

Number one, they have less money to spend into the economy.

Number two, they have less money to invest in business activities.

Number three, it gives wealthy individuals and corporations more of an incentive to move out of the United States.  As I have written about previously, the global elite are already hiding about 18 trillion dollars in offshore banks.  The U.S. government keeps trying to tap into all of that offshore wealth, but the elite always seem to be a few steps ahead of the game.

Yes, we should try to close loopholes in the tax system, but the truth is that the root cause of our problem is that the federal government is simply spending way, way too much money.

Right now, spending by the federal government accounts for about 24 percent of GDP.  Back in 2001, it accounted for just 18 percent.

But our politicians always want to put off spending cuts for another day because they know that immediate spending cuts would really hurt the economy.

For example, just check out this recent quote from White House Chief of Staff Jack Lew….

“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.”

Yes, the Obama administration definitely does not want to hurt the economy with an election coming up in a few months.

So when will it be time to seriously cut government spending?

The day never seems to arrive.

But even though the federal government has been pumping more than a trillion extra dollars into the economy every year, the economy has not shown much improvement.  The percentage of working age Americans that have jobs has barely budged for over two years.

Yes, the policies of the Obama administration have stabilized the U.S. economy for the moment, but if he was actually going to tell the truth he would say something like this….

“By mortgaging the future of our children and our grand-children I have stabilized our economic statistics for the short-term.   Unfortunately, I am going to have to continue to financially abuse future generations to keep us from falling into another Great Depression.  Meanwhile, I am making our long-term financial problems far, far worse.  But the most important thing is that I win re-election so that I can continue to be president.  Thank you for being so selfish and so willing to destroy the future of your children.  Vote for me in 2012 and let the party continue!”

Unfortunately, the party is going to come crashing to an end at some point.

Right now, the global financial system is based on the U.S. dollar and on U.S. government debt.

There will come a time when the rest of the world is going to get sick and tired of watching this Ponzi scheme play out and they are going to completely lose faith in the U.S. dollar and in U.S. government debt.  In fact, there are already signs that this is starting to happen.

When faith in our currency and our debt is completely gone, it will be nearly impossible to get back and the game will be over.

The false prosperity that we are experiencing right now is about as good as things are going to get.

Enjoy it while you still can, because when it is gone that will be the end of it.

Both the Democrats and the Republicans have failed us.  They played fast and loose with our future and they never planned for the long-term.

Now we are facing a collapse of unprecedented magnitude that most Americans will never even see coming.

A horrifying economic collapse is coming.

You better get ready for it.

  • Gary2

    Thanks Christians for all your hate christian sharia impositions. Look at what your hate has done. Don’t try to weasel out of it you know you are at fault for these crimes. And your ayatollah santorm.

    Planned Parenthood Firebombed in Wisconsin

    An unknown person placed a small homemade explosive device on an outside window sill to the buílding.

    The device later exploded, causing damage to the building. A small
    fire broke out at the time ofthe explosion, but it quickly burned itself out prior to the
    arrival of the fire department.

    The Grand Chute Police Department is investigating this incident.

  • Gary2

    Conservatives–you are going down so hard!!! I love it. The country does not want your Christian Sharia law imposed on everyone.

    Culture-War Backlash: Women in Swing States Shift to Obama En Masse

    President Obama has opened the first significant lead of the 2012 campaign in the nation’s dozen top battleground states, a USA TODAY/Gallup Poll finds, boosted by a huge shift of women to his side.

    • SandraO

      Liberal/Leftists/Communists/Progressives–you are going down so hard!!! I love it. The country does not want your Neo-Marxist Sharia law imposed on everyone.

      Culture-War Backlash: Middle class men and women in Swing States Shift to anyone but CommieObama En Masse.

      President CommieObama has the state-run leftist news media falsely reporting that he has a significant lead of the 2012 campaign in the nation’s dozen top battleground states. Only delusional Communist stooges, mean clipped haired lesbians, and welfare ghetto thugs support CommieObama.

      • Gary2

        wake up you must be dreaming.

      • Gary2

        I would have said wishful thinking but conservatives do not think, can not think.

        • greg

          Gary I think your mommies calling

      • knightowl77

        You Go Girl!

    • John W.

      Pretty funny you being happy about something that is going to hurt you too. You really do have mental problems. First off find a conservative runnibg for president. There is none in the race and damn few in either party.

    • http://Deluded Cherri

      God said he would send strong delusion and you are definitely deluded!

  • Nick

    I have been asking parents for years what they think their children will do. They either don’t care, or are completely oblivious to the true nature of the circumstances we face.
    As far as loop-holes in the tax code, I disagree with that. The real problem is a legal system that is totally dishonest from judges, and prosecutors, to defense, and tax attorney’s. If attorney’s were honest they would ask their client what their status is and tell them that they are not liable for the taxes specifically enumerated in the code. At that point, the federal government would be in a heap of trouble, and maybe we could put the entire lot of them in jail and start over.
    We will never resolve the problems through taxation and spending.

  • Stephano

    Debt is an allusion, who we paying the interest to? The federal reserve? What a joke, it’s time to bring these loan shark cartels down anyway and start over…

  • Barn Cat

    A good article as always but you’re missing the biggest point. No, we’re not leaving our debt to future generations. The Federal Reserve is already monetizing the debt by printing as much money as necessary until the dollar is worthless. Weimar Germany had hyperinflation. They went from 4 marks equalling one dollar to one billion marks equalling one dollar. The same thing will happen to our currency. It’s just a matter of time. Besides that, eventually all levels of government will completely default on their obligations or they will limit total payouts each month to the total amount of money collected each month.

  • http://BINGO harry b

    The ANZ Bank of Australia has recently started to trade with China within their own currencies. They are avoiding the dollar because it just doesn’t hold its value. The slide has started. New currencies and mediums of exchange will soon give direction to the dollar and the government will step in” again”, to put on more controls. Watch the 401 accounts being confinscated and made a part of the Social Security program. Also watch controls put in place controling gold holdings using excuses to avoid futher currency devaluation. The problem with the economy can be fixed in 24 months! Just get rid of the government for 24 monhs and farm out all government employment jobs to independent contractors and,” BINGO “- you have an economy making 15 trillion in surplus.

  • Buzzy Watts

    If you’re suspended 1500 feet up on a rotting swaying wooden bridge, you’re going to be most desperate for that bridge the second before it gives way. It’s the same way with the hideous lies about our unstable economic structure. Back in the day, people believed them because it wasn’t stunningly obvious how untrue they were. Now they believe them because it is obvious.

  • tappedops

    Dont worry Mr.M… half of your arts end up as top econ pieces at the “Tip of the Spear” … carefull bro -your bigger than you think…

  • tappedops
  • Robert

    Maybe that explains DHS’s recent order for up to 450 million rounds of .40 caliber ammunition. They think they will need it.

  • GEOsays

    The fool Gary2 has nothing better to do than to spout Democrat lies about taxing the rich to solve the country’s huge deficits. As pointed out in the article above:

    “Some have suggested that our problems could be solved by simply increasing taxes on the wealthy.

    Well, the truth is that the top 5 percent of all income earners already pay nearly 50 percent of all federal taxes and soaking them even more will not even come close to solving the federal budget crisis.

    For example, 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.

    And 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.

    So taxing the wealthy will certainly not solve all of our problems.”

    Taxing the rich ain’t gonna happen fool! The hypocritical Democrat elite like NancyPelosi and WarrenBuffet are some of the richest, most pampered people in the country! They’ll never pay one cent more in taxes than they do now!

    • Gary2

      geo–the top 1% have 90% of the wealth so they are undertaxed at only 50%. You clearly did not read the entire post.

  • terry r

    This is just further proof on the cowardice of Americans

  • the trade

    Gary2 = The most useful of the useful idiots.

  • Rich

    “That kind of debt is a recipe for national financial suicide.”

    That is the point. It is called going out with a bang. It is purposeful. You do society a disfavor by making it look accidental in your articles.

  • rjs

    this is a bunch of nonsense: We ran up the greatest mountain of debt in the history of the planet and we are sticking them with the bill.

    government debt does not have to be paid back, just rolled over…we’re still rolling the debt eisenhower incurred building the interstate highway system that my parents stuck me with…

  • Gary2

    Fundamentally, the representatives in our ‘representative government’ don’t represent you and me. They represent the one percent. You can play all the games you want about how campaigns are funded, and spin all the tall tales you need to about how money ‘only’ buys access, not Congressional votes, but the real system of pay-to-play is transparently obvious to anyone willing to risk even a sidelong glance at the emperor’s new clothes. It’s just that simple and just that broken. The only place American representative democracy exists anymore today is in eighth-grade civics textbooks.

    A liberal friend wrote this. Maybe you folks that say the r and d are 2 side of the same coin are correct??

  • Gary2

    He cited a Republican presidential debate late last year when the entire field rejected the prospect of $10 in spending cuts for every $1 in tax increases as a means to lower the debt.

    If you are republican/libertarian/conservative (they are all the same) no more bs about the debt. You are not serious.

    I at least admit we can tax the rich and grow our way out of the debt and that I do not consider the debt a big deal. For that matter in poll after poll only the rich care about the debt. (generalizing a bit here)

    • greg

      Gary your B.S. runneth over

  • Craig Pemberton

    Actually the Stock Market completely collapsed in October 2008. More than 50 % of the Stocks being ” traded ” do not actually exist. Look up what naked short selling is. It is illegal in every country in the world, this country, and every state in the union to sell what you do not have, it is called FRAUD. Goes on every day. It is all a fantisy, so they can keep the paper ocean going. There never was any ” money “. It is all fraudulent. Nibiru will show it to us 9/14, as the tides begin to really flow.

  • Helix

    Re: Think of it this way. If your family makes $40,000 this year and you spend an extra $20,000 on your credit cards, your family would be enjoying a false sense of prosperity… It is the same thing with the United States.

    While I agree with the sentiment here, this idea is a fallacy. The US Government has the authority to issue currency, a power denied to households. In terms of monetary policy, the crucial idea is to keep the quantity of money in circulation proportional to economic activity.

    At present, we’re suffering from two main failings:

    1) The government has turned the money creation authority over to the Federal Reserve, which, contrary to its name, is a privte bank. Thus all money is created at interest which flows to bankers. It is no accident that the Federal Debt is virtually identical to the money supply. It could not be any other way.

    2) Politicians make promises. I’m not talking about the promises made to their “constituents” — those promises are jokes. I’m talking about the promises made to campaign contributors and Lobby groups, who directly affect the politicians’ welfare. They are essentially promising access to the public till or financially favorable legislation to these parties. This translates into public expenditures, and thus increased public debt.

    It’s really that simple. We have a government that has been 100% captured by financial interests, and it is in the interest of these parties for the federal government to go further into debt: bankers directly, because they are the ones who extend credit, and campaign donors and lobby gorups indirectly, as they expect access to the public till in treturn for their support.

  • WASP

    It’s just a ghetto party on Obama’s stash.

  • Jeremy

    Our debt-GDP ration is over 100%, but it was also over 100% after WWII. We paid off our debt through growth during the post WW and 1950s.

    We can do the same, and accepting our decline and doomsday as inevitable is just giving up, quitting, and for the strong which accept this fate, negligent.

    • Kevin2


      “We paid off our debt through growth during the post WW and 1950s.”

      The differences are more than glaring comparing today with post WWII.

      1. The USD was backed by gold at an exchange rate of $34 oz and we had 90% of the worlds gold reserves. We were effectively bankrupt in 1971 and unable to redeem the USD at under the conditions set forth at Bretton Woods which established the international rules of trade and finance. We raided our national treasury to grow out of our debt. We no longer have such an option.
      2. The US Industrial base was untouched by WWII while 3/4 of the world had their manufacturing destroyed. The US economy could do nothing else but grow under those conditions. To say the US in specific and developed world in general now has competition is an understatement considering the developing worlds advantage with a bottomless pit of virtual slave labor devoid of civilized environmental and safety regulations.
      3. The US was self sufficient regarding oil and that remained until the late 1960s.

      Your deluding yourself because the post WWII years were an aberration. It is illogical to use data for future predictions on such a quirk of history.

  • the trade

    Gary2: “I at least admit we can tax the rich and grow our way out of the debt and that I do not consider the debt a big deal.”

    Thank you for admitting that you are an idiot that does not know what he is talking about.

    The first step to getting help is admitting that you have a problem, and we admire your courage.

  • bastiat

    Everyone who is in this debate or who truly cares about the future of our country needs to read “The Law” by Frederic Bastiat. If is a relatively short paper written over 150 years ago…You can find it here…

    Most of you will not bother because you are more interested in this debate than actually learning/doing something about it. Please take the time to read it and honestly consider what it says…it will change your life.

    • JR

      Clicking on it now. Thx

  • JR

    You mean mindlessly chanting “Yes we can” (or, more helpfully, “Yes, we have no bananas”) won’t help?

  • Jane B

    Didn’t the Fed recently report a “profit”? Of course, by pretending that the mountain of garbage it bought still has it’s book value. Only the gov’t could get away with this fraud!

  • DashRipRock

    The federal reserve has been doing this for many decades. It is possible that with global central banks and the new world currency of SDR’s, they can continue with this ponzi scheme for another decade by printing on a worldwide level. At least till the police state is fully enforce.

  • VyseLegendaire

    This is a great article! I loved your faux-Obama speech. It’s amazing how he and others can lie through their teeth about the way things are going and their true motivations.

  • The Equalizer

    In the UK 12 trillion pounds were stolen by the financial sector.The Government chose to hide that from is citizens and call it a credit crunch.The debt was put on balance sheets as an asset.Printing more money against future debt called quantitative easing.The bank were restocked and those new assets hidden known as off balance or shadow banking.
    All this was hidden the 99 percent so the those crimes against the 1 percent go unpunished.Future generations will suffer paying for those debts collecting interest until inflation eats into it.Slowly putting those new assets back into the visible balance sheets could take a hundred years at UK present growth.
    In the World financial markets 200 trillion US dollars disappeared and the same methods were used to cover up this crime.At the present world prices for all assets this debt is impossible to pay back.So prices will have to go up and inflation allowed to eat away at our life style.
    That’s the path our leaders have chose for us and it is back to the old model that failed us in 2005.
    The numbers above are extracted from the top experts in the world mid 2010 based on activity and feedback from within the financial businesses.

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