Debt Ceiling Default a Real Possibility!

Image result for America's debt ceiling 2017

The Sunday Arizona Star had an article called “Obama-era plan on standby for possible default”. This article points out that in August of 2011 there was a secret plan between the Fed and the Treasury which was meant to be kept secret for five years. The five years was up recently and the plan is now being partially revealed. Basically the plan is to selectively pay bond holders less than full redemption value when and if the Debt Ceiling is not renewed or not allowed to increase. The article says “holders of U.S. debt and recipients of Social Security, veterans, and other entitlements would be paid first with everyone else getting delays in payments or merely partial payments”.

 

The Obama administration back in August of 2011 devised this secret program which our Treasury and our Fed agreed to keep secret for five years. The plan is based on how debt is to be prioritized when the game of increasing the Debt Ceiling ends. It now appears that our Treasury Secretary, Steve Mnuchin, can fund the government with various gimmicks until late September or early October, 2017. Various Republican congressmen will push the issue of not increasing this ceiling so that they can gain influence to push new gimmicks upon the American people (so the article claims). What I witness is more financial gimmicks being proposed until the system collapses.

 

But what all this reveals is that our elites in government recognize that a day of financial judgment is coming. And my sense is that this day of financial judgment could/might be this fall. I, personally, don’t think that any further delay will be allowed. This September or October will likely be the longest that this judgment day will be postponed. The policies of Mr. Trump when it comes to our finances have not improved our situation. Debt is the issue and postponement can not be delayed much longer. The American people now recognize that debt, deficits, and gimmicks must cease. This awareness is now mostly everywhere thanks to the internet.

 

The message which various websites present is getting publication and our media is starting to inform the people slowly. Websites like: http://www.usdebtclock.org have been presented to the public and our leaders for over 10 years. To comprehend the problem Americans merely need to study the numbers and ask themselves a few pointed questions. Can this debt be repaid? How? Can the debt be reduced to manageable levels? How? Can this process of increasing debt be postponed indefinitely? How? Is it now time to pay the piper and accept the realities that America must restructure its house of finance? Basically, is Judgment Day here?

Watch what emerges in the coming months and ask yourself if the DAY OF FINANCIAL JUDGMENT is here! I am: https://kingdomecon.wordpress.com.

 

Some images to consider as you contemplate our situation:

Image result for america's debt when Reagan took office

Our small surplus (under Clinton) led many to project that all our debt would be repaid in a few years (what happened)?

Image result for america's debt under various presidents

This graph is misleading as Obama increased the nominal $ debt by nearly $10 trillion (much more than the others)!

Image result for america's debt under various presidents

As of 2017 our debt is nearly $20 trillion (whereas it was less than $1 trillion when Reagan took office)! Are American’s aware that Judgment Day is near?

Image result for america's debt under various presidents

The big increase in our trend was under the Obama administration (2008 – 2016)! Trump has inherited this debt bomb! Can his administration postpone this farce much longer? My sense is NO!

Image result for america's budget deficit under various presidents

Our debt bomb has reached levels where everyone realizes that it can not be repaid! Is ignoring this fair to our children? http://www.usdebtclock.org

Image result for america's budget deficit under various presidents

Will Trump and Mnuchin try to continue the charade of debt explosion or will they accept reality and deal with it? We should find out this fall at the latest! September or October, 2017, should reveal what will happen going forward!

 

Comments

Dino Manalis Added Jul 16, 2017 - 4:51pm
That's why they should rush to pass business tax cuts only followed by raising the debt ceiling in conjunction with gradual long-term deficit reduction that doesn't hurt the poor or the economy, like what was achieved during the Clinton Years.
George N Romey Added Jul 16, 2017 - 5:14pm
The US hasn't paid a penny of principal in decades. Its issuing debt to cover just the interest payments.  Not only is this debt not payable there is no way even if economic growth picked up the debt could be brought down to manageable levels.  More to the point, the amount of consumer debt is also not sustainable.
 
I believe we need a Jubilee.  Now I'll get all kind of push back about rewarding individuals, corporations and governments that took on too much debt.  However, this level of debt is stifling investment, ruining the chance of a productive economy and killing demand. Maybe next time around lenders will be more prudent in credit granting like they were 50 years ago and investors won't be so eager to buy bonds based upon financial nonsense.  Also, it will drive subprime lending out of business.
 
Of course we will hear from one person in particular that it really isn't debt because the government can either simply print money to repay the debt or simply skip issuing treasuries and fund shortfalls from again printed money.  This assumes that the world will still go along with the dollar being the reserve currency and safe investment haven.  Doubtful given recent actions by Russia, China and Iran.
 
A debt default is what we really need to force a reset on an economy based upon nothing more than central bank hocus pocus, paper wealth, financial gimmicks and propaganda hype that has been undertaken by Clinton, Bush, Obama and now Trump.
 
As the data shows both parties have increased the debt and RR was not the fiscal conservative his followers claimed him to be.  The lenders freely lent the debt and ultimately should pay the price.
Donald Swenson Added Jul 16, 2017 - 5:47pm
I would agree with George on his perspective. The debt reflex's on our children's future. Does anyone think we should return to responsible behavior so our off-site spring have a future? What kind of example are we setting? 
George N Romey Added Jul 16, 2017 - 5:51pm
Americans have followed the lead of its government, taking on massive amounts of debt for unbridled spending.  A jubilee would smack banks in the face so hard and cause so much hardship on bankers the days of buying treasuries unseen, unsight and handing out car loans, credit cards and student loans would come to an abrupt end.  This is what this country needs.  
Saint George Added Jul 16, 2017 - 6:15pm
Basically the plan is to selectively pay bond holders less than full redemption value when and if the Debt Ceiling is not renewed or not allowed to increase.
 
Government default.
 
Next step would be capital controls and bank shutdowns (including shutting down ATMs, lest nervous depositors decide to withdraw their cash as soon as possible). Cypress did the same thing recently.
George N Romey Added Jul 16, 2017 - 9:04pm
I suspect Trump and the Congress at the last moment will provide for a small increase and kick the can down the road for six months or so. This will probably be the strategy at least for the short term.
Katharine Otto Added Jul 16, 2017 - 9:49pm
George,  What's a jubilee?
Saint George,  "Bank holidays" have occurred through US history, too.  Franklin Roosevelt declared a bank holiday within a couple of days after his inauguration. His priority was to salvage the financial system (the Fed and banks).
Apparently, Congress can't live within its means, because all know that government deficit spending keeps the Ponzi dollar afloat.
Donald Swenson Added Jul 16, 2017 - 11:54pm
The majority will likely desire to do what George is saying, i.e., kick the can down the road with a higher debt ceiling. I am not so sure that this will be done, however. The entire Ponzi scheme is becoming known to the masses. Kicking the can does nothing positive. The positive response would be to deal with the issue by starting to default of select bonds. This would allow for a gradual deflation of the economy over a few years. We must watch what Trump ends up pushing. He is now a Deep State operative IMO. D
John G Added Jul 17, 2017 - 3:05am
Our small surplus (under Clinton) led many to project that all our debt would be repaid in a few years (what happened)?
Reality happened. Government surpluses are non-government deficits. You can't keep draining the private sector of its savings.
Maths is a bitch eh?
John G Added Jul 17, 2017 - 3:08am
There is no debt time machine. No future kids will be harmed by the US government not draining the private sector of its savings.
People WILL be harmed in the future by the government not providing sufficient income and investment in the real goods and services that will be required.
 
George N Romey Added Jul 17, 2017 - 7:29am
Donald I tend to agree that Trump has been taken over the influence of the Deep State.  Notice Janet Yellen is now starting to back down on ongoing rate increases and the Fed unwinding its mostly toxic asset balance sheet.  Of course the stock market went nuts going to higher highs.  The crash coming will only be intensified but well needed.
Paul Robbins Added Jul 17, 2017 - 7:48am
Debt weakens and destroys a Nation and in some respects Congress is the Guilty Party by voting for more to keep themselves in office. That is how twisted men act...Self before Nation.  Great comments and a great article by Donald....5 thumbs up!
Paul Robbins Added Jul 17, 2017 - 7:49am
The book, " The Politician", written many years ago should be read by everyone.
Paul Robbins Added Jul 17, 2017 - 7:53am
"The Politician", a book: author is Welch
Bill Kamps Added Jul 17, 2017 - 10:17am
Big difference between citizens taking on debt, and a country taking on debt.  The country can print the money to cover the debt, and people, cities and states cannot.  While on the face of it, this sounds like a problem, it is only a problem when people demand higher interest rates for holding the country's debt.  At  this point, interest rates are at record lows, along with inflation.  This tells us the market believes the US will be able to print the money to make good on the interest payments, and the value on the bonds wont likely fall below par value.
 
It would seem foolish to default on the debt, when the whole world is highly  valuing the debt with low interest rates, and all the government has to do is print money to pay it.  Even in the late 1970s, with interest rates in the mid teens, we didnt consider default, we just printed more money to cover the payments.  It worked out.  Doesnt mean it always will, but so far it has.
 
As for raising the debt ceiling politicians know it must be done.  The comments to the contrary are just posturing to gain favor with voters, and to gain support for favored legislation in exchange for supporting the raising of the debt ceiling.  All admit privately it will be done, because it has to be done.  The US has to make good on money owed. 
 
 
George N Romey Added Jul 17, 2017 - 1:07pm
If we keep printing money and piling on the debt aren't we forcing an even more horrific crash onto a future generation?  $20 trillion in debt cannot and will not ever be repaid, and yes we can continue to probably print money for maybe another decade or more.  However, everything in life has a limit and at some point investors are going to walk away.  China is already dumping treasuries and buying far fewer. Clearly Russia, China and Iran don't see this train running on the track forever.
 
As far as personal debt. This is also unsustainable.  Student loan debt and automobile debt defaults are soaring and are expected to get worst. Credit card defaults are now escalating.  If the real estate bubble pops expect another huge rash of short sells.  Its not sustainable.  
 
We need to get back to a prudent credit system and only when this dysfunctional one crashes will that ever happen.  
Donald Swenson Added Jul 17, 2017 - 1:25pm
If I have a serious dose of Cancer should I continue with cemo indefinitely or should I seek some surgery to remove the cause? Our debt has now reached a stage where we need to think differently. Life demands that we act now rather than later. The bug can not be eliminated via our current actions. I say, it's time for surgery. D
John G Added Jul 17, 2017 - 2:05pm
A currency issuer's 'debt' never has to be 'repaid'.
No debt, no money.
Saint George Added Jul 17, 2017 - 2:57pm


A currency issuer's 'debt' never has to be 'repaid'.
No debt, no money.


 
More MMT fantasy.
 
The issuer need only sprinkle salt around himself in the shape of a circle and stand in the middle of it and endless paper money (or endless digital currency) won't cause endless inflation.
 
Even neo-Keynesians like Krugman guffaw at such endless stupidity.
Donald Swenson Added Jul 17, 2017 - 3:08pm
John needs to check out student debt and credit card debt at this site: www.usdebtclock.org. Can our students repay this debt? Can our consumers continue the debt service payments (as interest rates rise)? Debt is the issue, John! Watch the clock as it 'ticks' and 'tocks'. D
John G Added Jul 17, 2017 - 3:22pm
Do students issue currency, Swenson? Dumb as a bag of hammers.
Paul Robbins Added Jul 17, 2017 - 4:24pm
John G,
When we pay our income tax, where does it go?
Donald Swenson Added Jul 17, 2017 - 4:34pm
John: Students must pay their debt. Currency is created by our commercial banks and our Fed. Paper currency is created by our BEP and then our Fed distributes this paper to the banks. D
Paul Robbins Added Jul 17, 2017 - 4:44pm
John G and Donald , et. al.,
An excerpt to read from Heritage Foundation about Debt..
 
In 2015, the United States government spent target="_blank">$223 billion in tax dollars just to service the national debt. This spike in debt-servicing costs will have serious and negative impacts on American families and the economy in the long run.
High public debt has been shown to target="_blank">slow down economic growth and to exert upward pressure on interest rates. Slow economic growth reduces employment and business prospects for American families, and it has a negative effect on family incomes and wealth.
As national debt and interest payments swell, investors may question the United States’ ability to repay its loans. This could raise interest rates and lead the government to collect more taxes in order to service the national debt.
To put debt-servicing costs in context, the federal budget is separated into three main spending categories: mandatory, discretionary, and net interest. Net interest is the difference between what the government pays to service the publicly held national debt and what is earned from government-issued loans. As net interest spending grows, target="_blank">the other portions of the budget shrink.
Every dollar spent servicing the debt is a dollar that cannot be used for another purpose, and these massive net interest payments will crowd out other vital national priorities. target="_blank">By 2023, spending on net interest payments will surpass spending on national defense.
Interest payments are determined by the size of the U.S. debt and market-driven interest rates. Since the federal government is legally obligated to repay lenders, interest on the debt is automatically paid every year, regardless of how much it costs.
This means that the only way to truly control net interest payments is to control the deficit and national debt.
But this is already something Congress should be working to do. Reducing spending and debt is critical, as a large debt is a detriment to target="_blank">America’s economic future. If Congress is going to get a handle on net interest payments and the national debt as a whole, it must tackle mandatory entitlement programs like Medicare, Medicaid, and Social Security, which are target="_blank">the largest drivers of federal spending.
Every time lawmakers approve more spending and take on more debt, it’s imperative that they understand taxpayers will be paying for it—in the form of debt servicing—for a long time to come.
Sure, government interest costs may not seem to impact everyday life as much as paying that extra dollar to watch “House of Cards.” But ballooning net interest costs will catch up to American families. Congress should target="_blank">make spending reductions that reduce the debt and put the budget back on a path to balance.
For this and other charts about the federal budget, check out The Heritage Foundation’s target="_blank">Federal Budget in Pictures.
 
Donald Swenson Added Jul 17, 2017 - 6:05pm
Thanks, Paul. This supports my perceptions. If we desire to solve our economic problems we must get our debt down. My sense is that this will not happen without downsizing the government. We need smaller government and we need fewer politicians. Let's ask many to step down now that have no real function to perform. I could name dozens to get us started. D
Dannl Yoder Added Jul 17, 2017 - 10:22pm
Many years ago a king was eating cake and was thinking out loud: icing on this cake would be nice.
 
The very next day, Satan,in the form of a banker brought the King some cake with Icing.
King: where did you get this? Yumm!
Satan: I wrote an IOU to the private baker in your name and he accepted it.
 
Years later, the King's son was eating some Cake with icing on it and wondered out loud: hmmm sure would be nice to have some Caramel swirl kn this.
The very next day, Satan brought him some Cake, icing, and swirls of Caramel.
King Son: How did you do this?
Satan: I wrote a bigger IOU in your name and took it to the confectioner.
Years later the King's Son had children and grandchildren who wanted cake, icing and swirls.
Satan presented them all with their wishes.
The King lay dying and said to Satan, 
His will I pay all those IOUs?
Satan: with more IOUs.
King: But ultimately how will it all be paid?
Satan: It will be paid with the blood of your children; but don't concern yourself, it will be far down the line before the Baker and confectioner's children catch on..meanwhile you will be with me in hell with your back broken. Bwahahaha!
 
 
Donald Swenson Added Jul 17, 2017 - 10:44pm
Well said, Dannl. Belseebub had all the answers. Lack of AWARENESS is how this deceiver works to get his way. D
Glenn Verasco Added Jul 17, 2017 - 10:56pm
I'm a millennial. My generation inherits all of this debt without getting any of the benefits. Not cool.
John G Added Jul 17, 2017 - 11:05pm
Those interest payments are private sector income. Federal government spending comes from thin air and disappears there when it is extinguished by taxation or charges.
Government debt is 'paid' by ledger transfer back to the reserve system where it came from.
No taxpayer pays a red cent toward it. And no future generations are responsible for it.
You can't be on both sides of the balance sheet.
It's simple accounting.
John G Added Jul 17, 2017 - 11:06pm
Federal government debt is not like your IOU. 
Glenn Verasco Added Jul 17, 2017 - 11:28pm
If you pretend that inflation doesn't exist, or that the US dollar will always be the world's go-to currency, or that interest rates will always be low, or that outrageous debt tends to slow economic growth, or that the deficit makes it harder to cut taxes, then I guess we don't pay a "red cent" towards it.
Otherwise, we're in trouble.
Dannl Yoder Added Jul 17, 2017 - 11:56pm
@John G... "Federal debt not like your IOU..."
Many will disagree with you. Perhaps you understand debt different from its IOU meaning. And maybe you can expound on it to Bankers using terms that they use with a wink and a nod, But your/mine/our federal reserve note is best understood as a legal tender, which is an "offer with no consideration"
Not only is that an "IOU sucker", but it is against the USCode annotated.
Not inclined to argue this with you John, I believe you know part of the puzzle, but not all of it. Else why aren't we out of Debt, and why must a simple Bible remedy called JUBILEE be passed over because a more sophisticated remedy is sought?
Cheers
John G Added Jul 18, 2017 - 2:01am
Verasco. None of those things need to be true.
One word, Japan.
michael d zitterman Added Jul 18, 2017 - 2:39am
http://writerbeat.com/articles/17253-ANY-DISCUSSION-ABOUT-A-FEDERAL-DEBT-LIMIT-IS-BOGUS-AT-BEST
 
mz
mikiesmoky@aol.com
John G Added Jul 18, 2017 - 2:40am
Robbins. Your Heritage Foundation article is a load of neoclassical bullshit.
wsucram15 Added Jul 18, 2017 - 6:27am
George..You have said it before and as usual are right. 
Bill Kamps Added Jul 18, 2017 - 10:41am
George, investors will not necessarily walk away from Treasuries. 
 
We will get a clue when concern starts, because there will be net sales of them, par values will drop, and interest rates will rise.  However, what is happening instead, is that people need a safe place to store value, and US Treasuries are the safest place.  Before you laugh, they are safe because the US government can create more money to pay the interest if necessary.  Companies, states, and cities cant do that.  So by  definition the interest will be paid.  It doesnt matter if the principal gets paid, as long as their are buyers for the Treasuries.
 
Paying off the principal is like saying a company must eventually buy back its stock and take the company  private.   As long as there are buyers for the  stock, a person can recover their investment.  Likewise, as long as there are buyers for the Treasuries, someone can recover their investment.  That is what matters, are they liquid, can you sell them if you need to.  Treasuries right now are the MOST liquid investment.  The fact that people prefer them to other investments, show how risky those other investments are.
 
Now, I would agree that we should slow the  growth of the debt, because some day, if there is too much  debt there will be a problem.  But  slowing the growth of the debt, is FAR different from declaring a default.  Why in the world should we declare a default when interest rates are low, bonds sell at par, and everyone is happy with our Treasuries?
Donald Swenson Added Jul 18, 2017 - 1:21pm
Bill: But  slowing the growth of the debt, is FAR different from declaring a default.  Why in the world should we declare a default when interest rates are low, bonds sell at par, and everyone is happy with our Treasuries?
 
Our market for bonds is International (as well as national).  China does not like that we buy their products with 'fake' money created out-of-nothing. Russia does not appreciate this operation, either. Why? Because they are prohibited from doing this with their currency. There is a growing dislike for the $ as a reserve currency as America has misused its privilege for years. We just create our $ from consciousness (nothing) and buy from the world. This may seem sound for Americans but it is viewed as unsound from the viewpoint of most foreigners. America's trade deficits are over $12 trillion (since 1976). We buy/spend and then create 'fake' money to pay for our products. Why should foreign counterparties like this Ponzi operation??? It's pure fraud and corruption! D
Donald Swenson Added Jul 18, 2017 - 1:23pm
At some point America will lose its status as the main Reserve Currency and this could happen soon. Both China, Russia, the Brics, and even Saudi Arabia are selling treasuries as they sense the Ponzi scheme as unfair to them. D
Donald Swenson Added Jul 18, 2017 - 1:27pm
Think of International trade as a 'value' for 'value' transaction. Both parties should demand equal 'value' exchanges. Americans are spoiled as the $ is the Reserve Currency for the planet and allows us to purchase from the World (with no real consequences). Is this 'fair' trade? Not in my mind! D
Bill Kamps Added Jul 18, 2017 - 1:53pm
Donald, I know you saw the comment that I made that we should grow the  debt more slowly, you quoted it.  Slower growth of our debt would be wise.
 
Right now, countries and individuals around the world are anxious to loan the US money are very low interest rates.   In fact they prefer our debt to their own, which is a real statement of our stability and the liquidity of our  debt.
 
Regardless of what the press says about the Chinese selling Treasuries, at this point in time there are willing buyers for every seller of our bonds.  We know  this because par value has not decreased, and because interest rates are low.  Is it currently time for alarm, no.  Should we be wiser going forward, yes.
 
We were in a lot more risk in the late 1970s when interest rates were in the mid-teens, now they are around 2% for a ten year bond.
 
Very few people buy Russian treasuries, and try to exchange the Ruble anywhere outside of Russia, you cant.  The  same can be said for the other countries you mentioned.  The Euro and a handful of other currencies can be regularly exchanged, outside the borders of the issuing country. 
 
I am NOT saying there aren't problems.  However, at the present time declaring default on US Treasuries makes no sense.  Slowing the growth of the amount we issue, does make sense for reasons you mention. 
John G Added Jul 18, 2017 - 2:30pm
What do you all think you get if you sell your US 'debt'? When exporters sell their goods and services into the USA, what do you think they get paid in? What do you need to buy US 'debt'?
If you think about these things in the systemic sense you will see that all the scare stories they are selling you are nonsense.
John G Added Jul 18, 2017 - 2:33pm
Coupon rates are not set by 'the market'. The market has no power over a currency issuer.
Japan does not have the world's 'reserve currency', they have much higher 'debt' levels and their bond issues are always oversubscribed.
Nor have they had 'hyper-inflation'. They've battled deflation.
All your neoclassical and Austrian theories are bunk.
Donald Swenson Added Jul 18, 2017 - 2:34pm
Bill: Slowing the growth of the amount we issue, does make sense for reasons you mention. 
 
What is happening overseas is that Russia and China are now trading with their own currencies (by-passing the $). Saudi Arabia is now accepting alternative currencies for their oil. Iran mostly ignore the $ for trade. I think we could 'slow' the growth if consumption of goods/services were to slow substantially. This, however, means a crash in our stock markets (most likely). American growth has pumped up our markets since 2009. Since we consume 24% of all goods/services on the planet, any slowing produces serious consequences for our economy and the global economy. Keynesian  economics is based on MORE and MORE (credit/debt). It's a one-way street. I don't think that Americans will accept any slowing until the markets crash. The cycle for a crash is coming IMO. D
Bill Kamps Added Jul 18, 2017 - 2:36pm
John G, correct.  It is easy to tell when a country's debt is in trouble.  The interest rate rises, and par value falls.  This is what happened to Greece, more recently Venezuela, and some years ago Argentina.   The Greeks have a particular  problem, because they cant create money to pay their debt, they gave up this ability when they  went on the Euro. 
 
If people holding US had trouble selling it  when they needed to raise money, the interest rate would be higher.  Its not.  Simply having more debt outstanding is not by itself a problem.  However, the demand for debt is not infinite, so we need to watch how quickly we increase it.
John G Added Jul 18, 2017 - 2:41pm
However, the demand for debt is not infinite,
Money is infinite therefore debt is infinite.
The US government spends the dollars that buy the debt into existence in the first instance. It (the 'debt') doesn't 'fund' anything.
It's just existing $US moved from reserves to Treasuries. 
A ledger operation.
People, including economics students, are taught falsehoods about the system.
Donald Swenson Added Jul 18, 2017 - 2:42pm
The game of money is based on 'confidence'. My view is that 'confidence' for our $ is waning (it's happening as I write this). This trend IMO will continue. This means that retaining the Reserve Status will continue to be more difficult. At some point our 'fake' money must be dealt with. D
John G Added Jul 18, 2017 - 2:57pm
Tax drives state currencies. 
You keep ignoring Japan.
Which just proves that you are willfully ignorant and offensive.
Bill Kamps Added Jul 18, 2017 - 3:03pm
If confidence were waning, interest rates would be rising, and would be higher than bonds priced in other currencies.  Our bonds are the lowest priced, which means they have the highest confidence today.  The market tells us what is the confidence, not the bloggers or the "experts".
George N Romey Added Jul 18, 2017 - 4:24pm
A few observations.  First, China, Russia and Iran are cooperating on their own economic ventures.  How could they look at this last election and see anything but a dysfunctional and dying republic. Second, economic situations change in a flash.  Remember as late as the week of Labor Day 2008 the Fed was claiming all was well and the temporary liquidity concerns were not going to amount to anything. Within 3 weeks you had the Treasury and the Fed screaming Armageddon.  Third, we already are having the Treasury print money just to cover interest on the debt.  
 
No one knows for sure when that moment arrives when suddenly there aren't enough buyers for treasuries and our only choose is to either print money to buy the treasuries or just skip issuing treasuries and fund shortfalls by again printing money.  
 
Finally, we are adding about a trillion a year onto the debt.  We can't normalize interest rates which hurts savings.  Sometime fairly soon not 30 years down the road the US is going to forced to make some tough choices with ramifications.
Donald Swenson Added Jul 18, 2017 - 4:40pm
Yes, the confidence situation can change in a flash. Cycles are real. We are due for some type of black swan event. When? Only God knows the exact date. D
Dannl Yoder Added Jul 18, 2017 - 4:43pm
THAT IS CORRECT!
George N Romey Added Jul 18, 2017 - 4:46pm
Donald the reality is that when our economy is based upon financial gimmicks rather than real productive investment then black swans are more than likely.  The dollar has been falling.  Auto loan, student loans and credit card defaults are rising.  We have zombie banks all over the world.  Europe and Japan are still into negative interest rates and their economies remain more anemic than ours (although I tend to think the US doctors its stats more to make our economy appear better,)
Donald Swenson Added Jul 18, 2017 - 4:50pm
George, I fully agree. Financial gimmicks are prevailing short term but reality will soon assume control. The entire financial system is mostly an ILLUSION. D
John G Added Jul 19, 2017 - 1:47am
Private debt and government debt are two very different beasts.
Dannl Yoder Added Jul 19, 2017 - 10:01am
John G. ' Private debt and government debtd are two very different things"
"very different."
Could that difference be so very?
I mean if, for an example,  the US is a corporation, and the branches of government are filled with excutives and officers, can we merely accept the as being OK, since it is " no sweat off my back"?
John G Added Jul 19, 2017 - 2:50pm
The US government is a currency issuer i.e. it creates its own money (liabilities). The non-government are currency users.
Big difference.
Donald Swenson Added Jul 19, 2017 - 3:00pm
Actually our private Fed creates our currency. They are independent from our government (legally). They receive no appropriation from our government. This makes them independent as to their operations. The money system is a Ponzi scheme. It's totally corrupt. Get out of the system
 Buy some physical gold and silver. D
Bill Kamps Added Jul 19, 2017 - 3:14pm
DS, money is what people are willing to take, and give you things in return.  Gold and silver have value, because people will give you things in return for g & s.  Dollars have value because people will give you things for dollars.  Both go up and down in value, based on various things.  The price of gold in recent years has been much more volatile than the value of the dollar, even accounting for inflation.
 
Yes gold ran up in price a great deal in 1980, but since then has been in decline.  People have been predicting a continued rise in gold for the past 40 years.  If one had acted on these predictions, one would have generally lost a lot of money, unless one was very nimble, and could catch the rising and falling of the price of the metal.  Most people prefer stable values, not a volatile value.
 
With dollars you can earn interest. With g&s that is more difficult.
 
We will know when the dollar is in trouble, when interest rates rise, and when the value of the dollar falls persistently.  Currently, there is no sign that the world is about to walk away from the dollar.  It might happen some day, but predictions based on buying gold, would not have worked well for most of the last 40 years.
 
I guess someone concerned about the value of the dollar, might own a bit of g&s, but that would be a very long term insurance policy, not some place to store money that would be needed in the short term.
Donald Swenson Added Jul 19, 2017 - 5:43pm
Bill: In reality there are signs all over that our $ is waning and collapsing. You have not followed its history. What happened in 1971 under Nixon? What happened in 1973? What happened in 1974-75 with Kissinger's trip to OPEC? What happened in 1987 with the flash crash? What happened in 2015 with a 40% drop in the Chinese index markets? Why is Iran abandoning the $? Why is Russia and China signing agreements outside the $ regime? Why is OPEC now accepting alternative currencies (other than the $)? The signs are there, Bill, but one must be aware of the signs. Awareness requires reading more than a local paper or media presentations. One needs to listen and view alternative media. Then think independently from the crowd. D
Donald Swenson Added Jul 19, 2017 - 5:44pm
By the way, Bill, gold and silver are physical commodities. Our $ is a mental abstraction with no tie to material reality. Are you aware of this. The $$$$$$$$$$$$$$$$$$$$$$$$ is nothing and no-where. It's an 'inner' concept of my/your mind. D
George N Romey Added Jul 19, 2017 - 6:35pm
You are right Donald none of what you speak about and more will be seen on MSNBC, CNN or even Fox. 
Donald Swenson Added Jul 19, 2017 - 7:11pm
The official media merely promotes the status quo. I rarely watch more than a smidgen of this news. I view these sources as soap opera. D
John G Added Jul 21, 2017 - 10:55pm
You promote the status quo, doofus.
Paul Robbins Added Jul 22, 2017 - 3:03am
John G
 
Where was the, (lack of knowledge of economics that you have gained ), learned?  Where did you study?  
John G Added Jul 22, 2017 - 4:37pm
I was taught the nonsense that you lot believe in at university.
It was all a pack of lies when it came to banking, currency and macro.
Donald Swenson Added Jul 22, 2017 - 5:01pm
What was this nonsense, John? What university? Where? When? D
John G Added Jul 22, 2017 - 5:13pm
Neoclassical ,bastard Keynesianism, IS-LM.
Why do you want to know where?
Can we add racist to your many personality disorders?
George N Romey Added Jul 22, 2017 - 5:14pm
Donald the fact that John thinks the Federal Reserve is government owned should tell you something.  The old adage, never argue with an idiot it will only bring you down.
 
Now that we have taken care of the buffoon.  Trump will do as every other politician has done.  Kick the can down the road and call it a victory.  The only difference between Trump and Obama is the latter is much more polished.
John G Added Jul 22, 2017 - 5:26pm
Can you show me any concrete evidence that the Fed is not government? Where are the share certificates? Where are the incorporation documents?
John G Added Jul 22, 2017 - 5:27pm
"Kick the can down the road".
LOLz, you're such a sponge for the right wing gold bug crowd's buzz words.
Saint George Added Jul 23, 2017 - 1:01pm
Money is infinite therefore debt is infinite.
 
More drivel, sophistry, and spittle on the beard.
 
"L'Etat c'est moi!"
— King Louis XIV
 
Inked paper as "money" is infinite only on condition that government be the monetary sovereign. If people flip it the middle finger and decide to use something else as money — despite government insisting to be paid its taxes only in its special inked-paper — then money is no longer infinite.
 
The kookiness of Modern Monetary Theory, based on the old theory of chartalism, has destroyed many economies over the centuries. Look at how it screwed up Japan for decades. Observe how it continues to devastate Zimbabwe.
Donald Swenson Added Jul 23, 2017 - 5:06pm
We need an AUDIT of the Fed to get to details on ownership. Why does this private corrupt entity refuse Ron Paul's audit? Think. D

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