Debt Ceiling Limit: The Cover Story

At the moment, media coverage of the proposed Debt Ceiling Limit increase has taken back stage to the events in Egypt, Obama apparently kicking his smoking-habit and various other mindless up-to-the-minute news snippets. For this reason, I suspended further commentary on the subject until the subject reemerged. Well, at least until today! 

Seems as though there are (still) a few true and thoughtful Journalists actually interested in the subject and share many of the same concerns as I. This is a very serious issue that many in the media simply will not touch and for reasons which I can only suspect. Whatever their motives I confess that for many the subject of Money & Banking is far too Darth Vader-like and cloaked in the cape of complex dealings, strange and peculiar terms such as monetizing, discount windows, shadow banking entities, special drawing rights and so on and yes, even the name of the global banking partners, The Federal Reserve Bank, The Bank of International Settlements and The International Monetary Fund are quite intimidating in their appearance, titles and purpose.  But as I’ve quoted John Kenneth Galbraith before and for similar purposes, his statement remains relevant, purposeful and matter-of-fact: 

“The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The processes by which banks create money is so simple that the mind is repelled” 

He does, after all, describe the very foundation of what becomes its own rather peculiar protectorate, even more, it refines an elaborate Cover Story

Now then, back to the event that occurred releasing me from my self-imposed resolution. Earlier today I was asked to contribute my personal knowledgebase toward the efforts of a well known and a respected Journalist presently researching this topic for what I understand may be a series of articles.  I confess I love the subject but even more, I love this Country and my Fellow Americans far more and to be quite blunt, I am increasingly concerned about an imprudent and uneducated Washington Regime and the effects their response will (likely) have on this Nation’s political and economic future. Whatever your impressions of my personal sentiments, nonetheless I willingly and gratefully accepted the invitation and what follows are my actual as-submitted notes. Although they are somewhat raw and unedited know that when the actually article(s) is published, I will provide a link to the same.  

In either case, I acknowledge in advance that some may find my comments dreadfully boring and academic, regardless I encourage you to know them, be aware of them and watch for the Media Conversation that is about to be unleashed. They will be a helpful and irreplaceable guide and point of reference as one follows the discourse. Rest assured, this issue has severe consequences and yes, it is so important an issue that I make this rare appeal! A quick anecdote before we move on: 

“The practice of government has become more a process of concealing failure than ascending to the ideal of common purpose. Were it only an occasional error in judgment, forthright minds easily and willingly reconcile. However, when one discovers that the very occurrence of concealment is both deliberate and measured, ones contempt is provoked not to reconciliation, but toward vengeance.” 

“On the subject regarding increasing the Debt Ceiling that to the moment receives only a cursory glance, let us first accept the fact that the causal force that lies back of the discussion (in the first place) has far more reaching affects than most realize. Upon close inspection and inquiry, you will discover that what has occurred over the last three decades in the area of geo-political-economics and finance which one might otherwise pass-over as mere coincidence does, quite literally, posses a synergistic form and function.  While I remain at your disposal to assist in your stated purpose, do consider the following as inseparable to the issue at hand and only as a point of departure. To this end: 

  1. Is the current Debt Ceiling Limit (DCL) of $14.3 trillion actually a faithful and reliable prohibition against current and future spending practices? Is it accurate? After all, when we consider the guarantees of TARP and various other Government Bailouts and their related loan guarantees in addition to Unfunded Mandates and Global Federal Reserve “Float” (which is Guaranteed by the U.S. Treasury) conservatively estimated to be in the range of $5 – $6 Trillion, are we not then presently committed well beyond the existing debt limit regardless of how it (debt) is selectively defined and/or concealed.
  2. Is the DCL, as a Spending Prohibition, actually a more valuable tool?   If that is the case,
  3. At a time when clearly the U.S. Gov’t is spending 4.7 times the actually “productive wealth” of the U.S. GDP should we even be talking about a DCL increase? Shouldn’t we, instead, be discussing an overhaul of the process which created the debt-load in the first place?  By the way, these numbers do not include the  Debt-Load of the 50 States.
  4. Some would have you believe that if the U.S. doesn’t increase the DCL that it will effect the U.S. Credit Rating; an interesting observation particularly when the Rating Agencies are only appendages of the very same Banking System that issues, distributes and sells the very Debt that is said to be at risk for being Down-Graded!  Moreover, to think that the Investors and Global Debt Holders are ignorant to the spending habits of the U.S. Government is to place far too much credibility on the Rating Agencies (and the FED) and far too little faith in the value of observing the obvious which is to say; clearly the Debt Holders are going to see that the U.S. is increasing its DCL and will not be deluded in to thinking that the Nations Credit Rating has suddenly improved simply by increasing its debt-load.  A bit absurd, no?
  5. Let me be clear on one point that has not been made necessarily conspicuous in the previous note: It is the FED that creates the debt and not the Investor/Institution/Sovereign Fund who purchase it!
  6. Also as history has shown, the DCL never moves in the opposite direction (downward) which is to say and confirm the point above (#1) and so, it is and must never been seen as to spending,  a “reliable prohibition.”
  7. I whole heartedly and sternly oppose the DCL increase on the following grounds:
    1. It relieves Congress from the burden of fiscal discipline and accountability.
    2. It relieves the President from culpability relating to failed Budget discipline.
    3. It further accommodates the FED in it’s ability, as an extension of its statutory license, to bind the U.S. Treasury as an “Agent” of the U.S. Gov’t, to all debt it creates, domestic and global (see #1 above).  And,  for now,
    4. It further exposes the American public not only to the obvious burden of the debt itself, but to a greater and more insidious consequence, spiraling inflation and the inevitable loss of economic capacity.
  8. Now, in part related to #7 above, there is one other issue that could be even more significant requiring more discussion than time and possibly your interest may accommodate and that is to the issue of Reserve Currency Status (RCS).   

There is a great deal of international pressure being applied to the concept of replacing the US $ as the world Reserve Currency (WRC).  This is largely appearing to be articulated by Russia and China and to a smaller part, Iran.  It is my opinion, that features/aspects of what is going on in the Middle East is the furthering of efforts by these 3 Countries as part of their desire to inject increasing pressure on global markets, U.S. hegemony and Economic influence which these 3 Nations view as in opposition/interference to/toward their own self-interests.  

Whether this triad is the sole generative force appears distinctly suspect as there are several “papers” floating around the globe, two in particular from the BIS (Bank of International Settlements) and the IMF (International Monetary Fund) that discuss this very point, i.e., consideration by the IMF to restructure Global Currency using what are known as SDR’s (Special Drawing Rights) to establish a composite valuation which will ultimate be represented by a “common currency.”  The term “bancor” has been tossed around for the name of this currency.  As far fetched as this might seem, there are a number of factors and signals that indicate that something along these lines is actually in process.  Here are a few examples:  

  • The BIS activities in unifying global standardization of the existing Banking Systems and this can be seen in sections of the recently passed Frank-Dodd Bill (aka Wall Street Reform Act) as well as in recent enacted intra-institutional (Banks) industry-wide regulations.
  • The apparent lack of concern on the part of the U.S. FED over the disproportionate ratio of U.S./Global GDP to Debt ratios.
  • The apparent lack of concern over the “exposed value” of Derivatives (BIS estimates at $1,155 Trillion or $1.15 Quadrillion).
  • The apparent lack of concern on the part of the EU to address their massive Debt-Load; now approx. $18.3 Trillion.  And,
  • Continuous efforts by Western Banking Interests to pressure China to allow the Yuan to float with the “Markets”.   

Taken as a whole (the above), clearly the Global Debt burden will never be able to be resolved by Global Economic Output (such is the nature of Fiat Monetary Policy) and the only solution to all of this is either one of two options: Vacate the Debt or Hyper-Inflate select economies in an attempt to mask the paying off of Old Debt with New Money (Debt) which, as we all know, simply does one thing and one thing only, it simply creates new debt and does nothing to regenerate the economic degradation or overcome the fundamental flaw of Fiat Monetary Policy; it is a mathematically unsustainable concept

My final comment for now relates to the Political spectrum: The truth of the matter is that Politicians are grossly uneducated on the subject of banking and monetary policy and lack the practical knowledge base necessary to understand the functional realities as they are, the terminal consequence of current monetary and banking practices and more importantly, the simplicity of their cause and equally so (should you want to retain sovereign nation status) the simplicity of a practical solution. As to Representative, Ron Paul, though he may have a valid and intuitive sense as to the current banking systems numerous flaws, blindly following his “end the FED” routine may in fact only accelerate the notions discussed in #8 above.” 

Well, there you have it. I truly do hope that you will value this commentary and liberally pass it along to your friends, family and associates around the Globe. Of course all the while, do keep in mind: 

“Man must be Free for Independence to be at Liberty to be Expressed!” 

Curtis C. Greco, Founder

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