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Beyond $18 Trillion: What The Debt Means For Your Bottom Line

THE U.S. GOVERNMENT’S “POINT OF NO RETURN” By FITSNEWS || Three-and-a-half years ago the federal government passed what we referred to at the time as the “debt dereliction deal” – a colossal failure to rein in the federal government’s unsustainable growth.  Two years ago it passed the so-called “fiscal cliff” deal –…

THE U.S. GOVERNMENT’S “POINT OF NO RETURN”

By FITSNEWS || Three-and-a-half years ago the federal government passed what we referred to at the time as the “debt dereliction deal” – a colossal failure to rein in the federal government’s unsustainable growth.  Two years ago it passed the so-called “fiscal cliff” deal – yet another perpetuation of this unsustainable expansion.

This month it passed the latest in a long line of stopgap spending bills – one that (predictably) does nothing to rein in deficit spending.

Add it all up and you’ve got a national debt of $18 trillion and counting … one that’s expected to hit the $25 trillion mark within eight years.

Naturally this escalation raises an important question: Is America ever going to pay off its debt?

And if the answer (as should be glaringly obvious at this point) is “no,” what does that mean?

Last week Simon Black of The Sovereign Man  published an entry seeking to answer these questions.

His conclusion?  That paying down the debt is now “almost mathematically impossible.”

“I’ve worked out a mathematical model which shows that, even with absurd assumptions (7 percent-plus GDP growth for years at a time, low interest rates, etc.), it is simply not feasible for the US government to ‘grow’ its way out (of debt),” Black wrote.  “Default has become the only option.”

Yikes …

Once you’ve accepted the inevitability of default, Black says the only question left is to figure out what form it will take.

The government could bail on its creditors, but “this would spark a global financial and banking crisis,” he says.  It could default on the Federal Reserve but “this would create an epic currency crisis for the U.S. dollar.”

So who does that leave holding the bag?  Easy: You.  

As a future beneficiary of government entitlement spending (and a holder of U.S. dollars), “you” are the one who is ultimately going to pay the piper.  And not just when it comes to “benefits” you are paying for (but will never receive) … but also in the diminished value of your earnings and assets.

Every “incentive” to a politically connected company, every bailout to a broken bureaucracy, every handout to further incentivize dependency, every new billion dollar weapons deal … puts you deeper in the hole.

And for what?  Are things getting better?  Is our country creating more jobs and better incomes?  Are we safer?  Are our people less dependent on government?

Of course not …

Yet our government has gone and passed precisely the same sort of recklessly unsustainable spending deal it always passes … hoping you’ll be pleased there wasn’t a “shutdown.”

Seriously … how much longer can our country be this stupid?

***

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45 comments

Blah Blah Blah December 15, 2014 at 10:47 am

There was an accountant who ran #’s on youtube 2 or 3 years back that showed the same thing, Simon’s a little late to the party.

Anyway, it’s just history repeating itself. If you haven’t prepared you’d have to be pretty stupid as the information has been out there a long time.

Then again, I suppose most might be aware but don’t think that the money printing to sustain 43 years of unbalanced budgets will ever end badly.

In one regard, I can understand why they think that based on 43 years of such, Japan’s debt to GDP of 225%, etc.

Empirically, when constrained to a 50 year viewpoint, it makes sense to think it will go on forever.

I’d rather be prepared though for something that might not happen than not….and my common sense drives a longer term outlook than 50 years….if I’m wrong than so be it…but I’m not risking anything by preparing.

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Prepare December 15, 2014 at 10:59 am

I interested in knowing exactly how to be prepared. Walmart does not take gold coins besides gold is just a rock and the printed money will be worthless. So I am guessing the best preparation is food to live and guns to keep out the MADMAX types? Is That about it?

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Blah Blah Blah December 15, 2014 at 11:17 am

“Walmart does not take gold coins besides gold is just a rock and the printed money will be worthless.”

So do you think that if there’s a currency collapse that no currency will spring up in it’s place for perpetuity?

Are you aware of what each new currency that has sprang into existence starts off based on if it’s paper scrip?

“I interested in knowing exactly how to be prepared.”

Then get up off your lazy ass and do some research.

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E Norma Scok December 15, 2014 at 11:40 am

Stock up on toilet paper and cocaine–tomorrow’s currency.

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Blah Blah Blah December 15, 2014 at 12:34 pm

Cigs, bullets, chocolate, condoms, etc.

E Norma Scok December 15, 2014 at 11:38 am

From my perspective, if it can make it 40-50 more years, I really won’t care; I’ll be dead.

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Squishy123 December 15, 2014 at 11:54 am

Scary part is that those old fucks in the Legislature are saying the same thing but using 4-5 years as their numbers.

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tomstickler December 15, 2014 at 11:06 am

Today the interest burden of US debt is 1.4% of GDP. In the early 1990s, the burden was over 3.0% of GDP.

How in the world did we survive?

For one thing, we were not stuffing billions into the pockets of Wall Street and the military-industrial complex. Then we had eight years of Clinton in the White House, with budget surpluses some years.

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Ha! December 15, 2014 at 11:23 am

The interest rate on 10 year T’s was fluctuating between 6 & 8% at the time(early 90’s)…if the rate ever returns to anywhere near that the US can’t make its interest payments…

Debt burden to GDP in % is a ridiculous metric for a variety of reasons anyway.

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FastEddy23 December 15, 2014 at 11:49 am

Yes! … And a modest tax cut, if you all recall.

“It’s the economy, stupid!” was and is a mighty good catch phrase. So, what is the current administration doing about that? And what did congress just do about that?

Recall Time!!

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idcydm December 15, 2014 at 7:01 pm

Yep, Newt and Bill worked together pretty good those last four years but the surpluses were smoke and mirrors.

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True December 15, 2014 at 8:46 pm

“but the surpluses were smoke and mirrors.”

SS, “off budget”…

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idcydm December 15, 2014 at 9:14 pm

Some kind of lock box, right? ;)

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True December 16, 2014 at 9:26 am

lol, right. The lock box that never existed….***warning***…don’t try to open it, or it becomes Pandora’s box.

Rocky December 15, 2014 at 11:09 am

Well the easy answer would be, stop running deficits, allow the creation of surplus, then over time pay it off. The majority of our debt is in 1-5 year T-bills. So years 1-5 would reduce the debt by about 10 trillion. That’s paying 2 trillion a year. The remaining 8 trillion is clustured in the 5-10 range, with about 2 trillion of it in the 30 year range (remember the 30 year T-bill was discontinued in the late 90s when President Bill Clinton had managed to erase the deficits and we didn’t need to borrow but was re-instated under President George W Bush when he immediately eliminated any surplus in 2001 and returned to 200 billion plus deficits). That’s how America pays off the national debt. But in reality it probably never pays off the entire debt just as Americans never pay off their credit cards. BTW – anyone every wonder what the W stands for in George W Bush? I think it stands for Wow!!!!

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Point of order December 15, 2014 at 11:18 am

“Well the easy answer would be, stop running deficits, allow the creation of surplus, then over time pay it off. ”

I think you missed the part where it’s “impossible” to do mathematically.

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Tom December 15, 2014 at 11:24 am

It appears to me all he said was we can’t grow ourselves out of debt, with our current tax and spending structure. To me that means we need to raise taxes and cut spending. We should start by returning all taxes to where they were before Dubya took office. We should return Defense Spending to where it was before Dubya took office plus the rate of inflation. Then let’s see where we are.

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Point of order December 15, 2014 at 11:27 am

“It appears to me all he said was we can’t grow ourselves out of debt, with our current tax and spending structure.”

If you look closely at his numbers, you can’t meet the SS obligations in a decade after cutting everything else…

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Tom December 15, 2014 at 12:00 pm

Without raising taxes. Taxes are at a 50 year low in this country. They can go up. Further there are some relatively benign adjustments we could make to the Social Security and Medicare programs, that would secure them for 50 to 75 years, while allowing those programs to continue to serve the function they were always intended to serve. Which was to provide some semblance of stability for the middle class. But basically the Koch/Rich crowd want to use the threat of not getting paid as a reason to kill the programs all together. This is a one sided biased report.

Really? December 15, 2014 at 4:37 pm

Did you get caught making up shit on the last go round of budget /deficit talks?

Or was it an inflation discussion?

I can’t keep track of all your bullshit.

Tom December 15, 2014 at 6:01 pm

What part do you consider made up? As far as I am concerned I try to never make up anything. Unlike the Fake News, Beck, Rush crew, and you.

idcydm December 15, 2014 at 6:51 pm

The National Debt has continued to increase an average of $2.41 billion per day since September 30, 2012!

Tom December 15, 2014 at 7:30 pm

What does that have to do with anything I have said?

idcydm December 15, 2014 at 7:52 pm

Just thought you might be interested.

Really? December 15, 2014 at 9:03 pm

“What part do you consider made up?”

Well here’s one for example:

“Taxes are at a 50 year low in this country.”

That is straight out not true, regardless of what metric you use(corporate, personal income, etc.):

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205

So first of all, starting from 2013 you have the following years that were lower(as a total via GDP): 2009-2012, 2003-2004, & 1965.

Not only that, but you neglect to note that the US has never successfully collected over 20% debt to GDP in revenue…meaning we are already close to the ceiling for confiscation as a % to GDP and so raising taxes won’t presumably lead to a long term fiscal solution.

I get tired of correcting your shit all the time. I remember now, last time you said there wasn’t inflation.

It’s like you just make shit up, farting our fairy dust #’s and stating it like it’s objective fact.

I’m just content for you to do it from here on out, but I just wanted to point it out to everyone else so they know in advance.

idcydm December 15, 2014 at 9:16 pm

“It’s like you just make shit up, farting our fairy dust #’s and stating it like it’s objective fact.”…Those damn talking points will get you every time.

Tom December 16, 2014 at 3:49 pm

Who the hell said taxes as a percentage of GDP. We are talking about taxes on the richest Americans.

http://krugman.blogs.nytimes.com/2012/07/12/the-long-run-history-of-taxes-on-the-rich/?_r=0
Just more typical BS from the Fake News right. Just so every one knows. Lets just ignore the facts.

idcydm December 16, 2014 at 5:24 pm

krugman.blogs.nytimes…”is one sided biased” reporting.

Really? December 16, 2014 at 10:11 pm

“Conscience of a Liberal”

How dare you suggest Krugman has bias!

idcydm December 16, 2014 at 10:48 pm

Didn’t you know it’s only Fox News and conservatives blogs that are biased, only they can put stuff on the internet that isn’t true.

A long time ago, long before the internet, my daddy told be figures don’t lie but liars figure.

Really? December 16, 2014 at 10:09 pm

“We are talking about taxes on the richest Americans.”

We? Do you have a turd in your pocket?

Here’s what you said:

“Taxes are at a 50 year low in this country.”

Tom December 15, 2014 at 11:09 am

Yes, all the typical Koch Brothers, Howard Rich drivel. We are doomed, doomed, I tell you. The end is near, and there is only one way we can be saved; cut taxes on the rich and cut benefits for the middle class.

This wealth of the middle class exploded between 1933 and 1980. There is another answer to deficits besides cutting spending on programs designed to provide stability for the middle class. Increasing revenues. On an historical basis the rich in this country are under taxed. We need to return taxes to more historical levels. We also need to cut defense spending.

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Smirks December 15, 2014 at 11:27 am

Perhaps we are fucked. If the 2000’s were any indicator, the Republicans sure as shit don’t care about the national debt. I mean, Cheney’s infamous quote about deficits and all that. And if 2008 to now is any indicator, Democrats don’t give a shit about raising revenue/cutting unnecessary spending that the GOP racked up and bends over just as easily to Wall Street.

What I do know is that regardless of how fucked we are, the oligarchs are going to attempt to steer this ship in the direction they want to the bitter end, even if it means steering us directly into the glacier. Which is exactly what they will do. Increased subsidies/welfare (for them), lower taxes (for them), bending regulations to their whim, making taxpayers guarantee their bottom lines, making sure monetary policy goes whatever way they want, making sure their peeps lead the agencies that regulate them, etc. I’m sure they’ve figured out a way to jump ship right as the hull shatters, too, with all their ill-gotten goods.

I, for one, intend to use my final gasps of air as we go under telling the Job Creationists: “I told you so!”

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E Norma Scok December 15, 2014 at 11:35 am

“I, for one, intend to use my final gasps of air as we go under telling the Job Creationists: “I told you so!””

That’ll fix’em.

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FastEddy23 December 15, 2014 at 11:43 am

” If the 2000’s were any indicator, the Republicans sure as shit don’t care about the national debt. …”

Most of those republicrat fools are retired or dead. Good riddance IMOP.

The rino republicrats of this latest session have a whole lot to answer for as well. They just backed another government bailout to the tune of another $1.1 Trillion in tax collections and accumulated government debt.

Let the republicrat recalls begin! … and in the “progressive” wings, let the purges begin!

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Squishy123 December 15, 2014 at 11:51 am

So you’re saying the Democrats care about the national debt?

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Really? December 15, 2014 at 4:38 pm

“On an historical basis the rich in this country are under taxed.”

Well, we know who isn’t rich now don’t we?

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FastEddy23 December 15, 2014 at 11:39 am

The “National Debt” is Government Debt.

Did any one of you authorize the g’ment to incur such a massive debt? … Me neither.

I do not believe that the taxpayers are responsible for this huge debt. Government spent the money, g’ment printed the bonds, government incurred the debt, government should find a way out of their debt.

Here is one way: How about a “special” tax on government employees? (Its called a pay cut.)

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Squishy123 December 15, 2014 at 11:49 am

$18 trillion deficit means that it’ll be $20 trillion by the time Obama leaves office.

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GrandTango December 15, 2014 at 11:56 am

Are you BRAGGING about what you and your fellow-idiot Obama voters have done? Dumb@$$….

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Liars lie December 15, 2014 at 12:36 pm

I have no doubt, that if gov’t is claiming $18 trillion, it’s probably more like $36.

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GrandTango December 15, 2014 at 11:55 am

He Dumb@$$…Obama was re-elected more than 2 years ago. You were MUTE on the deficit BEFORE the 2012 election. STFU about it now..unless you are apologizing for being ignorant beforehand.

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Crooner December 15, 2014 at 2:39 pm

Funny thing is that if we did default on the debt it would be the 1% who really get fucked. So you know THAT ain’t gonna happen.

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PetroDollars December 15, 2014 at 3:52 pm

As long as the Petrodollar remains the only way to buy and sell oil the debt literally doesn’t matter. As long as we have the most powerful military in the world the Petrodollar will continue to be used and that will be enforced by force up to and including the use of nuclear weapons. As Obummer said, “You can take that to the bank.”

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Really? December 16, 2014 at 9:29 am

“As long as the Petrodollar remains the only way to buy and sell oil the debt literally doesn’t matter”

Why do you think Iran, Russia, China, Turkey, India(BRIC), etc. are all making deals to trade in gold, Yuan, etc.?

Is the US going to bomb them all? Ukraine overthrow via the CIA is peanuts compared to billions of Chinese & Indians hoarding gold and dumping Treasuries.

Everyone always thinks the paradigm is unbreakable, till it isn’t.

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