The deficit imposes a net burden on future generations. This was a major theme of Ross Perot when he was running for the Presidency in 1992. There is some truth to this statement, but not much. This statement conjures up an image that the younger generation(s) has this huge tax bill hanging over their heads which must be paid off entirely. But countries never die (or at least they never plan on dying). Therefore, there is no reason why our children and their children’s children cannot keep passing on the debt forever. In fact, so long as the economy continues to grow, future generations can continue to pass on ever-larger debts. Simarlarly, if I lived forever, I would never have to pay off my credit card debt entirely – just service the monthly interest payments.

Moreover, payers and recipients of the debt are both primarily U.S. citizens, so income is simply redistributed from one group to another. Suppose Ross Perot was elected President and decided to pay off the national debt once and for all over a period of say, 5 years. How would he do it? He would have to raise taxes and cut spending so that we ran significant surpluses (on the order of $1 trillion per year). The government would then take the funds directly from the tax payers and indirectly from the citizens who lose the benefits they used to receive from government services, and pay off the bond holders. Does the money leave the country? No. It is simply transferred from all tax payers to the bond holders. In fact, many bond holders may find that the value of their bonds were offset by the higher taxes and/or lower level of government services.

There is one case where the net burden argment may hold some weight. Right now, about 15% of US debt is held by foreign investors. To the extent that future generations must pay off this debt, and the income leaves the country, future generations are burdened with the current generation’s run-up in debt. Fortunately for the US, the foreign-owned portion of the debt is still fairly small.

The national debt will bankrupt the nation. Huge debts have bankrupted some nations, but we are far from that scenario. The main difference is that most of our debt is internally owned. Also, the government never has to pay the entire debt off at one time since the government never “dies.” Furthermore, the government has an enormous power to raise revenue via taxation.

How can other countries compete against a country that does not charge interest to use it’s money? Another country? North Korea.

a solution:
Banking :
http://www.youtube.com/watch?v=nNumEm2NzQA

Clowns: S.S. is what we paid in, it is a “Trust Fund” and buddy, keep your ******* hands off my money.

“Debt”, it was you “top 25% income earners” that got 90% of the tax cuts…now you whine after accepting it and putting us in a $12 trillion hole because of it (lost revenue since it was enacted, geniuses.)

Poor widdle reddog….poor widdle puppy.

And there´s another problem, quite known in the UK: the quality of the debt. Most of US debt is structural, and therefore cannot be simply eliminated.

The most important factor that holds the US together in economic terms is this: it controls dollar emissions. Since the dollar is globally accepted as an exchangeable currency, it can get heavily indebted, because it can print the money to pay the bills!

Surely the US is heading towards a very rough way, but the rest of the world is not free from some bumps along the path too. Maybe there is some karma in this world after all (as a consequence of leading USSR to bankruptcy…).

NAFTA NATION
&
much more

I can’t wait no longer now.

It’s here…

All hope is not lost… But I cannot say the same for the efforts of America’s authorities at hand…

Apparently we are a vast minority. That’s why I am simply blown away at our ostrich response- up and down- social and educational strata. How long can this charade continue?

Not long.

…simply crazy.

Let’s tack on another 5K / American this year why don’t we?

It will be mass government defaults around the world, or hyper inflation…both will suck. There’s no way people will accept massive taxation and no social programs (which is the only way to get rid of the debt).

http://www.johntreed.com/democracy.html
Give it a read, it’s very insightful….

“Dr. Strangemoney or How I Learned to Stop Worrying about the National Debt and Hate The FED”.

There’s a lot of talk going around about how the national debt is killing the economy and I want to tell you to stop worrying about it. So what is the national debt and how did we get here? Whenever the government needs money, it prints up some Treasury bonds and sells them to investors. Whatever it doesn’t sell, the Federal Reserve (which is not federal and doesn’t keep much in the way of reserves…more about that later) buys them. What most people fail to understand is that the FED doesn’t use real money, as you know it, to buy them. It creates the money out of thin air with an accounting entry. If you or I did that, we would be in jail for counterfeiting. Let’s suppose for a moment that the FED is actually a federal agency. The left hand needs some money so it asks the right hand to borrow some, which the right hand gladly does by printing up some cash and accepting an IOU in return. Is this really as absurd as it seems? The government is actually borrowing money from itself and paying itself interest on it?

The simple truth is that the Federal reserve is privately owned by its 12 member banks and by extension hundreds of other banks. You see, when your local bank gives you a loan, they don’t use your deposits to create loans as you might think. In fact they create the loan by an accounting entry. In other words, out of thin air. If a bank has $1000 in deposits, it can loan $900, without ever touching your $1000 deposit. The extra $900 is created *in addition to* the $1000 in deposits. The bank now has $1900 in assets. When the money is paid back the $900 is destroyed. This is called fractional reserve lending. Many years ago, some unscrupulous goldsmiths figured out that they could create receipts for 10 times the amount of gold they had on hand because, at any one time, only 10% of the people who stored gold at their vaults would come to retrieve it. It is, at it’s essence, a form of counterfeiting.

The problem comes with the interest you must pay the bank. It was never created! Every dollar in your wallet represents a debt someone else owes on a loan. Confused yet? It was designed to be confusing. The FED made it that way to hide the fact that they are slowly draining money away from the middle class straight into their pockets. It’s a hidden tax. This expansion of the money supply is what we call inflation, meaning the cost of the products you buy must continue to go up over time and the government *must* increase the federal debt. If all the loans in America were paid off tomorrow, we would all be broke.

What about the money that was loaned to us by other countries? It too was created by their central bank out of thin air. It is also true that the FED returns 90% of the money it “earns” back to the government but you have to ask the question why is this any different than the mob skimming off the top from casinos. In 1913, a Congress very similar to what we have today- part ignorant, part stupid, part corrupt and way too few heroes, passed the 16th Amendment (the income tax) and the Federal Reserve Act. What the FED leaves out is that tiny fact that almost ALL of our money is not created by the FED but by the smaller regional banks. In other words, the same place you got your car loan from.

Many people confuse wealth with money. Money is a medium of exchange and a measure of value. Money could be made of red, white and blue poker chips. Dollar bills are merely paper. What gives them value is the government. Our forefathers had it right when they gave the power to create money to the government. It is absurd for the government to borrow it’s own money. If the people demanded it, we could end the national debt with the click of a mouse. If the government printed up the money it needs to run the government and provide services, we could end the federal income tax tomorrow. This isn’t some far-fetched idea. We’ve done it before. Our revolutionary war was funded by the Continental currency as was the Pennsylvania colonies. None other than Benjamin Franklin figured out how this would work.

The standard argument against this method is that it would create runaway inflation. A closer look at history proves all of these arguments wrong. The Continental currency was destroyed by the British army counterfeiting millions. Lincoln’s greenbacks (this is where our current dollars get their color) worked well too until his death and the bankers seized control again. There has been a tug of war for centuries between the people and the bankers. Germany’s Weimar Republic inflation was caused by currency speculation, not government spending. Inflation can be controlled by tying our currency to a wide ranging basket of commodities, like the Consumer Price Index so that a gallon of milk today costs the same as it would in 10 years.

What has happened to our economy is the result of the mathematical certainty of compound interest. There will always come a time when the interest due exceeds the ability to pay it. This is called the debt saturation point- where all your excess money goes to paying your bills. You can’t dig your way out of a hole. Soon the government will not be able to pay the interest on the national debt. They will say we are broke and we need to raise taxes and cut services. To this I say, BULL! We can fix this problem with very little pain (that is unless you’re one of those whose job depends on being a parasite on the backs of workers).

In summary, the national debt is not a problem at all. We need to demand our government return the money creation power back to the people as it is spelled out in the Constitution. The banks need to return to banking in the way most people think they already do, by taking in deposits and loaning out money given to them for investments…..not by creating an ever-increasing supply of money out of thin air. The government would create money and SPEND it into existence for infrastructure and services like Social Security, Medicare, etc. Aristotle had it right centuries ago- “Money exists not by nature but by law”. As it stands now, we-the-people have little to no control over the money supply and inflation. That is in the hands of a few too-big-to-fail banks. Government is the only control we-the-people have and the government is made up of the people we vote in. If they won’t listen, vote them all out.

A more accurate statement of this reasoning, or attitude, whichever it is, goes as follows: “We really just don’t know where the end is, or what the limits are, until we reach them.” To boil this down even further, we aren’t going to stop until we have to, which means until we hit the wall, encounter utter disaster.

An alarming aspect of the current spending madness (a literal, not metaphorical description) is that the minds in charge of prolonging it toward imposed disaster are intelligent, educated types. If all of us realize this as unsustainable madness, then they must have some sense of this as well. There are many explanations for this, based on political considerations that are best illustrated by the “keep kicking the can down the road” metaphor.

I offer another, even more cynical, explanation for thought. What if those in charge of our spending, insiders relative to the rest of us, have information that the end is, in fact, nigh. They may, for example, by virtue of information that they have and the rest of us don’t, know with near certainty that our economy and the dollar cannot be saved at this point and will soon crash into a fire-ball of disaster(much as many argue above). It’s so far gone we can’t even make it any worse, so let’s just go wild and spend like mad men.

They may have complete knowledge on the peak oil question and agree with something like Richard Duncan’s Olduvai Theory, that energy supplies and infrastructure will collapse in the near future sending modern civilization back into the Stone Age. As late as 2007, Duncan showed that his decade old theory was right on course, and he predicts the new Stone Age will commence in 2030.

A third possibility involves advanced scientific (or historical) knowledge about long-term cyclical changes. The elite rulers of this country may have applied their immense resources to figuring out exactly what will happen when we cross the galactic plane in 2012, and it may be they know it is going to be the end of the world as we know it.

In short, though the madness of deficit spending and money printing is hard to fathom on this scale by any rational mind, if the power elite know of a coming apocalypse, then their propensity to live like there’s no tomorrow goes from blur to focus. Of course, if they were to have knowledge of this sort, they would certainly not share it with the rest of us, for obvious reasons