Is the U.S. Insolvent


Albertabound
#1
"In numerous years following [the Civil War], the Federal Government ran a heavy surplus.It could not [however] pay off its debt, retire as securities, because to do so meant there would be no bonds to back the national bank notes.To pay off the debt was to destroy the money supply."

Insolvent: the inability to pay financial debt

That is one reason the debt can’t be paid off: our money supply is debt and can’t exist without it. But there is another obvious reason: the debt is simply too big. To get some sense of the magnitude of a $7.6 trillion obligation, if you took 7 trillion steps you could walk to the planet Pluto, which is a mere 4 billion miles away. If the government were to pay $100 every second, in 317 years it would have paid off only one trillion dollars of this debt. That’s just for the principal. If interest were added at the rate of only 1 percent compounded annually, the debt could never be paid off in that way, because the debt would grow faster that it was being repaid. (3). To pay it off in a lump sum through taxation, on the other hand, would require increasing the tax bill by about $100,000 for every family of four, a non-starter for most families.












If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks...will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. -Thomas Jefferson
Last edited by Albertabound; Jan 16th, 2007 at 03:43 PM..
 
AndyF
#2
Quote: Originally Posted by Albertabound View Post

"In numerous years following [the Civil War], the Federal Government ran a heavy surplus.It could not [however] pay off its debt, retire as securities, because to do so meant there would be no bonds to back the national bank notes.To pay off the debt was to destroy the money supply."

That is one reason the debt canít be paid off: our money supply is debt and canít exist without it. But there is another obvious reason: the debt is simply too big. To get some sense of the magnitude of a $7.6 trillion obligation, if you took 7 trillion steps you could walk to the planet Pluto, which is a mere 4 billion miles away. If the government were to pay $100 every second, in 317 years it would have paid off only one trillion dollars of this debt. Thatís just for the principal. If interest were added at the rate of only 1 percent compounded annually, the debt could never be paid off in that way, because the debt would grow faster that it was being repaid. (3). To pay it off in a lump sum through taxation, on the other hand, would require increasing the tax bill by about $100,000 for every family of four, a non-starter for most families.

So we do the south american route and declare all debts paid, including and especially the one on my truck. That gets paid first, then the rest of you guys are next.

AndyF
 
Albertabound
#3
My question to all of you is, with our current way of banking (fractional reserve banking), do you believe that the U.S. is bankrupt. Because if they are Canada is not very far behind. Here is a clip on debt vs. GDP

http://youtube.com/watch?v=rW5KgF7Oy...related&search=
 
Tresson
#4
Quote: Originally Posted by Albertabound View Post

My question to all of you is, with our current way of banking (fractional reserve banking), do you believe that the U.S. is bankrupt. Because if they are Canada is not very far behind. Here is a clip on debt vs. GDP

http://youtube.com/watch?v=rW5KgF7Oy...related&search=

I have to say yes. Our whole economy is base on the concept that the consumers, of all types, need to be spending more money then they actually have. This sort of shecme can't last forever and when it does go bad it's going to take the rest of the world with us.
 
hermanntrude
#5
The US is in a unique situation in that they have the biggest debt ever, but because of the giant quantities of interest, which gives many other countries and businesses a nice little income, it would cause terrible trouble if anyone foreclosed. so they have the biggest debt ever and nothing can be done about it as far as i can tell.

I dont think a term like bankruptcy applies
 
Albertabound
#6
Quote:

I dont think a term like bankruptcy applies

I used it as an attention grabber for those who were unsure about the word insolvent..........the inability to meet ones financial obligations.






Quote:


History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. -James Madison

 
hermanntrude
#7
in which case, yes... i think they can never pay back the debt.
 
Toro
#8
No, the United States is not bankrupt. The net worth of the United States is around $45,000,000,000,000, which is the value of all assets after the repayment of debt.

The US debt is just under 70% of GDP, it was almost double that size after WWII.
 
hermanntrude
#9
yes but the question is can they pay it back, ever?
 
Albertabound
#10
Quote:

No, the United States is not bankrupt. The net worth of the United States is around $45,000,000,000,000, which is the value of all assets after the repayment of debt.


That's the problem Toro, the U.S. can not possibly ever pay off the debt.







Quote:

History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. -James Madison

 
L Gilbert
No Party Affiliation
#11
Quote: Originally Posted by AndyF View Post

So we do the south american route and declare all debts paid, including and especially the one on my truck. That gets paid first, then the rest of you guys are next.

AndyF

LOL
Nifty idea except mine's paid for. But I need a little 12 foot fishing boat with an outboard on it.
 
L Gilbert
No Party Affiliation
#12
Quote: Originally Posted by Albertabound View Post

My question to all of you is, with our current way of banking (fractional reserve banking), do you believe that the U.S. is bankrupt. Because if they are Canada is not very far behind. Here is a clip on debt vs. GDP

http://youtube.com/watch?v=rW5KgF7Oy...elated&search=

I think we only owe something like $28K each and the States' folks only owe about $23K each. Dunno bout them but we could put a run on those record-profit-making banks of ours and pay off the debt with their profits.
 
tamarin
Conservative
#13
The answer lies in the bullion market. Gold has always been real money. The one indisputable hard asset. Gold bugs have been trumpeting the end of the American banking system for decades. They've never got what they wanted. Interventionists including world central banks have always stepped in to stop gold's rise. Only when you see gold move above $1000 will that signal a possible imminent collapse of US dollar credibility. Until that happens the world banking system with the US buck still as its linchpin will make it through. There's always been major manipulation in the capital markets. Debt really means nothing to them as long as they can slick the wheels for any program or direction they want.
 
Albertabound
#14
Quote:

I think we only owe something like $28K each and the States' folks only owe about $23K each. Dunno bout them but we could put a run on those record-profit-making banks of ours and pay off the debt with their profits.

That's just the principal, it's more like $100,000/person with the interest added on in the U.S. But that is exactly the thinking needed. Due to the fractional reserve banking system we could never make a run on the banks because the don't have our money. A bank only has to have 10% of what they loan out. So you see we could never get our money back from them because it does not exist.

The U.S. debt with compounding interest is more along the lines of $700 trillion it is not fathable to even consider trying to pay this off.









Quote:

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks...will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. -Thomas Jefferson

Last edited by Albertabound; Jan 16th, 2007 at 01:28 PM..
 
BitWhys
#15
Quote: Originally Posted by Toro View Post

No, the United States is not bankrupt. The net worth of the United States is around $45,000,000,000,000, which is the value of all assets after the repayment of debt...

not to question the figure, but where are you getting that from and why would you prefer it to this one...

Table 1.1. Current-Cost Net Stock of Fixed Assets and Consumer Durable Goods

(heh - temporalily pooched. has it pegged at just over $40T at EOY 2005)

ON EDIT: my chomp. fixed the link.
Last edited by BitWhys; Jan 16th, 2007 at 02:43 PM..Reason: I'm a klutz
 
hermanntrude
#16
40T IS 40,000,000,000,000. so toro's figure and yours are pretty similar
 
Albertabound
#17
Quote:

has it pegged at just over $40T at EOY 2005)

2005 that number is not even close as of jan.2007

http://youtube.com/watch?v=rW5KgF7Oy...related&search=
Last edited by Albertabound; Jan 16th, 2007 at 01:43 PM..
 
hermanntrude
#18
ok so it's much bigger now, which makes up for the missing 5trillion.

anyway it's a giant number. once you're into the tens of trillions it hardly matters
 
Albertabound
#19
Quote:

anyway it's a giant number. once you're into the tens of trillions it hardly matters

That is until the money changer (bankers) call in the loans, remember it has happened 5 times in America's history. And it will happen again.

Remember the Federal Reserve in neither federal or a reserve, it is a privately owned bank




Quote:

History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. -James Madison

Last edited by Albertabound; Jan 16th, 2007 at 02:01 PM..
 
Albertabound
#20
Sanctus.........I am curious, do you have any opinion on this topic?
 
BitWhys
#21
Quote: Originally Posted by Albertabound View Post

2005 that number is not even close as of jan.2007

http://youtube.com/watch?v=rW5KgF7Oy...elated&search=

That segment doesn't say anything about net worth, which is what I'm asking Toro about, and makes a much bigger deal about unfunded liabilities than it should. The issue there is the the OASS fund is a stack of off-the-book non-marketables where real financial assets should be.
 
BitWhys
#22
Quote: Originally Posted by hermanntrude View Post

40T IS 40,000,000,000,000. so toro's figure and yours are pretty similar

I know. I know. I'm just trying to drag another source out of him.
 
Albertabound
#23
I still can not access your link BitWhys, I sure wish i could though. Quite curious
 
Albertabound
#24
<H1><SPAN lang=EN-GB><FONT face=Verdana size=2>[QUOTE] <H1> A Modest Proposal for Eliminating the Personal Federal Income Tax <B><FONT face=Verdana size=2><SPAN lang=EN-GB style="mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt">
 
BitWhys
#25
heh

that's because I munched the link.

this should work

$41T

serves me right for working from memory.
 
Albertabound
#26
Returning the power to create money to the government and the people it represents would generate three new sources of revenue for the public purse:

1. The interest earned on loans would be returned to the government

Using the figures for 2002 (the last relatively normal year before the United Sates was at war in Iraq), total assets in the form of bank credit for all US commercial banks were reported to be $5.89 trillion. (9) Assuming an average interest rate of 6 percent, about $353 billion in interest income was thus paid to commercial banks. This interest was earned, not be lending anything of their own, but by advancing the ‘full faith and credit of the United States.’ Returning this interest to the collective body of the people to whom it properly belongs would thus have generated revenue for the government of $353 billion in 2002.

2. Congress could issue new interest-free notes(Greenbacks) to the extent(and only to the extent) needed to "grow" the money supply in order to cover productivity and interest charges


In the monetary scheme of Benjamin Franklin, paper money was issued ‘in proper proportions to the demands of trade and industry’. What is the ‘proper proportions’ of monetary growth? One way to approach the problem is to look at current growth. The money supply (M3) grew from $7.96 trillion in November 2001 to $8.49 trillion in November 2002, an increase of $529 billion or 6.6 percent. (10) Under the present system, the expansion in the money supply needed to keep up with productivity and interest charges must come from federal borrowing, since private borrowing zeroes out on repayment. If the government were to quit ‘borrowing’ money into existence, this source of growth would dry up, and there would be insufficient money to cover the interest due on commercial loans. Like in a grand game of musical chairs, some borrowers would have to default.
If the average collective interest rate is 6.6 percent, and if the government can no longer ‘borrow’ that money into existence, it will need to issue enough new Greenbacks to increase the money supply by 6.6 percent just to keep the system in balance. In 2002, that would have meant creating $529 billion in new debt-free US Notes.

3. If the government were to pay off the federal debt with new greenbacks, it would no longer have to budget for interest on debt

Using 2002 figures, money paid in interest on the federal debt came to £333 billion. Paying off the debt would have reduced the collective tax bill by that sum.

Combining these three sources of funding - $353 billion in interest income, $529 billion in new US Notes to cover annual growth in the money supply, and $333 billion saved in interest payments on the federal debt – the public coffers could have been swelled by $1,215 billion in 2002. Total personal income taxes that year came to only $1,074 billion. Thus by reclaiming the power to create money from the private banking system, congress could have eliminated personal income tax for 2002, with a $141 billion dollars to spare. How much is $141 billion? According to the Unites Nations, a mere $80 billion added to existing resources in 1995 would have been enough to cut world poverty and hunger in half, achieve universal primary education and gender equality, reduce under-five mortality by two-thirds and maternal mortality by three-quarters, reverse the spread of HIV/AIDS, and halve the proportion of people without access to safe water world-wide (11)


Quote:

The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity. -Abraham Lincoln

Last edited by Albertabound; Jan 16th, 2007 at 03:21 PM..
 
Albertabound
#27
Every time a president has tried to implement this (issuing of greenbacks or gov't issued notes) he has been assassinated.




Quote:

History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. -James Madison

 
Toro
#28
Quote: Originally Posted by Albertabound View Post

That's the problem Toro, the U.S. can not possibly ever pay off the debt.

Of course they can.

Canada's debt went from 100% of GDP just 10 years ago to about 60% today, which, BTW, is slightly lower than the US federal government's debt.

I'll repeat, the net worth of the United States is about $45 trillion. For those of you who are financially challenged, "net worth" means the value of your assets minus liabilities. Total asset value in the US is something like $62 trillion. Government debt is $8 trillion and private debt is something like $10 trillion. (Or thereabouts).

So yes, the US can pay off their debts. No problem.
Last edited by Toro; Jan 16th, 2007 at 06:43 PM..Reason: spelling
 
Toro
#29
Quote: Originally Posted by tamarin View Post

Gold bugs have been trumpeting the end of the American banking system for decades.

Yes, they have been wrong, and they will continue to be wrong.

The faith the gold bugs place in gold is one of religious ferocity. They will never, ever see the top in gold, and they will hand the heads of those who do invest in gold when it gets to $1000 on a silver, er I mean golden platter.
 
Toro
#30
Quote: Originally Posted by Albertabound View Post

That's just the principal, it's more like $100,000/person with the interest added on in the U.S. But that is exactly the thinking needed. Due to the fractional reserve banking system we could never make a run on the banks because the don't have our money. A bank only has to have 10% of what they loan out. So you see we could never get our money back from them because it does not exist.

You have it completely backwards. A bank run occurs because they don't have all the money at the bank. That's the definition of a bank run.

Here is an explanation.

http://en.wikipedia.org/wiki/Bank_run