RANTING ANDY – Despite writing yesterday, I felt the need to follow up today regarding everyone’s favorite topic de jour, the Federal debate regarding raising the debt ceiling.
The “official” U.S. debt of $14.3 trillion is a joke, as the real number, including “off balance sheet items” and “unfunded liabilities” is closer to $100 trillion.
Irrespective, even the smaller $14.3 trillion number is no larger than America’s ENTIRE ANNUAL GDP, which itself is heavily inflated by accounting chicanery (surprised?). Moreover, per the link below (which is about a year old), the U.S. alone has more “official” debt than ALL OF EUROPE COMBINED, and nearly 30% of ALL GLOBAL NATIONAL DEBTS despite the fact that the U.S. accounts for less than 5% of its population!
Of course, the U.S. Federal debt is only part of the equation, as countless American MUNICIPALITIES, such as states, cities, and counties, face the same dire debts and deficits. Per the link below, the 50 States have combined “official” debts of $2.7 trillion, so any discussion of “U.S. government debt” should be that much higher, and probably another $1.0 trillion or so if you include the myriad smaller municipalities.
In fact, California alone has debt of $371 billion, making it the 22nd most indebted “country” in the world, just behind CHINA at $406 billion and not far behind GREECE at $532 billion!
In 2010, INTEREST PAYMENTS on the “official” external debt amounted to $413 billion, or more than the ENTIRE public debt of all but 21 countries in the whole world. But thanks to the dollar still maintaining its “world reserve status” (i.e. other nations are scared to dump dollars en masse), the government’s stupid decision to heavily weight its portfolio with low duration bonds, and of course the massive QE programs utilized to buy up nearly all the nation’s debt issuance, the $413 billion only represented a roughly 3% average interest rate, among the lowest in the world (read link below).
Think about it, a government more in debt than nearly the entire world combined, with soaring deficits, a collapsing economy, and fiscal and monetary policies specifically targeting a WEAKER dollar, and the average interest rate is just 3%?!?!
How long do you think this historical aberration will last, particularly due to the aforementioned short duration portfolio that will require INCREASED DEBT ISSUANCE just as QE2 is ending, when QE2 was responsible for purchasing AT LEAST 75% of ALL U.S. PUBLIC DEBT ISSUANCE?
And yet the PPT/Exchange Stabilization Fund/Cartel still manages to run the dollar and T-Bonds up when crappy economic news comes out, such as yesterday’s horrific unemployment report.
This is a joke, right?
Well I assure you, it won’t be for long.
OK, so now that you have the skinny on the DEBT, let’s talk about the DEBT CEILING debate, and what it entails.
The debt ceiling is the biggest joke in the history of America, which is saying a lot. To display it as such, I have dug up several enlightening websites, starting with the first one, directly below, listing the FISCAL 2010 deficit at $1.65 trillion, NOT INCLUDING all of the “off-balance sheet items” such as WARS (Iraq/Afghanistan), the ongoing BAILOUTS of privatized entities such as Fannie Mae and Freddie Mac (remember them?), and numerous other items we are not even told about.
Moreover, this chart brilliantly compares the soaring deficits to the party leadership of the various governments, depicting that no matter who was President, or who controlled Congress (Democrat or Republican), the numbers continued to soar. I am an Independent, so I have no particular bias either way, but must note that the longest ongoing myth in this nation is that Republicans are any more “conservative” than Democrats.
Next up, I looked into the history of the U.S. debt limit, which will make you laugh or, more likely, cry.
The chart below shows that since 1940, the U.S. debt limit has been raised an incredible 75 TIMES, or more than once each year, from $49 billion to $14.292 (so precise) trillion. And if you really want to laugh (or cry), nearly all of the debt ceiling increases were labeled as “temporary” by the administering Congresses.
Anyhow, the debt ceiling was just $400 billion when the U.S. abandoned the gold standard in 1971, and first reached $1 trillion in 1981, just 30 years ago.
Reagan’s administration then doubled it to above $2 trillion.
Next, Bush I’s team doubled it again to $4 trillion, in just four years during a relatively mild recession. And despite raising taxes, to boot!
Next, Clinton’s administration, during the so-called best economic times in American History (all fraudulent, as it turned out) raised the debt ceiling by another 50%, to $6 trillion.
Next, the “Neo-Cons” under Bush II, under cover of the “War on Terror” and popping of the stock and real estate bubbles (inherited from years of easy monetary policy, care of Alan Greenspan, and the “Strong Dollar Policy”, care of Robert Rubin), added yet another 50% to the debt limit, to $9 trillion.
Next, with the U.S. economy past the point of no return, the commencement of the global financial meltdown, and a President hell-bent on bypassing socialism on the way to pure communism, “Hope and Change” Obama has added another roughly 50%, to $14.292 trillion, in just 2½ years!
And finally, the coup to gras of the U.S. dollar as “world reserve currency” will be this month’s inevitable increases to an estimated $16.5 trillion, equating to a roughly 85% increase for Obama in just four years, which by the way will only grow faster under the next President, whom will make Obama look as “conservative” as Obama is making Bush look.
OK, now for the “debate” itself that is making such headlines. If you recall, about a month or so ago, we theoretically reached the $14.292 trillion debt limit, but after much ado about Congressional “spending cuts” to the tune of some pathetic number like $30 billion (NONE OF WHICH, in practice, have actually occurred), our brilliant Treasury Secretary decided that we could just steal from the Federal Pension funds to delay the “official” debt ceiling limit breach until August 2nd (again, so precise). I believe some $250 billion has already been pilfered from such funds, which are as likely to be restored as the Social Security Trust Fund, which long ago was “temporarily borrowed” by the government.
OK, so now we’re just three weeks from August 2nd, and this time they MUST do something concrete. So far, the “budget talks” have been as fruitful as the NFL and NBA labor talks, which is to say not at all. All we hear is the typical blustering and finger-pointing from politicians intent on being re-elected, with no real substance (or truth) to a single thing they say. For example, this weekend’s boondoggle with Obama and the “top eight Congressman” will produce nothing substantive at all, except for sensationalistic headlines by the parasitic media, of course.
As you know, I am not a fan of Peter Schiff as a person, but he certainly is a brilliant economist (aside from his inability to acknowledge gold manipulation), and hits the nail right on the head with this piece about the political process behind the debt limit negotiations.
The saddest part of this exercise, which as noted above has occurred roughly 75 TIMES in the past 60 years, is that Congress thinks they are somehow fooling the world by stating that the limit will only be raised if substantial spending cuts are made, as if such changes will have even the slightest impact on the nation’s insolvent financial condition. As I noted above, NONE of the “emergency” cuts announced just a month or so ago have been realized, and as Schiff states in the article, almost all such announced cuts will be back-end weighted, such as the contract Bobby Bonilla signed with my beloved Mets in 2000 that will require them to keep paying him for the next 25 years!
But when you look at what they are actually talking about cutting, it gets even more pathetic. The headlines proclaim $2 TRILLION, $3 TRILLION, or even $4 TRILLION of potential spending cuts, but don’t tell you these cuts are projected to occur over TEN YEARS. Even if $4 trillion of supposed cuts are agreed upon (which could easily be repealed, by the way), that would amount to just $400 million per year compared to a current “on balance sheet” budget deficit of roughly $1.6 trillion, a figure that has ABSOLUTELY ZERO chance of going down at all (unless Medicare, Medicaid, and Social Security were cut out, which would result in anarchy).
And once again, such cuts are always heavily back-end weighted, so the aforementioned “best-case scenario” is itself a pipe dream, if one can call a horrific nightmare a “pipe dream.”
Readers, I hope that seeing the numbers in this article have solidified your belief that we are LONG PAST the point of no return in this country. I don’t care if Ron Paul is elected President (he wouldn’t unless the nation had already collapsed), or Jesus Christ himself, there is NOTHING that can save America’s finances, or even mildly slow its descent into hell. The debt ceiling has exploded exponentially in the past decade, and will shortly go hyperbolic as the U.S. economy and dollar completely collapse into oblivion.
And as I wrote yesterday, it will not happen “next year” or “in the future”, it will happen NOW.
Gold and silver, in my view, are guaranteed to rise at least 10x EACH in “2011 dollars”, just to account for all the global money printing that has occurred in the past decade while, simultaneously, gold and silver prices have been suppressed by the Cartel via naked shorting of PAPER instruments such as futures contracts and fraudulent ETFs, as well as the creation of billions of PAPER derivatives created solely for manipulative purposes. And in 2012+ dollars, the numbers could be staggering, as in MILLIONS, BILLIONS, or even TRILLIONS of paper dollars per ounce, for BOTH gold and silver.
And don’t forget the price of OTHER COMMODITIES and LIFE NECESSITIES as well, which will also soar in price, not just in dollars but in many other collapsing fiat currencies as well, with my bet on the British Pound as the other MAJOR CURRENCY to experience an incredible, horrifying collapse.
And one more thing before my conclusion; take a gander at the list of proposed spending cuts that are being bandied around as we speak, such as at the pathetic high-level meeting tomorrow (Sunday) in Washington. I guarantee the Democrat’s list is equally appalling, and keep in mind that every item on this list is likely back-end weighted, as noted above.
For emphasis, I have italicized some of the more inane things our government has been spending printed money on.
These are all the programs that the new Republican House has proposed cutting.
- Corporation for Public Broadcasting Subsidy. $445 million annual savings.
- Save America ‘s Treasures Program. $25 million annual savings.
- International Fund for Ireland . $17 million annual savings.
- Legal Services Corporation. $420 million annual savings.
- National Endowment for the Arts. $167.5 million annual savings.
- National Endowment for the Humanities. $167.5 million annual savings.
- Hope VI Program.. $250 million annual savings.
- Amtrak Subsidies. $1.565 billion annual savings. (NO SUBSIDIES, NO RAILROADS! JUST LIKE “ATLAS SHRUGGED”)
- Eliminate duplicative education programs. H.R. 2274 (in last Congress), authored by Rep. McKeon, eliminates 68 at a savings of $1.3 billion annually.
- U.S. Trade Development Agency. $55 million annual savings.
- Woodrow Wilson Center Subsidy. $20 million annual savings.
- Cut in half funding for congressional printing and binding. $47 million annual savings.
- John C. Stennis Center Subsidy. $430,000 annual savings.
- Community Development Fund. $4.5 billion annual savings.
- Heritage Area Grants and Statutory Aid. $24 million annual savings.
- Cut Federal Travel Budget in Half. $7.5 billion annual savings (THE FEDERAL TRAVEL BUDGET IS $15 BILLION/YEAR, NOT INCLUDING THE “VEHICLE BUDGET” BELOW!)
- Trim Federal Vehicle Budget by 20%. $600 million annual savings.
- Essential Air Service. $150 million annual savings.
- Technology Innovation Program. $70 million annual savings.
- Manufacturing Extension Partnership (MEP) Program. $125 million annual savings.
- Department of Energy Grants to States for Weatherization. $530 million annual savings.
- Beach Replenishment. $95 million annual savings.
- New Starts Transit. $2 billion annual savings.
- Exchange Programs for Alaska , Native Hawaiians, and Their Historical Trading Partners in Massachusetts .. $9 million annual savings (WTF?)
- Intercity and High Speed Rail Grants. $2.5 billion annual savings.
- Title X Family Planning. $318 million annual savings.
- Appalachian Regional Commission. $76 million annual savings.
- Economic Development Administration. $293 million annual savings.
- Programs under the National and Community Services Act. $1.15 billion annual savings.
- Applied Research at Department of Energy. $1.27 billion annual savings.
- FreedomCAR and Fuel Partnership. $200 million annual savings.
- Energy Star Program. $52 million annual savings.
- Economic Assistance to Egypt . $250 million annually. (FAT LOAD OF GOOD THAT DID!)
- U.S. Agency for International Development. $1.39 billion annual savings.
- General Assistance to District of Columbia . $210 million annual savings.
- Subsidy for Washington Metropolitan Area Transit Authority. $150 million annual savings.
- Presidential Campaign Fund. $775 million savings over ten years. (REPUBLICAN TAXPAYERS HAVE TO PAY FOR OBAMA’S RE-ELECTION CAMPAIGN?)
- No funding for federal office space acquisition. $864 million annual savings.
- End prohibitions on competitive sourcing of government services. (SO NO COMPETITION WAS ALLOWED FOR GOVERNMENT CONTRACTS? THINK HALLIBURTON!)
- Repeal the Davis-Bacon Act. More than $1 billion annually.
- IRS Direct Deposit: Require the IRS to deposit fees for some services it offers (such as processing payment plans for taxpayers) to the Treasury, instead of allowing it to remain as part of its budget. $1.8 billion savings over ten years.
- Require collection of unpaid taxes by federal employees. $1 billion total savings. (I AM SPEECHLESS ON THIS ONE)
- Prohibit taxpayer funded union activities by federal employees. $1.2 billion savings over ten years.
- Sell excess federal properties the government does not make use of. $15 billion total savings.
- Eliminate death gratuity for Members of Congress (NOTICE THEY DON’T DARE PUT A DOLLAR FIGURE ON WHAT TAXPAYERS HAVE PAID DEAD POLITICIANS)
- Eliminate Mohair Subsidies. $1 million annual savings.
- Eliminate taxpayer subsidies to the United Nations Intergovernmental Panel on Climate Change. $12.5 million annual savings
- Eliminate Market Access Program. $200 million annual savings.
- USDA Sugar Program. $14 million annual savings.
- Subsidy to Organisation for Economic Co-operation and Development (OECD). $93 million annual savings.
- Eliminate the National Organic Certification Cost-Share Program. $56..2 million annual savings.
- Eliminate fund for Obamacare administrative costs. $900 million savings. (EXACTLY WHAT “ADMINISTRATION” COSTS $900 MILLION?)
- Ready to Learn TV Program. $27 million savings..
- HUD Ph.D. Program.
- Deficit Reduction Check-Off Act.
- TOTAL SAVINGS: $2.5 Trillion over Ten Years (EQUATING TO JUST $250 MILLION/ YEAR, COMPARED TO THE CURRENT, AND RISING, $1.65 TRILLION DEFICIT, BUT OF COURSE THIS WILL BE BACK-END WEIGHTED)
To conclude, I wasn’t kidding with the title of yesterday’s RANT, “The End Game starts NOW (July 8, 2011), Are you prepared?”. The U.S. economy is completely collapsing, and yesterday’s unemployment report essentially seals the deal for a near-term commencement of QE3, which ultimately will prove to be the demise of the dollar as world reserve currency.
No one knows exactly which specific events will be the catalysts, or exactly what dates. But it’s quite obvious that every round of ammo fired in desperation since the financial meltdown commenced in mid-2008 has been spent, and it’s time for reality to set in.
Either you have PROTECTED YOURSELF by trading your rapidly depreciating dollars for PHYSICAL gold and silver, FOOD, and OTHER REAL ITEMS OF VALUE, or you have not.
I hope and pray that you have, or if not that you do so RIGHT NOW.