Topic: Is the US national "debt" an illusion? (Read 6690 times)

The irony on all of this is that all money is debt if you think about it, so it basically means if all debt were to be paid, there would be no money available.. kinda of a mindfuck. Currency nowadays is just a mere money token, or coupon. Real money is gold and silver, and Bitcoin is the new real money. If the debt stops growing, the world's monetary fiat ponzi implodes.

The OP compares the outstanding debt of the US with its assets/wealth. That is why there is a question on whether the debt is an illusion.

There is no doubt that the United states of America national debt is not an illusion, since US is a super nuclear powered country, it spends it lot of budget on Defense department. Also note that it stands first major export for arms, missiles, and Defense Technology to all over the countries in the world, Russia stands Second next to the US in the world.

It can't be illusion as there are physical records of liability. If there were no records and still claims, it could be considered as an illusion but unfortunately that is not the case. The US is under a debt of about  $16.394 Trillion Dollars. United States owes a lot of money. US debt is larger than the size of the economy  The debt ceiling is currently set at $16.394 Trillion and approaching rapidly 

The U.S. is different. Leaving the U.S. doesn't matter. If you are a U.S. citizen, you must pay income tax no matter where you are in the world. The only way out is to renounce your citizenship, and even then you are handed a hefty tax bill.

That's indeed the problem, when you tax the super rich guess what happens... they leave to Switzerland and alike places. The only thing that could stop them is public shame, so those that are public figures (top athletes, actors, etc) are risking that their native fanbase starts hating on them. But the anonymous rich bankers and so on? these guys simply don't give a fuck, they'll just move the money.

France actually tried something to that effect. Though I don't know how it fared in the long run (I guess we should ask Arthur Laffer), but I heard some celebrities giving up their French citizenship...


Buy when there's blood in the streets, even if that blood is your own

You may want to read what people thought on the eve of the WWI and how unaware they were of what lay ahead of them. The outbreak of war came as a complete surprise. It started as minor tensions between competing nationalisms in the Balkan cockpit swiftly evolved into a full-fledged warfare all over Europe (and beyond)...

Still wanna talk about some poor countries that have nothing to lose?

All that wealth will soon evaporate when the markets crash. I keep telling my friend to sell their overpriced house, it's priced out of range for almost the whole target market and there is no upside. They have no plans to sell. It's too bad, when the house loses most of its value they'll probably sell. Real state investments are addictive and some people can't let go their properties even in critical situations.

there are some poor countries that may go in war, they have nothing to lose, and much to gain if they can win the war, but their problem is that they don't hold a large military weapons, hence they prefer to leave the thing as they are now, the best they can do is helping another country or another movements, like ISIS, in destroying their enemies, if they share the same opponent

The First World War had been even more inconceivable back then, right on the verge of it. No one could even dare to think when it will start, how bloody it will be, or how long it will last. It happened all of a sudden and then belligerent nations went totally mad. Saudis can't decide to price oil in Euros since they are allowed to sell oil for the US dollars in the first place, and then invest the proceeds into the US Treasuries...

In today's context, a world war is unlikely. Countries have too much to lose by going to war.
The US, however, might attack any country which is an irritant. Suppose the Sauds decide they want to price oil in Euros, they won't last very long. 

It seems that you are confusing cause and effect. The end of many fiat systems had been a result of a preceding war (e.g. the spectacular destruction of the Weimar Republic monetary system after WWI). Needless to say that the present-day monetary system was established in 1944 when the end of the ongoing war was near while its results were abundantly clear...

So what you preach for may actually turn out to be nearer than you contemplate, though not in the order you assume

Dosn't really matter how much you inflate worthless paper. 0 times 1000 is still 0.
You can say that it is big trouble, but in reality its just worthless fiat. a few zeros more dont make any change.
The only change is that your work is worth less. For the state a few zeros dosnt make any diffrence what so ever, they can just print more paper

I have little doubt that US dollar is going to crash... crash really hard. I don't know when, perhaps not the next 5-10 years... but it will happen, and all the other fiat will follow. The result will either be world war or the build up of a new monetary system. In case we don't all die, then will gold,silver and digital currency play an important role in building up the new system.

https://en.wikipedia.org/wiki/Trillion_dollar_coin

The richest country in the world is in the biggest debt. Hahah, that's why they fear Russia. Russia has maximum resources and minimum debt.

So what happens if a war between Russia and US breaks down? Who has an upper hand?

I don't agree to the notion that having national debt is the same as stealing from the future.

Here is the reasoning: A generation from now, the people will have to consume the food that is produced in the future, drive cars that are produced in the future and so on. Everything that is consumed, is consumed in the now, and have to be produced in the now.

But to produce in the moment, you rely on a capital structure that is partly from the past. When you drive over a bridge, that capital was produced in the past. The house you live in was build in the past. The tractor that make the farmer more producive was produced in the past. Therefore it is important that the capital structure is properly maintained and and adjusted to needs, and grown if you want a higher prosperity level. Currently we have gross distortions and capital consumption due to ZIRP  and money printing. That means a smaller, less adapted capital structure, which means the next generation will have lower prosperity.

i know it the new youngers is just getting problems already at Portugal they just bought car and house with loan of 40 years.... they lost the job and the back tooked the house the car currently those new generation returned to live with father and mother where they didnt should left to have their own house without a safe job... as Portugal others countries facing the same problem how in their mind earning 1000 euros ,buying a car and a house with bank paying around 300 euros montly would they really thinked without any savings they could pay it for 40 years?if they had some saved before try a house and a car or why not just the house why needed to have more than a thing just to show?

but they could ask for the central bank to print money for them, are they doing so?

also if normally the previous debt is payed with another next debt, by printing more money, why the value of the fiat isn't collapsing, but it always stays there,are they perhaps, destroying their previously printed money, to keep the activity on this dirty cycle, forever?

You can not kick the can down the road forever. Banks usually drive larger and larger bubble to create jobs and increase income, however they have run out of bubbles now. When people consume something from future, but their future income is getting worse year by year (Due to market saturation and technology unemployment), less and less people will be able to pay back the loan, so more and more people will default and banks will eventually acquire majority of the assets many years down the road.  Of course no one cares when they have a better life now, but how about their next generation? The system is unsustainable long term wise, the situation is getting worse for young people quickly

well all countries has debit ,,, those allowed people to make them houses and pay in 40 years.... they can buy a computer buy internet buy a car ... the thing is if the loans wouldnt be allowed do you really think we would have a better life?

I agree, specially that paper money is debt slave money.

As long as you can print money, you can always pay back whatever amount of debt, that's not the problem. Only a country like Greece who can not print money for themselves will run into huge problems

However, those printed money's initial ownership is strange: It should belong to governments, but in reality they all belongs to central banks, which in turn is owned by regional reserve banks. So banks actually pay back the debt using printed money, at the same time those money become the new debt of the government, so that government's debt is ballooning (They borrow money from central bank to pay debt)

Anyway, banks can write off those debt just like they create money, so the debt is really an illusion. It is a way to keep the game running, but the game designer can easily change the rules and still make it work

But foreign investors in US government bonds will not write off those debts, they will require a 100% repayment plus interest, so central banks will print some money to pay them in future

This games runs as long as people accept payment in fiat money, if the trust for fiat money is gone, then the system will collapse

I haven't read through the 4 pages of comments, but I wouldn't count possible future income against current debt levels.
If I have $100k debt, I am in debt and have debt.  My future earnings will help me service the debt, and the debt is secured against my capital, usually a house.

In this case America has the debt, but doesn't have the house yet.  They have a plot of land, but are borrowing against a house that could possible be built on that plot of land in the future.  That is just debt plain and simple to me.

The reason why their debt is an illusion is that they don't need to pay it back!  But that's another story.

Paper money is just debt slave money. How do you pay off the debt if every cent you borrow you have to payback in interest? I borrow a $1 now i owe you $1.10 so I borrow $2 to pay you back but now I owe you $1.30... If the government printed its own money it would be a different story but any president that had that idea has been killed. Abe Lincoln and John Kennedy.

Debt allows for things to happen. If you are not in debt, you are usually a slave too, a 9-5 one.
Debt can allow someone without many resources to start his own business. Of course things can go wrong and you are screwed. It's a gamble.
The problem is not debt, the problem is the debt has a fraudulent origin.

No, actually it didn't collapse this year as it were before. now the more job opportunities emerges and people are getting job normally. Actually the military spent on Iraq and Afghanistan reduce drastically compared to previous years, it is one of the big reason that U.S going correct on the line, regards to the inflation crisis, any wrong step on foreign affairs will have bad impact.

You can only float debt for so long before you are buried in interest payments. Decades ago, the national debt didn't matter because it was all owed to domestic sources. It was like taking money out of one pocket and putting it in the other. In today's world however, the majority of the debt is foreign held and all interest that is paid leaves the U.S. economy.

The national debt (what the OP was talking about is National Net Worth. Very different animal) is a serious problem that, unless addressed, will have widespread financial consequences in the near future.

it seems that despite the huge debt, usa are still on track, and can recover from it anyway, they can probably liquidate the first debt by rising another one and keeps the circle active

so yes, you could consider it an illusion

...

Febo (and everyone)

Yes, debt is dangerous!  Way too many people go into debt irresponsible way, to support consumption now rather than building a base for more productivity.  Perhaps the only exception would be for a mortgage that you are sure you can afford.

Shakespeare was right, better not to get into debt (nor loan).  Unless you have thought it through.

It is too easy to become a slave when in debt.

Debts sucks.
If you take debt, then always take so much that you cant repay back. so you bankrupt and not worry with the rest.

No, the US debt is real, because the repercussions if US does not pay are real. Slavery is an illusion? Yes, a slave can leave, but before it gets a step will be recaptured.

Debt doesn't matter as long as investors believe in the system. It's just a matter of faith. Fiat and debt exists as long as people believe they are real and have value. Santa Claus exists also because so many kids believe it's real.

If you asking if it's assets outweigh it's debts than yes they do. However many of those assets are very difficult to liquidate...

 It is very real ilussion and can be more and more real
 Now money is debt,money lost his value like a national money it is all global debt
virtual hype pyramid

If you think the USD is safe forever and until the end of time.. then beg the question, why not just prop the stock market up until the end of time and keep interest rates at 0%? Free monopoly money for everyone!

Id rather own gold/BTC than a worthless piece of paper. Go to Russian or Greece, it's cheaper to wipe your ass with their money then actually buying toilet paper.

The human nature of the market is generally underestimated.

The prices come from what people own, what they need and want, and take action on through person to person exchange. In the market, they prefer one thing over another and take action. It is not the aggregate, it is not the average or mean, rather the price on the market is for one less or one more of what we already have. The price is never rational, and it can not be computed from history.

Therefore the price is a perfect input to the entrepreneurs; what they do when they start a business, is to provide a little more of something, and when they close a business they, provide a little less. Total harmony.

This works for a while. It depends on what the market actors think. If they think, in aggregate, that bonds can fall in real value, they would be reluctant to hold them. Therefore they can fall, in a chain reaction.

The keynesians believe you can just loan money in the form of bonds, issue new bonds when they expire, effectively pushing the repayment into the distant future (Varoufakis' words). The state lives for ever, right? A bond with repayment in the distant future, with no interest, and transferable, is equivalent to money, which eventually will be a price-inflating force. Price inflation is never proportional to money volume inflation, but there is a force, and money volume and prices will tend to balance in a longer timeframe.

But there is a limit, again it is the market participants who decide. When they start to believe they are being ass-fucked, they act. First slowly, then suddenly.

*bump*

As long as people trust USD and use it to measure value, the debt can always be paid back by printing USD. For most of the people, including people in other countries, that trust is almost unshakeable. So debt is the least to worry about

Sure, banks have printed 5x more USD and diluted the USD value dramatically, but for average people, they will never raise the price of their products/services based on USD money supply, their pricing is depends on cost and competition, and since we have continuous improvement over efficiency due to automation and computer, the price might even drop

I pity anyone who tries to understand the U.S. fiscal debate, given how much nonsense is out there.  Economics continues to be used as a way to dress up the most crass anti-government prejudices, and numbers can always be quoted out of context to twist reality. 

Most people do not know that the american dollar (fiat currency) is a government i.o.u. that you used to be able to cash in at a bank for gold or silver. the problem now is that there is only pennies of collateral (ffort knox) backing up all of the i.o.u. dollar bills floating around the world, so, when a large amount of them are cashed in...ooops, bye bye economy, us declares bankruptcy, and anyone that is invested in the us dollar goes down with it. no wonder all the u.s. creditor nations are selling u.s. dollars (fto other fools) for real assets like gold and other "real", tangible goods. The thing is this time there is also Bitcoin and the sky is the limit.

There are alternative, non-debt based fiat options the US Treasury could employ to pay off the debt and continue to stimulate economic growth. However, these strategies would be completely revolutionary, and would essentialy make the president an elected king. Conspiracy theorists suggest this was JFK's intention with EO 11110. I read the order and do not interpret it the same way as the tinfoil hat crowd, but I do understand the underlying philosophy. It is good economics, but terrible politics.

Any major move away from the Fed would be the nuclear option of monetary policy. It would result in an entire shift in the world order, and would not be without consequence. The emotional sense of false scarcity that central banks and sovereign debt create governs the amount of natural resources populations consume, and forces societies to work together. Unless your favorite movie is "300," the current world order is probably for you. It is better we play along with the debt game as enlightened participants than experience a complete revolution. And by revolution, I mean bloody.

However, if we don't step on the gas now and print our way out of this mess there will likely be another type of revolution. Or at least a big fire. That fact is pretty well laid out in history books, including the one King James commissioned.

yeah, I don't see how OP didn't think of that.  The National Debt is literally the Debt that we owe.  Isn't there a U.S national debt counter in Arizona or something?  the more the Debt goes up, the more there is an issue, when it starts decreasing, that is when we know the problem is fixed and over with. 

The corporate oligarchy is another ball of wax. At the end of the day, it really is the government's fault. In this case, I blame the SBA.

Isn't the widespread corporate consolidation really just a result of the difference between the cost of capital for small and big business? Big business borrows at a 2.5% interest rate, paying only interest for the term of the loan. Small business borrows at 5-7%, amortizing (paid off in full) over 5-10 years.

The debt constant (annual payment/total loan) for small business can be upwards of 25%-30% vs 2.5% for big business. Small business loan payments are typically TEN TIMES MORE EXPENSIVE than big business loan payments.

Additionally, small business loans are capped at $2-5 million. Big business loans have no limit. Also, small businesses loans restrict passive and "rent extracting" activities. Big business loans encourage them. These economic realities make small business investment nearly imposible and big business consolidation inevitable.

If America cares about small business and the middle class, we must lower interest rates on government-guaranteed small business loans (through SBA reform), offer more "interest only" options to keep small and big business borrowing costs competitive, increase small business loan limits, and widen the scope of small business loans to include financial and rent extracting activity. These moves would strengthen the small businesses that currently exist, stimulate the formation of new small businesses, and enrich American business owners and small business employees alike.

Otherwise we all be working at Wal-Mart for the rest of our lives. F- that. Let them eat my cake.

Debt is very different from the view of a private person than the view of the whole society

A private person can keep fiscal discipline and always first make more money then spend, so he don't need to take any loan. But in order for everyone as a whole to make more money, some money must flow into the society at the first place, and this new money is injected in the form of loan

Before, new money is injected by newly mined gold/silver, but since the removal of gold standard, new money only enter the society in the form of loan, e.g. government borrow it from central bank and spend, company borrow it from banks and spend. Since each borrowed dollar carry an interest, it is impossible to repay the loan with existing money, so more money must be borrowed each year just to cover the cost in interest, thus the debt keeps going up

Even the interest is zero, if economy expands and society becomes more wealthy, there will be more money needed each year, and those money can not be mined like gold as before, they must come into existence in the form of loan. In fact FED can purchase assets to issue money, that does not involve loan, but unfortunately they already ran out of assets to purchase, the only one left is bond

Currently, most businesses work on debt. But with sound money, this will not be strictly necessary. If one person or association does not have enough money to buy the capital needed, they can just team up with more persons. Lending to a company, or investing directly, both involve risk. The owners can take up a loan to avoid diluting their projected profit, and for a lender, the loan can be less hazzle and less risky (since loans have priority over share owners). A loan fraction of about half, was considered prudent in the old days. Loans for business is useful, but not absolutely necessary.

Private loans, however, are sometimes necessary. Sometimes you need a house or a car right now. Life does not wait. The "collateral" for the loan is your future earning potential. With a risk premium to the interest, risk can be spread over several loans, and can thus be quite safe for the lender.

This reminds me of an old school shipowner, when asked about the equity, he said: We have as much in the bank as all the ships costed. That means the equity was 200 % of working capital, 400% if you consider that the ships were worn by half on average. The point of the large equity base was, since shipowning is a risky business, to avoid having to sell when prices were low. Analogous to being margin called when you play with futures.

 

but this luck goes to 1 out of 100 

We can sit around and talk about this for eternity regarding how it affects nations or individuals: plain and simple - worry about yourself and those important to you.

Live within your means, adapt to the changing systems of the world and plan for the worst (hoping for the best).

Take a look at this graph:




If Japan’s debt-to-GDP ratio is more than two times greater than America’s, does this indicate that we are far from the edge of the cliff? In other words, could we support a debt burden of $30 or $40 trillion? Considering the myriad of economic problems Japan has faced since 1990, let’s just say I would hate to test this hypothesis.

it's always been a confidence game, "con game" in short.

Yeah, all businesses work on debt. Your only chances to make it outside the class you are born with is getting into debt to make your business a reality, and have luck that it is a succeed and you can pay it back + make profit.

no country can survive without debts nowadays.

at least part of the debt is owed to itself, in terms of social security, municipal bonds, and some to the fed.  only about 15/16% is owed to china & japan

The debt is in the sense of consequences is real and people will suffer it unfortunately. The problem is not individuals. The problem is irresponsible government spending. The Republicans are just as responsible (maybe more) then the Democrats. As a country life is going to be radically different in ten years or less.

Zero Hedge submits to reality and starts the drumbeat for QE4:

http://www.zerohedge.com/news/2015-03-22/next-move-fed-trial-balloning-qe4

This is because you don't live in other places. Freedom is good in USA.

Is it even possible to discuss US monetary policy without a quantitative understanding of M3? Foreign central banks have resumed reporting their M3 money supplies and the information has been vital to their economic recoveries. The Fed stopped reporting M3 under Bush. Does Obama have what it takes to force the Fed to resume reporting this stastitic, or is that going to be the job of future President Paul?

Naturally, people won't abandon the dollar just for the fun of it. They would if they somehow lost trust in the US, if the US economic world domination the USA got as a result of the two world wars would be disrupted or tainted in some way. Whether this should happen and whether it is bound to happen (and how soon) remains to be seen, though...

Indeed, if they all decided to abandon USD, there will be a large amount of excessive USD out there, but even USD is mass inflated, it still holds better trust than many other countries' currency

Why would they necessarily abandon it? They would ultimately send their dollars to where they originated from, that is, back to the USA, trying to buy few goods which the latter sells (I mean the last holders of dollars when you won't be able to buy with them anything internationally in the end). But since the US has a large trade deficit (which is covered by debt), this would inevitably cause a panic sell of the US dollars leading to the devaluation of the US dollar...

And chickens finally came home to roost

I mean US people, other countries hold a lots of USD reserve, if they abandon it, they lost many years of work, not a wise idea

This is serious business.
OP wrote a long text, but what does he really know about the history of paper money?
In the USA, Freedom is an illusion and the debt is real.

And I forgot about this, which is funnier.

http://www.investing.com/rates-bonds/switzerland-10-year-bond-yield

Look at this funny situation.

http://www.investing.com/rates-bonds/u.s.-10-year-bond-yield
http://www.investing.com/rates-bonds/spain-10-year-bond-yield

Like spaniard I am happy, but it doesn't have any sense.

That's what I meant by dropping the US dollar from the international trade between countries (other than the US) and switching to regional currencies instead. China and Russia are already going that route, so you, in a way, are a bit late with your fears...

That will send lots of dollar back into US in exchange for US products. For enterprise, they will suddenly get lots of orders, why is that a problem? Maybe short term wise there will be inflation due to not enough product to deliver, but long term wise it will create more jobs and make everyone richer

In a world that everyone desperately want to make something to sell to others to make money, those who spend money will drive the economy

The only thing that could crash this system is US people start to lose the confidence of USD and refuse to accept them, and I don't see how is that possible. In people's mind, USD is money, no reason to refuse money. Even if they read that "the biggest scam in the history of mankind" and know the truth, they would still not change their opinion that USD is money, since their income is dependent on it

If anyone is interested, here are a few snippets from my activism during 2012:

Me (Matthew Libman) with Newt and Callista Gingrich: https://www.flickr.com/photos/94809731@N02/8724111149/in/set-72157634144456567

Me (Matthew Libman) with Jesse Jackson: https://www.flickr.com/photos/94809731@N02/8724111743/in/set-72157634144456567

Lobbying for the Volcker Rule with NAACP President Ben Jealous and Rev. Jesse Jackson Sr.: https://m.youtube.com/watch?v=A3wDjAugaRg

Calling for a boycott of the Los Angeles Times and Chicago Tribune to prevent Rupert Murdoch's hostile takeover of the newspapers: https://m.youtube.com/watch?v=CIbj5CXJqwM

A 30 minute collection of clips of my activism including Mitt Romney, Newt Gingrich, Ron Paul, Occupy Wall Street, NATO, and more: https://vimeo.com/68334998

Thanks for your support.

Because central banks create money out of nothing, they will always lend, government have endless borrowing capacity

The only reason that central banks stop lending is because of hyper inflation, e.g. there are too much money out there, but it seems the hyperinflation would never happen in today's system, due to more and more people are pushed to poverty, and their purchasing power go down continuously. In fact you can have an economy with lots of rich people holding trillions of money while majority of people barely make their ends meet, in such a society inflation is not possible

In dollar we trust. If people outside the US stop using the US dollar in their trade with other countries (i.e. the dollar is no longer a reserve currency in the international trade), this will start the process of economic collapse in the USA...

The US national debt is a money supply of the US dollars into the world

I just found this slideshow online. It has a bunch of pictures, including some activism work I did with Rev. Jesse Jackson Sr., Texas Governor Rick Perry, NAACP president Ben Jealous, Newt Gingrich, Occupy Wall Street, and Ron Paul. And a picture of the Libman family.

There are also shots of my old house - a Chicago NATO summit protest site - before and after (boarded up by police). Feel free to take a look:

http://flickeflu.com/mobile/photos/94809731@N02/interesting

The debt may be real, but it's made off printed magic money, and the illusion that they will ever pay it back. That's not even illusion, it's just plain delusion.

The only thing that gives anything value is whether people view it as valuable. The fiat is a product of the government. When the government shows an inability to govern responsibly, everything its involved in suffers, fiat included.

The assets you mentioned, can only be defined as a asset, when it can be sold. { I cannot see how the American government can sell those assets, for the debt they have inccurred through bad financial management and poor decision making, and having the people pay for those mistakes }

There needs to be accountability for those bad mistakes and the general citizens should not foot the bill, by selling off the National assets.  

When banks give out credit cards to every tom / dick n harry.... and they know they cannot pay it back... their has to be accountability.

The limit is when the lenders don't want to lend more.


Here is the cycle, you can see it in fast forward in Argentina.

Starting with a defaulted government, no debt:

1 The state has problems borrowing, after a while lenders will lend small amounts for a high interest.
2 The interest is good, so more are tempted to lend, the debt increases slowly.
3 Lenders feeling safe, interest slowly decreases, bond prices going up, the first lenders are happy.
4 The first bonds mature, see! the country is prudent, pays back its debt.
5 More lenders available, interest creeps downwards, state starts spending.
6 The economy, with borrowed money and state expenses, social programs, apparently grows.
7 State looks successful, spending takes off, borrowing takes off.
8 But the economy that is built, is full of distortions and bad public investments, and it can not produce the expected wealth.
9 State income diminishes, a last death cramp of debt is taken, the fiat is busted by printing, a new default.
Go to 1

The debt is real, but it's stupid. The reckless spending by our government for unneeded things. For instance, you probably noticed all those made in china stuff. It's basically because everything from china is cheap as hell. We didn't see our spending and even China almost passed us (or might have already passed us) on the best economy.

So is the debt an illusion? No. FBI spent 1 trillion dollars on 17 items? Yes.

Are our taxes being put to good use? Could it ease this 18,000,000,000,000 dollar debt?

Nope.

U.S went to collapse this year, after this stronger dollars .

No, ask China, it's very much real.

...

Erdogan's 10 Point program is a great place to start.  Of course, doing even a relatively small fraction of that would be almost impossible here (USA).

In general, whenever government gets involved, things get worse.  

I will grant the possibility of some exceptions like NASA and even experimental technologies that even wind up failing (the numbers for wind power apparently do not add up for example).  A government role in basic science that is only at a research stage (not nearly ready for commercial exploitation) might be a good thing.

But, we have seen that government is NOT SATISFIED with such roles, they want moar and moar and moar...  And we get to pay for it.  And the corruption is what is so galling (Exhibit 1: Solyndra).

Not revolution, but the debt is real, not an illusion,  and when it defaults, a lot of things will change fast. Fasten your seatbelts, say I.

Agreed, but is a revolution likely in the next few years? Or is raising the debt ceiling prudent while we negotiate a bridge to a more honest system?

Or is prolonged austerity necessary to wake everyone up?

No country should have debt. It's as simple as that. Debt for a country is either stealing from the future or stealing from your debtors if the country currency goes under. Sure debt speeds up things for businesses, but who here trusts their country to always do the right thing.

In fact, there is no debt burden if you can always borrow new money to pay out the old debt. The result of this game will be forever increasing debt, and forever increasing ability to payback the debt

Since those who borrow money will borrow more and consume more, and those who don't borrow money will work more and earn more, the borrowers become the driven power of economy

But still, this feels very strange, where is the fatal flaw of such a scheme?

Obviously everyone knows the debts of any country can't be paid.. but that doesnt matter to them.

Debts are not owed in a 1:1 relationship. It is a complicated web of debts and entities.

As a simplistic example: The US may owe money to a German bank. The German bank stands to make money off of that investment. Germany might owe money to a US bank. The US bank stands to make money off that investment. The two banks have no interest in having that debt canceled out because they are both making money off of it.

Money is debt, every country that wants to be rich also needs to have debt, it's just a part of our dreadful system..

Yes but realizing the "national" (government) wealth is politically impossible. The pitchforks will materialize at the thought of it, long before the change can begin.

I argue that the $18 Trillion national debt pales in comparison to the national wealth of the United States. There is no better example of this than the revenue generated from Obama's successful energy exploration campaign.



Imagine when you compare Russia's little debt with it vast natural resources!! This is why the US fears Russia, because Russia's potential far exceeds what the US has been able to create so far.

The debt is real, and it is ultimately owed to individuals.

Wealth is what people consume, and that is always the same as what is produced in the moment. So what the current people really can give to the unborn people following them, is the production structure. Due to QE and ZIRP, capital is misallocated and consumed. So in the future, there will be less wealth.

Most countries could clear out the debt using the state's activa. To fix a country, do:

1. Remove all constraints of money, go to private money and let the market decide. Stop QE and ZIRP.

2. Let the interest float, and let risk also trade in the market.

3. Stop backstopping banks and corporations, let the bad businesses die

4. Remove all taxes and subsidies.

5. Remove all regulations, replace with the rule of law, meaning if someone is hurt from careless persons or toxic waste, let the responsible pay (to the victim).

6. Remove all unneccessary public social programs. All are really unnecessary and destructive including for the recipients, but there will be a need for something in the transition.

7. Sell all public companies, not primarily for the profit, but to convert them to private ownership.

8. Fire most government officials.

9. Sell schools, medical facilities etc that is government owned.

10. Sell parks and public land.

You get the idea. Selling off government businesses was recently done in the Czech Republic with grand success.

You could end up with a solvent state, free and responsible individuals, and a flowering production, unseen in history.

Any other country with such high levels of debt/GDP would have a much lower rating from the rating agencies.
The US manages to get away with it because of its size.

The official plan is a forever increasing debt with a forever increasing consumption/income

Since there is no physical upper limit for the debt, does it really matter if you have one Quadrillion or Centillion dollars in debt? Especially when that debt have zero or negative interest like today

Central bank is like god, you can borrow whatever amount of money from them, and you can borrow new money to pay back the old debt, those borrowed money will create job and income, thus boom ...

It seems the whole scheme is flawless, but where is the achilles' heel of such a great plan?

Dosn't really matter how much you inflate worthless paper. 0 times 1000 is still 0.
You can say that it is big trouble, but in reality its just worthless fiat. a few zeros more dont make any change.
The only change is that your work is worth less. For the state a few zeros dosnt make any diffrence what so ever, they can just print more paper

There is no need to pay off the debt unless you change your monetary system. Central banks do a good job of portion sizing natural resources for humans. Obama could pay off the debt with a stroke of a pen. But once he did that, everyone would demand Bentleys in exchange for another 12 year presidential term. Not good.

I like the Fed a lot more than securitzed spyware - which is essentially all Bitcoin is.

"You can't fight city hall.  The only safe route is a cryptocurrency that can function like cash but also with price stability."

Isn't the very existence of Bitcoin an attempt to fight city hall? What is the underlying resource backing up Bitcoin? Scarcity and market manipulations? Sounds like fools-gold to me.

Or just gold, minus the utility.

Bitcoin is useless, outside of the rigged "currency" market it trades in. Oh, and I'm sure the NSA got a lot of good data with the innocent "data mining" program you installed on your hard drive.

It is as if the CIA and Federal Reserve set up a huge trap and you walked right into it.

I have an 800 Fico and great income. Are there any Bitcoin banks lending at a rate and term comparable to Fannie Mae's 4% 30 year mortgage?

Didn't think so.

Like you said, you can't fight City Hall. Let's just raise the friggin debt ceiling and return to life.

The issue is not as much the ratio of debt to wealth as much as it is the ability to pay off the debt.

I tend to agree with many of the forward-thinking viewpoints that are shared on forums like this. However, I feel there is misinformation being circulated regarding the US national debt. The core question that must be answered: What is the national wealth?

Private wealth in the US is almost $70 trillion. But dig deeper: What is the mineral wealth in our national parkland? What are the Rocky Mountains, Mendocino County, and ANWR worth? What is the aggregate oil wealth in public lands? What is the value of the US military in the jungle of international relations?

I argue that the $18 Trillion national debt pales in comparison to the national wealth of the United States. There is no better example of this than the revenue generated from Obama's successful energy exploration campaign.

When you take a look at the massive swaths of valuable land held by the federal government, it becomes clear that the total federally-owned real estate, oil, minerals, etc. within the borders of the USA could be valued in the quadrillions of dollars.

One thing has become increasingly clear to me: the United States HAS debt, but it is really not IN debt.

The purpose of the Federal Reserve is to govern the people through the money supply. The threat of hyperinflation or deflationary depression is exaggerated. The resource wealth of the United States - as well as the large, rich, taxable population - provides a backstop that keeps our currency strong, even in expansionary environments.

I believe this backstop is far more valuable than prior generations' use of precious metal reserves. I concede gold and silver are more tangible, but defining the national wealth by reserves of scarce metals is nothing more than a form of social brainwashing intended to keep resource-rich Americans feeling poor.

Conspiracy theorists and John Birchers who measure the national debt against gold reserves are engaging in monetary child's play. However, the Federal Reserve's ability to spend the past decade in crisis while hiding the money supply (M3) from the American public is brilliant. A brilliant scam that must come to an end in the United States, as it has in central banks throughout Europe and across the globe.

The strength of the dollar in FOREX markets in the wake of QE3 invalidates many conspiracy theories. As a market student and participant, I believe the dollar is legitimately strong and would remain strong through QE4, QE5, and QE6.

Is it time to end the myth of false scarcity? Is the easy answer - a dramatic increase in the debt ceiling to fund the Small Business Administration, Farm Service Agency, and regional banks - the best path for the US economy?

Recently an interesting statistic was released. The USA has fewer corporations today than 40 years ago, despite having three times as many citizens. If "corporations are people," do we just need more "people?"

Or is a multi-decade Japanese-style depression a better way to break the will of American men, break the daughters of the revolution into prostitution, seize American's weapons, and ultimately rejoin the British Crown and join the New/Old World Order?

I ask that question only half-sarcastically, because that appears to be the the intent of the current world order, and the path the United States is headed. Especially if either Hillary "Forester de Rothschild-RHODam" Clinton, or Jeb "Lehman is now Barclays" Bush are elected president.

This is serious business.

Sure, a new monetary system would be nice. But is a total revolution possible? Perhaps it is time to submit to reality, and finally admit that Reagan was right.

Mine eyes have seen the glory of the coming of a new hashtag.

Matthew Libman
Charleston, SC