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The US debt is too large to ever be repaid

By Charles Ponzi
EarthBlog News©
TinyURL for this article [http://wp.me/pOhuI-h]


This essay will argue that the US debt is too large to ever be repaid. Not only is it too large, it is over an order of magnitude, a factor of 10, too large.

Following are remarks made by Richard Fisher, President and CEO of the Dallas Federal Reserve, in May of 2008. This was just prior to the bailout. His estimate including obligations which are promised, but not paid for, was 99.2 trillion dollars.

Storms on the Horizon
Remarks before the Commonwealth Club of California
San Francisco, California

Richard W. Fisher President and CEO of the Dallas Federal Reserve
May 28, 2008
Add together the unfunded liabilities from Medicare and Social Security, and it comes to $99.2 trillion over the infinite horizon. Traditional Medicare composes about 69 percent, the new drug benefit roughly 17 percent and Social Security the remaining 14 percent.
More at the Dallas FED website

Now following are remarks by Neil Barofsky, who was the primary person in charge of projecting the ultimate cost of the bailout. His estimate of the cost of the bailout was 23.7 trillion.

U.S. Rescue May Reach $23.7 Trillion, Barofsky Says
By Dawn Kopecki and Catherine Dodge
July 20, 2009 (Bloomberg) — U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.
more at Bloomberg

Adding 99.2 trillion to 23.7 trillion is 122.9 Trillion dollars.

So what is the income? The income is around 2.5 trillion. That’s probably being very generous. Whatever. Call it 1 or call it three trillion. When you are in the hole for 122 trillion, you are off by an order of magnitude in terms of ever being able to pay off the debt.

As stated in an introspective look, scaling these incomprehensible numbers down to size, this is like you taking home 200,000 a year and owing 12 million dollars. At 3%, the annual interest on 12 million dollars is 360,000 exceeding the income by over 50%.

If you estimate the annual tax revenues at 2 trillion and an average 30 percent tax rate, that would put the number at 6.6 trillion assuming a 100% tax rate. So 123t represents all of the peoples income for 19 years. While this figure is meaningless in itself, it serves to highlight the degree of  unpayability of the obligations.

For the people who say the government can just print money to cover the shortfall,  money is debt. When you print money, you increase the debt and the debt is already an order of magnitude too large to ever be repaid.

This isn’t very complicated, really. The party line…the corporate media groupthink... is that this is all well and good but an issue that will only have to be dealt with in the future. The future is here as our friendly Chinese creditors say “please payment now“. Payment in what? More tokens of an unpayable debt that some people are still pretending to be a currency?

No matter how large the model becomes before collapse, approximately 88% of all people will lose.

the bottom 3 tiers of the pyramid always lose their money when the scheme finally collapses.No matter how large the model becomes before collapse, approximately 88% of all people will lose. If the scheme collapses at this point, only those in the 1, 2, 4 and 8 got out with a return. The remainder in the 16, 32, and 64 tier lose everything. 112 out of the total 127 members or 88% lost all of their money.

Pyramid scheme
From Wikipedia, the free encyclopedia

No matter how large the model becomes before collapse, approximately 88% of all people will lose.


Ron Paul: The US Government’s Debt Can Never Be Repaid

  1. Anonymous
    January 5, 2010 at 1:23 pm

    I like how you relied on just what they are telling you to reach a simple conclusion. This demystifies all the hype and spin I have to wade through. It's a simple, thoughtful analysis.

  2. Anonymous
    January 5, 2010 at 1:48 pm

    Would you loan him any money? Depends how big and scary his military is…

  3. Anonymous
    January 6, 2010 at 12:16 am

    Anonymous, I guarantee you the chinese are not scared of the us military. The american military has nothing on the one billion member chinese military. The american military has become completely politically correct. Take for example the muslim fort hood shooter. Secretary of defense bill gates said if we lost our "diversity" it would be worse than having thirteen soldiers shot and killed. Our soldiers are told don't shoot unless shot at. Theyre basically told innocent afghans lives are more important than there lives. At one time America had a great military with a man like george patton today we have bill gates. No ones scared of our military except the u.s. citizen. Tyler

  4. Anonymous
    January 6, 2010 at 12:26 am

    Once again I've jumped the gun on my comments. I jumped to the conclusion that anonymous was saying the chinese would lend us more money because of our military. After reading it again it seems thats not exactly what you were saying. Your point is pretty accurate and I think it fits more for the chinese military than the american military. Its almost as shocking as the detroit ghetto video from you tube as whats happened to the american military in the last twenty years. I've decided not to comment on this blog anymore because me and comments don't go together. I wish the author all the best and I hope you open peoples eyes to reality. Tyler

  5. Anonymous
    January 6, 2010 at 9:26 pm

    There is an article at http://www.atimes.com called the blowback effect 2020. If you havent read it you should. China is getting stronger and have lots of allies. The west is decaying and our allies are scarce. Great Britain is a joke and all the west is a joke. According to this article America still has the strongest military by far but when you add up all our enemies like iran and add to that they are allied with china and russia we plus the terrorist muslims I don't think America can handle all of them at once. Who really thinks obama has a clue about war? He went to harvard and spent years as a community organizer for acorn. haha. pathetic.

  6. Craig Harris
    January 7, 2010 at 1:55 pm

    The thing China has going for it (other than an estimated population so large that the entire US population equals the rounding error in estimating the Chinese population) is that they make things. Not only do they make things, they are globally the low cost producer and the supplier of raw materials and subsystems to any American companies left who still make things.Then we could get into the creditor/debtor relationship between China and the US, but it's safe to say that it doesn't take a lot of intellectual horsepower to know that China is the one in the drivers seat.

  7. Anonymous
    January 11, 2010 at 12:25 am

    The debt is never meant to be repaid. That is the purpose of central banks. The control and enslavement of nations is acheived with one of the oldest crimes in the book; usury. As morpheus said "you were born a slave", understanding this is the key to grasping everything that transpires.Why are the elite so enamoured with socialism/Marxism? Simple, it ensures that populations will always spend more than they generate – keeping them in perpetual debt (enslavement).

  1. February 19, 2010 at 12:14 am
  2. February 25, 2010 at 1:52 am
  3. April 21, 2010 at 4:31 am
  4. May 15, 2010 at 11:46 pm

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