http://www.willthomas.net/Convergence/Weekly/United_States.htmGoing Broke
The USA Is Bankrupt – What Now?
By William Thomas 11/28/04
“Under what conditions can it repay the money?” Rep. James Traficant Jr. asked Congress 11 years ago. “The estimated interest on the debt equals all the personal income tax paid by all Americans. Our government is so deep in debt that it cannot get out…We are here now in chapter 11.”
Much of this borrowing involves selling interest-bearing promissory notes called treasury bonds to foreign investors, whose eagerness to “buy America” has financed an illusory prosperity. But their largesse may be over. On Sept. 9, 2004, foreign investors already awash in Bush’s bad checks stopped buying that “paper”.
Hostage to foreign governments, trapped in a permanent war-making economy that exports almost nothing but debt, death, suffering, destruction and more jihadist recruits – Americans “maxed out” on debt and lacking personal savings are as unprepared as most of the rest of us for what is coming like a fast train through a narrow tunnel.
It’s 1929 all over
again. Back with a lot more debt to bail out this time around, Back in the Roaring Twenties, consumer debt was too high to be sustained. Even the stock market was being stoked by record purchases.
Sound familiar?
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“Though the timing is anyone’s guess, the US dollar is poised to be overwhelmed by the deficit,” warns the Asia Times.
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The USA owes its creditors about $4.4 trillion right now. Paying all that interest means more borrowing – which requires still more loans to keep “rolling over” all those 10-year Treasury notes as they become due for repayment plus interest.
But with the dollar plummeting in value and inflation rising, foreign lenders are losing confidence in the worth of Bush’s IOU’s. Oil-producing nations are saying they prefer payment in Euros, gold dinars (at left), or yak hides – anything but more bogus bucks.
Until a dew months ago, Asia’s central banks – particularly the big commercial banks in Japan and China – have been financing America’s huge appetite for consumer products, weapons and warfare. The interest alone on all those loans is unpayable. With total state and federal government debts currently passing $14 trillion dollars in a near-vertical climb, US taxpayers have shelled out $15 trillion in interest payments since 1960 – while the principal continues to rise.
Higher interest rates means more interest on the national debt, which is really the debt of American children, and their children – just as climate change really kicks in with increasingly costly catastrophes.
But despite a decade’s prediction of economic doom, financial meltdown hasn’t happened yet. And it won’t, runs the counter-argument, because global interdependence means that everyone must maintain the illusion of solvency – or go down together.
Still, if someone blinks, all those debt bombs blow up at once.
That someone could be China.
Unhappily, the self-restraining domino theory of Mutually Assured Financial Destruction has a fatal flaw. As a financial blogger writes: “Asian central banks don't have to sell their existing Treasuries for the dollar to come under pressure. All they have to do is to stop buying new Treasuries.”
This is already happening.
Foreigners have stopped buying US stocks. From net purchases of $9.7 billion on Wall Street in July, offshore investors turned to a $2.1 billion sell-off last August. Private foreign investors also sold $4.4 billion more in T-bills than they bought that month. In fact, all foreign investment into the United States has fallen off sharply. The Institute for International Economics’ John Williamson says that foreclosing on Uncle Sam “wouldn't be in the interest of the world. But any one country might think, ‘I'll beat the crowd and diversify first.’”
The Catch-22 dilemma is that whether acting individually or internationally, the smartest precautionary moves – curbing spending, reducing personal debt, reducing “exposure” in the US stock market and the US dollar – could also crash a global casino dominated by debt and the dollar.
The collapse of the greenback and America’s faulty empire could come as quickly as the fall of the former Soviet Union – and for many of the same reasons. You might want to plant a winter garden. And throw a few cans of beans in the cupboard.
Also
http://www.house.gov/larsen/wida/reality.pdfhttp://www.house.gov/apps/list/speech/wa02_larsen/morenews/reality.html“Why Younger Generations Should be Concerned about the Deficit”
“The report points out that at the end of fiscal year 2003, the federal debt and the accumulation of all previous deficits, topped $6.7 trillion and is projected to reach $13.3 trillion by the end of 2014.”
"The $159 billion in interest paid on publicly held debt in 2004, combined with $163 billion in interest paid to the Social Security Trust Fund and other government trust accounts, averages out to a staggering $1,100 'debt tax' for every American."
Go to page 11 and study the graph which shows the Bush policy will result in the budget being permanently in deficit.
Got to page 14, and study graph which shows tax cuts are greater than social security and medicade payments combined.
also good reading
http://www.federalbudget.com/http://www.uwsa.com/uwsa-usdebt.htmlhttp://www.mises.org/fullstory.aspx?control=1423http://home.att.net/~mwhodges/debt_a.htmhttp://www.publicdebt.treas.gov/opd/opdint.htmThe interest expense on the National Debt is the third largest expense in the federal budget. Only Defense and income redistribution (The Departments of Health and Human Services, HUD, and Agriculture (food stamps)) are higher. Do you have "Compassion" for the lower income earners?
How much will you pay on the national debt out of your tax dollar this 2004 tax year?
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