The many faces of the political argument surround Monetary Policy makes identifying the core issue virtually impossible unless and until of course one realizes that the core issue is purely political mixed with an equal measure of intellectual dyslexia.
All sorts of sordid affairs and mixed intentions are at work attempting to clutter the various targets of conflict; deficits vs. budget, budget vs. entitlement, entitlements vs. debt and so on. Not unlike the causal forces that stirred action toward bailing out the “to big to fail,” the same rush to errors in judgment are peaking into the view of many who also believe the U.S. Government is also to big to fail. All of which leads me, once again, to the very same question I posed at that time: Why fund a broken system?
Here are a few facts to consider: (Source: CIA Factbook)
- The U.S. GDP is presently stated to be $14.7 Trillion. Consider that this number includes Government (Federal & State) of $6.7 Trillion. That leaves us with a non-governmental economy of a mere $8 Trillion, net.
- This 8 Trillion Dollar Economy breaks out this way: Agriculture – $17.6 Billion, Industrial Output – $3.3 Trillion and the Service Sector – $4.6 Trillion.
- U.S. Industrial Growth – 3.3% (World Ranking: 98th).
- U.S. Federal Spending (2011) is estimated to be $3.7 Trillion. State & Local Government spending projected to be $3.2 Trillion.
- Total U.S. Federal Debt: $14.3 Trillion (stated). Although if you add to this number the Federal Government Guarantees under TARP, FannieMae & FredieMac, FHA and the Global Banking System Float by the Federal Reserve then we would need to add, at the moment, an additional $9.3 Trillion. Lastly, if you really want a view in to the completely absurd then of course you will need to consider the Federal Unfunded Mandates toping out at a hefty $112 Trillion. Lastly,
- Not included in the numbers above is the total Debt and Unfunded Mandates for the individual States presently slightly over $4.7 Trillion.
Now at first look one might be prone to ask, “In what way is this information relevant?” My reply would turn to these very basic and rudimentary indicators as a first-hand witness to what none in the Politically Elite Class seem to grasp. There is no way any of their rather dubious attempts will resolve the budget/debt trap this Country faces!
To understand why, let’s look at what one is able to conclude from this information:
- If we consider that a Nations true measure of economic health is its productive capacity/output then in the case of the U.S., this number would be slightly over $3.3 Trillion (agriculture + industrial output). From this information we conclude that at the present moment the U.S. Government and 50 States are, on an annual basis, spending double this nation’s productive capacity! And,
- Assuming that we could hold the economy steady, interest rates and borrowing costs static, suspend further loss in Fed & State revenues, freeze spending at current levels and put a choke-hold on further growth in entitlement spending – all of which is impossible – at current economic levels and assuming we were able to dedicate 100% of the economic output to debt-retirement, it would take no less then 42.5 years to pay of the current debt-load. Again, just the current debt load and that’s not including the interest costs; for that we will need to add approximately 17.4 additional years.
To be quite blunt, the current Monetary System is not designed to settle debt. In fact, it is deliberately structured for it to expand! Because of this fundamental fact, clearly the processes at work in the political spectrum are not at all dedicated to addressing even the most fundamental flaws in the system. Moreover, I am convinced that the reason for the mindless blubbering both within the political regime and the media circus is simply because for those who understand the problem, they wouldn’t dare want the public to know of the systemic flaws built in to the system and for those in the matrix who are unaware, ignorance is an attribute they’d prefer be kept from public view as well.
The fault for all of this lies squarely at the feet of a seriously flawed Monetary System and to a Political Class that has fully abdicated its duty and lastly, to a Public that has allowed it to persist. Mutton-headed budgetary and slight-of-hand accounting methods are not going to fix the problem. So again, why fund a broken system?
As it is, the U.S. Economy is inextricably linked to a Fiat Banking System that feeds off of perpetual inflationary spirals in order to create money, literally, out of thin air and then charges the Government and Taxpayers for the use of it. The sovereign stockpiles of gold that once were the sole possession of the American People and held in-trust by various repositories around the country have all been pledged to the Federal Reserve as collateral for the debt it assumes. And, in case you didn’t know it, the U.S. Treasury is not able to re-purchase its Gold from the Fed and this is for one very good reason: The Federal Reserve does not accept the very currency it prints in settlement of the credit/debt it extends to the U.S. Government. Also a fact that none seem to pay attention too.
Will the Government raise the Debt-Ceiling? Yes, it already has and it occurred the moment Congress passed the Budget and the President signed the Bill affirming the same. Moreover, the Federal Reserve really doesn’t need the Debt-Ceiling to be raised in order to churn the massive Federal Debt and this is because the moment debt is created by the Fed, the U.S. Government is on the hook for it; courtesy of the Federal Reserve Act of 1913. So then, understand that the problem isn’t debt creation which is easily dealt with by simply printing more money; the problem is that the Debt-Load and related interest is ever expanding exponentially faster than the nation’s capacity to pay for it. It is, by design, a mathematically unsustainable process and precisely why it is not solvable! Ever! This Monetary System is not intended to create wealth, it is designed to extract it!
Fund a broken system? Absolutely not however until there are a sufficient number of people willing to starve a system of its perpetual tax and spending binge there will be little change in the process. Is it fixable? Yes in deed it is and quite simply so. The present Central Banking System here in the U.S. is the exact same system that has been exported around the world, save for Russia and China (as of this writing), and in effect the global banking system is united in the very same process of money creation. It just prints it or executes an electronic issuance and suddenly it appears on the balance sheet of a Member Bank – it truly is that simple – and then the Member Bank loans it to you or a Government accompanied by an interest charge for its use. So as to make it all appear quite legitimate, the Central Banks then issue various debt instruments securitized by their respective governments. Thus giving us the Government Debt, (with interest) in favor of the Central Bank who created it, that is consuming the Nations of the planet. When one Central Bank runs short of cash, such as in the E.U., then the E.U. Central Bank prints up a few debt instruments (currency-swaps) and the Federal Reserve, with a push of a button, makes an electronic transfer to E.U. Member Bank. Yes, truly, it is that simple.
Do we need to Fund a Broken System? No, not at all and in fact to illustrate how simple it is to fix the current system and cure the debt all that is required is to merge the Federal Reserve Bank in to the U.S. Government and repatriate all of the Gold and Silver Bullion. Then, immediately pay off all the debt simply by making electronic transfers and then retire all of the Federal Reserve Notes in circulation, equal to the necessary nominal value of the repatriated gold and silver bullion, with a U.S. Treasury Note. Then quickly move to prohibit the Federal & State Governments from ever accumulating debt, save for national emergencies which will require 2/3rds consent of the States; clearly the Senate is not capable of demonstrating fiscal restraint.
Yes the process will continue much as it has until the People have had enough. When the longing for freedoms and liberties lost becomes the diet of those starved for the taste of what has become a painful memory, perhaps then we will revoke the self-indulgent process of excess and I truly hope that day is not far off. There’s so much to do in a world full of infinite possibility and it is time we recover control over defining what becomes of our future.
There is a light in the tunnel! Is it a train headed toward us or is it the sun showing the way out of darkness? I wonder, which of the two is moving forward?
Curtis C. Greco, Founder