For a number of years I was preaching the same line as the folks at the Concord Coalition. But when I read the book “The Creature from Jeckyll Island”
I found out I had a real big misunderstanding of what the National Debt is!
Ha, ha, I actually thought that the “National Debt” was money the Federal government borrowed from some poor sucker and actually had to pay back! How wrong was I on that!
The “National Debt” is a government smoke screen to mislead people about the fact that the government is taxing us by printing tons of money!
The bottom line on the “National Debt” is that the government effectively borrows the money from, the government!
When the Federal government wants to print up $1 billion in cash to use it uses this scheme to make it look like it is borrowing the money.
First the Congress prints up $1 billion in fancy looking IOU papers which are T-Bills. The T-bills just say “IOU $1 billion”.
Next Congress calls up the Federal Reserve and says “Hey guys can you please print up $1 billion in cash. We need the money to go on another spending spree.”
The folks at the Federal Reserve board then print up $1 billion in cash and Congress gives the Federal Reserve the $1 billion in IOUs in exchange for the $1 billion in cash.
A good question is why can the Federal Reserve Board print up $1 billion in cash? The Federal Reserve Board is a PRIVATE entity, not a government agency!
Congress pretends this was a loan! But the loan never gets paid off. And get this every time Congress has to pay the Federal Reserve board interest on the $1 billion loan it borrows more money to pay off the interest.
Congress uses this scheme to bypass the part of the Constitution that says Congress can’t print money. And the folks at the Federal Reserve Board, which is a PRIVATE BANK, not a government agency get to make a lot of money by printing money and “loaning” it to Congress.
When Congress prints money this way it is an indirect tax on everybody that has money or gets paid in money because printing money causes inflation. And inflation causes money to lose it’s value
Dear Concord Coalition:
I attended a presentation titled something like "I.O.U.S.A" at the Chandler public library today on Thursday March 12, 2009 put on by the Concord Coalition.
In the first part they showed a move. I pretty much agree with all of your figures. The movie said the National Debt is $10 trillion as of Jan 2009, which is correct since the debt is now at $10 trillion and rapidly approaching $11 trillion.
The movie also said that the total debt owed by the US Government is about $53 trillion when you throw in thing like Social Security, Medicaid and Medicare. Again I think that is a good ballpark figure.
The guy from your group who put on the presentation didn’t really give us a good answer on what to do about this problem. Do you have some better answers you can give me?
He told us to write the Chandler City Council and complain about it. Fat chance they will do anything about this since the cause of the problem is in Washington D.C, not Chandler Arizona. And of course the Chandler City Council is constantly asking Washington for more federal pork.
You guy also told us to write our U.S. Congressmen and Senators. Again that probably won’t help. After all the reason they run the printing presses is so we won’t know we are being taxed. If we had to pay the taxes required supporting what the Federal Government does, American would have long ago gotten out their pitchforks and torches and strung our Congressmen and Senators from light poles in Washington D.C. eliminating that problem.
Perhaps you can tell me if I am on the right path in a solution to the problem?
First we have to pay off the National Debt.
With the debt at about $10 trillion and with 300 million people in the USA that means every man, woman and child owes about $33,000 toward their share of the debt. And since kids don’t pay taxes it means that each adult in the USA owes about $66,000 toward the National Debt. Or that mythical family of four owes $132,000 toward their share of the National Debt.
Since most families of four don’t have $132,00 sitting around to pay off their share of the National Debt it would mean that they would have to get a loan and pay off their share over time, like you pay off a home.
My friend Pat ********* who is a mortgage broker tells me that as of today he could give me a loan at his best rate that would allowed my family of four to pay off our share $132,000 share of the National Debt with payments of around $750 a month for 20 years. Yes $750 a month extra for a family of four is a lot of money in addition to the taxes we already pay but if that’s what is required to get rid of the National Debt we need to do it.
Of course your movie mentioned that the $10 trillion National Debt isn’t the only thing hanging over our heads. When you throw in other things the government has promised to pay for the net present value of the debt grows to $53 trillion.
To fix the problem we have to pay off the $53 trillion debt?
Looking at the $53 trillion debt that means the amount every man, woman and child in the USA owes toward it jumps from $33,000 to about $165,000. And of course the amount each adult in the USA owes toward that debt jumps from $66,000 to about $330,000. And the amount that mythical family of four owes toward their share jumps from $132,000 to about $660,000.
My friend Pat ********* tells me that he could give me a loan at his best rate that would allowed my family of four to pay off our share $666,000 share of the all the debts of the USA with payments of around $3,750 a month for 20 years. Yes $3,750 a month extra for a family of four is a lot of money in addition to the taxes we already pay but if that’s what is required to get rid of the all the debts Uncle Sam has promised to pay then we need to do it.
Of course I think if every family of four got out their calculators and did the math like I just did and found out that to pay of the debt that Uncle Sam has created for they will have to pay almost $4,000 a month for the next 20 years to retire the debt, them they would probably want to get out their pitchforks and torches and head to Washington, D.C. to string the people in Congress and the Senate up by street lights.
Again but that comment about string crooks from street lights is neither here nor there. The real question is have I done my math right. Is that what we need to do to fix this problem?
Of course paying off all the debts Uncle Sam owes is only the first part of the solution.
The second part of the solution is Congress to run a balanced budge every year. This means for every cent they spend they must collect revenue in taxes and use the tax money to pay for the expenses.
This means for every cent they plan to spend in future dates they must either collect taxes NOW and put the money in some type of bank account which will be used to pay the expense in the future when they are payable. This is what needs to be done for things like Social Security, Medicare and Medicaid. This also means stop that Ponzi Social Security scheme. All Social Security revenue must be placed in bank accounts to pay for future Social Security expenses.
In the question and answer period after the meeting I brought up the $10 trillion figure used for the National Debt. I think it is a valid number. But your guy who ran the meeting said it wasn’t really $10 trillion. He said it was closer to $5 trillion because of intergovernmental loans included in the National Debt.
Are you saying the National Debt is only effectively $5 trillion when you play with the numbers?
I also brought up the $53 trillion number in your movie. I agree with you number. It is a good ballpark figure. But the guy who gave the presentation said it was too high and it is hard to predict.
Why did you put the $53 trillion figure in your movie if it wasn’t accurate? And what is an accurate figure that your organization thinks the total debt is?
Like I said I agree with the $53 trillion figure. In the past the number used to be about 4 times the National Debt but most of the other figures I have seen seem to say it has grown to a little over 5 times the National Debt.
Of course if you ask me I don’t have any faith in the government to solve the problem. They will never solve it because if they had to raise the taxes of every family of 4 by $3,750 a month for 20 years to pay off the debts the US Government owes it would bankrupt the country.
Our Congressmen and Senators will solve the problem by rolling the printing presses. And we will pay for this mess by having our money lose it value. At least that way the citizens won’t come to Washington D.C. with their pitchforks and torches and string the Senators and Congressmen from street lights like they deserve.
They replyed with
Re: What is the solution to the “I.O.U.S.A” problem?
Thank you for attending the event at Chandler public library and providing your feedback.
In regards to the numbers you mentioned below, the gross national debt currently stands at $11.033 trillion. Of this gross debt, $6.74 trillion is debt held by the public while $4.29 trillion is intragovernmental holdings (to better understand the distinction between these two, visit here ).
In contrast, the $56 trillion figure you cited below is a construction of the nation's explicit liabilities (debt held by the public, pensions, benefits, etc), commitments, contingencies, and implicit liabilities (Social Security and Medicare benefits). This comes from the 2008 Financial Report of the US Government put out by the Treasury Department (found here ).
As a grassroots organization, The Concord Coalition relies upon volunteers across the country to help spread the message of fiscal responsibility. There are many things that you can do at the local level. For instance, our organization is always looking for individuals to help organize a Principles and Priorities exercise at local schools or provide a Concord Chart Talk to civic organizations. Depending on the amount of time you are willing to volunteer, there are many different options. To figure out how you can best participate, contact your regional director.
Please contact me with any further questions you may have.