Congressional Budget Office now admits catastrophic debt ‘crisis’ inevitable for America
(NaturalNews) From the behavior of both sides of the political aisle in Washington, you’d think that the nation’s unsustainable debt is no big deal. Otherwise, lawmakers would be clamoring to get a handle on it. But as it is, only a small, small group of fiscal conservatives is working to not only get a handle on the national debt, which is spiraling ever faster out of control, but to reform the entitlement spending that is driving the debt higher.
Obamacare is just the latest massive entitlement that is quickening the pace of America’s bankruptcy, which is why the fiscal hawks are moving to defund it. The same forces who passed that monstrosity, however, are now working overtime to not only keep it the law of the land but to make sure America goes broke funding it.
Is there anything that can impose reason on the unreasonable? Well, the Congressional Budget Office, Congress’ non-partisan fiscal watchdog, is trying. But there is only so much the CBO can do.
Like a broken record, the warnings keep coming
In its latest budget projection, which covers the 10-year period between 2013 and 2023, the CBO offers yet another dire warning that lawmakers ignore at there – and our – peril. The agency says that, based on its current projections, America’s large and growing debt – can you guess? – is unsustainable.
“[A] large and continually growing federal debt …would increase the probability of a fiscal crisis for the United States,” says the report.
What’s more, CBO says that if current laws and policies don’t change, the federal debt could reach 100 percent of GDP by 2038 (it is currently about 73 percent).
CBO also projects that healthcare spending by the federal government “will grow considerably in 2014 because of changes made by the Affordable Care Act” (Obamacare).
Of the current federal debt-to-GDP ratio, the “percentage is higher than at any point in U.S. history except a brief period around World War II, and it is twice the percentage at the end of 2007.”
If laws remain the same, CBO said that it expects federal debt held by the public to decrease slightly, relative to gross domestic product, over the next several years. But after that, deficits would begin growing once more, in no small part due to the government’s major healthcare programs (think Obamacare, Medicare, Medicaid and the Children’s Health Insurance Program, or CHIP).
“CBO projects that the federal debt held by the public would reach 100 percent of GDP in 2038, 25 years from now, even without accounting for the harmful effects that growing debt would have on the economy,” the report said.
Per CNSNews.com:
The word “crisis” appears numerous times in the report, as the CBO explains the negative consequences of burdensome debt. At some point, the report says, investors would begin to doubt the government’s willingness or ability to pay U.S. debt obligations, making it more difficult or more expensive for the government to borrow money. Even before that happens, the high and rising amount of debt “would have significant negative consequences” for both the economy and the federal budget.
And it just gets worse from here
More bad news:
— As the debt-to-GDP rises, there will a larger risk of a major fiscal crisis as well, because investors could begin demanding much higher interest rates to finance the federal government’s borrowing.
— More debt equals less flexibility in Washington to utilize tax and spending policies as a response to unexpected issues or occurrences, like a new recession or a major war.
— Most assuredly, interest payments on the government’s rising debt would necessarily increase – and substantially so – to become one of the budget’s biggest line items, if not the largest.
— As the government borrows more, private investment will fall off, “because the portion of total savings used to buy government securities would not be available to finance private investment,” CNSNews.com reported.
“While boasting of our noble deeds, we are careful to control the ugly fact that by an iniquitous money system, we havenationalized a system of oppression which, though more refined, is not less cruel than the old system of chattel slavery.”
– Horace Greeley
Have you ever wondered why the vast majority of hard working people on this planet does not make enough earnings to have a reasonable standard of living without being in debt? Our personal debt is modern version of slavery*.
* Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation. Historically, slavery was institutionally recognized by many societies; in more recent times slavery has been outlawed in most societies but continues through the practices of debt bondage, indentured servitude, serfdom, domestic servants kept in captivity, certain adoptions in which children are forced to work as slaves, child soldiers, and forced marriage. [ Wikipedia ]
For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.
Some famous quotes regarding money and central banking:
“Banking establishments are more dangerous than standing armies.” — Thomas Jefferson
“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
“The modern banking system manufactures money out of nothing. The process is, perhaps, the most, astounding piece of sleight of hand that was ever invented. Banks can in fact inflate, mint, and un-mint the modern ledger-entry currency.” — Major L.L.B. Angus
“Banking was conceived in iniquity, and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen, they will create enough deposits, to buy it back again. However, take it away from them, and the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain slaves of Bankers, and pay the cost of your own slavery, let them continue to create deposits.” — Sir Josiah Stamp, (President of the Bank of England in the 1920′s, the second richest man in Britain)
“Whoever controls the volume of money in any country is absolute master of all industry and commerce.” — President James A. Garfield
“Those who create and issue money and credit direct the policies of government and hold in the hollow of their hands the destiny of the people.” — Sir. Reginald McKenna, former President of the Midland Bank of England
“Paper money eventually returns to its intrinsic value— zero.” — Voltair (1694 – 1778)
“Give me the power to issue a nation’s money, then I do not care who makes the law.” – Anselm Rothschild
“Money confers social and political power, naturally. Those who have more of it than others use their wealth to dominate or control other human beings who have little or none. But money also gives power to a secret self, enabling it to pursue its own self-gratification in a singular fashion… “Money, therefore, contains a continuous illusion of immortal power – the psychic vehicle for defeating time itself by controlling the future. It is only an illusion; no mortal ever conquers time… “Thus, on a psychic plane, the Wall Street investor accomplishes what the alchemist could not – creating gold from dross, real wealth from mere paper, a living organism from raw numbers… To demystify the Federal Reserve, one first had to understand that money did not require religious faith or buried fantasies or impenetrable technicalities. Money was, above all, a political question – a matter of deliberate choices made by the state.” — William Greider,Secrets of the Temple, pp. 235, 236, 238, 242
The Money is an Illusion
By Dene McGriff
Over the centuries man has used many things for money – cattle, seashells, camels, coffee, jewels and precious metals. Before money, there was Barter – two people trading something the other wanted. Commodities and finally metals in the form of coins were introduced. Paper money originated with the goldsmith who gave receipts to wealthy citizens for storage and safekeeping. The goldsmiths realized that the receipt could be used in commerce since it could be redeemed in gold from the goldsmith. Thus, modern banking was born. Then they realized that the demands for redemption were relatively small so long as they kept a minimum in reserve. Thus fractional-reserve banking was born. If they kept ten or fifteen percent on hand, they would have enough to redeem any demands on the bank. For centuries, European privately owned banks would issue paper bank notes backed by gold reserves. The system was transferred to America. Gradually, the value was transferred to the demand deposits which were redeemable by personal drafts or checks and gold was all but forgotten.
During the 18th, 19th and early 20thCenturies, periodic failures plagued the banking industry. Experiments with fiat (paper) money always ended in inflation and devaluation of the currency. After the Civil War, the National Bank Act tried to regulate bank notes issued by state banks but the public at large had little confidence in this chaotic banking system. Then along comes the Federal Reserve Act in 1912 to restore order and public confidence in the monetary system.
Now when the Federal Reserve began, the paper money was backed by gold or silver up to a small portion of the face amount. The problem is that the fractional reserve tends to become smaller and smaller until it is reduced to nothing. And even to this day, fiat money is the way governments create money without taxation. It has nothing of tangible value to offset it so let the printing presses roll
The Alchemy of the Federal Reserve
Money is created out of absolutely nothing. Most texts teach that money is created first by someone making a deposit and then the bank waits for someone to come along and borrow it. That is not true. Money is created the instant it is borrowed. In other words, debt creates money. The government creates bonds (debt), gives them to the Fed which uses that debt to create money. There is no other value attached to it. It is the act of borrowing which causes it to spring into existence. “Banks are creating money based on a borrower’s promise to pay (the IOU)….Banks create money by ‘monetizing’ the private debts of businesses and individuals.” (I Bet You Thought, Federal Reserve Bank of New York, p. 19). Now I am going to quote from Griffin’s book to explain how the process works. Money creation is a circular concept and hard to grasp so please stay with me. Once you get it, it is absolutely shocking!
“The entire function of this machine is to convert debt into money. It’s just that simple. First, the Fed takes all the government bonds which the public does not buy and writes a check to Congress in exchange for them. (It acquires other debt obligations as well, but government bonds comprise most of its inventory.) There is no money to back up this check. These fiat dollars are created on the spot for that purpose. By calling those bonds “reserves,” the Fed then uses them as the base for creating 9 additional dollars for every dollar created for the bonds themselves. The money created for the bonds is spent by the government, whereas the money created on top of those bonds is the source of all the bank loans made to the nation’s businesses and individuals. The result of this process is the same as creating money on a printing press, but the illusion is based on an accounting trick rather than a printing trick. The bottom line is that Congress and the banking cartel have entered into a partnership in which the cartel has the privilege of collecting interest on money which it creates out of nothing, a perpetual override on money which it creates out of nothing, a perpetual override on every American dollar that exists in the world. Congress, on the other hand, has access to unlimited funding without having to tell the voters their taxes are being raised through the process of inflation. If you understand this paragraph, you understand the Federal Reserve System. (Griffin, The Creature from Jekyll Island, p. 193)
“The federal government adds ink to a piece of paper, creates impressive designs around the edges, and calls it a bond or Treasury note. It is merely a promise to pay a specified sum at a specified interest on a specific date…this debt eventually becomes the foundation for almost the entire nation’s money supply. In reality, the government has created cash, but it doesn’t yet look like cash. To convert these IOUs into paper bills and checkbook money is the function of the Federal Reserve System.
An instrument of government debt is considered an asset because it is assumed the government will keep its promise to pay…so the Federal Reserve now has an ‘asset’ which can be used to offset a liability. It then creates liability by adding ink to yet another piece of paper…the “Federal Reserve Check”…
There is no money in any account to cover this check. Anyone else doing that would be sent to prison. It is legal for the Fed, however, because Congress wants the money, and this is the easiest way to get it…The process is mysteriously wrapped up in the banking system…The Federal Reserve check is then deposited in one of the Federal Reserve Banks…
These checks become the means by which the first wave of fiat money floods into the economy. (For detail, please see Griffin, pp195-197)
These Federal Reserve Checks become commercial bank deposits.
On Aug 10th, 2011, the stock market dropped over 500 points again after having gone up 450 the day before and down 640 the day before that. What is this all about? Why so much confusion? Where is it going? Is America on that long slide down to “third world-dom”? Is China taking over as top dog?
I have been writing on the economy for quite a few years now. I called the housing bubble back in 2004, the derivatives problem which led to the crash in 2008 and the continuing deflation (depression) the entire world is experiencing. So what is the problem? Is it the US debt? Does it have anything to do with the US? Will America be destroyed? I would use the analogy of attacking a Chihuahua with a baseball bat – one swipe and he’s a goner. Ever try and attack an elephant with a baseball bat? The elephant will probably survive just fine but the attacker may not. America may have problems but they are nothing compared to the rest of the world. Bottom line is that we are much more able to absorb the blows than they are.
What is the Problem?
Let’s start with today. Is the problem the credit downgrade of the U.S. by Standard and Poor’s? No, in fact Treasury sales are better than ever (the markets aren’t that stupid) and long term interest rates continue to drop. No, it is Europe and specifically France. France has been supporting Greece and there isn’t enough money there to save them. The stronger nations of Europe have been trying to save the weaker PIGIES (Portugal, Italy, Ireland, Greece and Spain) but France and England are not far behind. Does this floundering European Union sound like the burgeoning power that will rule the world one day as some Christians think? They can hardly agree on anything. The EEC is a joke and it is disintegrating before our eyes.
So, you say, China holds all the cards and yes they have a pretty good hand. But I have news for you, China has 1.5 billion problems: an aging population with fewer women (since baby girls were often eliminated), not to mention the logistics of providing fresh food and water, housing and other services for huge population. Corruption and cronyism, demography and regional inequities will overwhelm and destabilize the new Asian miracle. The same might be said to a slightly lesser extent for India.
So who does that leave on top? You guessed it. As we have said in the past, there is only one nation known as prophetic Babylon which matches this picture: apostate Christian, the great consumer nation, the greatest military power, and a friend of Israel (at least for now). So the economic demise of America/Babylon may be greatly exaggerated. Let’s look at the facts as to why America is nowhere near falling into oblivion.
There is a tremendous amount of debt all over the planet – corporate debt, government debt, local debt, personal debt, bank debt, not to mention the so-called unfunded liabilities (also an international problem) of retirement, medical care for the poor and elderly, unfunded pensions, etc. Nearly every country in the world is having the same problems that we are but it is much worse. The government “solution” is to print money (increase the money supply), both in cash and credit markets and just spend, spend, spend. Debt is parlayed and expanded in the form of derivatives. One would think that since the 2008 meltdown fiasco we learned our lesson, but we haven’t and the derivative debts continue to grow exponentially. The world is awash in funny money – fiat currency with no backing, but rather than causing hyperinflation, we see deflation which is the financial enema solution to excess liquidity. Dead broke businesses, banks and factories go out of business and local governments and countries default (just don’t pay their debt). The irony is that the world knows that America will never default and that is why the dollar is golden – even if they have to tax and take away nearly every dollar earned. Nations flock to buy US Treasuries. They can’t get enough even when they make nothing on them. Those are the facts.
So in this article, we want to look at the debt ceiling crisis, why there isn’t enough money in the world to bail out the PIGIES, what will be the result of this failure and where we are headed as individuals.
From a prophetic point of view, we see that America will not decline commercially. Up until the very end America will be the leading economic and military power. However this doesn’t mean all goes well for you and me. All of the crashes and bailouts have been at our expense. More on that in a minute – the $16 trillion heist! The long term trend is that the rich will get richer and the poor will get poorer and the middle income will continue to slip into poverty. Right now, I am making one sixth of what I made twenty years ago. I have three grown children and all are struggling to keep their heads above water.
The middle class is shrinking and here are stats to prove it.
83 percent of all U.S. stocks are in the hands of 1 percent of the people.
61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.
66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.
36 percent of Americans say that they don’t contribute anything to retirement savings.
A staggering 43 percent of Americans have less than $10,000 saved up for retirement.
24 percent of American workers say that they have postponed their planned retirement age in the past year.
Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.
Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.
As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.
The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.
In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.
The top 1 percent of U.S. households own nearly twice as much of America’s corporate wealth as they did just 15 years ago.
In America today, the average time needed to find a job has risen to a record 35.2 weeks.
More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.
the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.
This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.
Approximately 21 percent of all children in the United States are living below the poverty line in 2010 – the highest rate in 20 years.
Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.
The top 10 percent of Americans now earn around 50 percent of our national income.
So what are the prospects for your future? Not very good. I know you don’t like to hear this but all of the bailouts have occurred at your expense. Let’s talk about the bailouts and stimulus. Who caused the crisis to begin with? We all now know that it was the banks and their reckless derivatives. Who got bailed out? How much money did you receive? Nothing? I didn’t either. Imagine that. But read on. It gets much worse for us little peeps even though America will continue to prosper.
The Bailout and Dismantling of Europe
Look at Europe. Greece already received $153 billion and now the Eurozone and IMF are providing another $152 billion. Where does that money come from and who benefits? It comes from tax payers. The bailout doesn’t go to the Greek government. It is just passing through to pay the banks to pay the 14% interest they already owe on their $476 billion in original debt! This guarantees another default which will filter back through the banking system in Europe, the US and other countries. Greece is very small potatoes. It is 38th in size, $318 billion in 2010, whereas Italy is 10th and Spain 13th in size with a total economy of nearly $3 trillion. Looking at it another way, the chart on the right shows the size of country debt by GDP. We hear about the PIGIES all the time (Portugal, Ireland, Italy, Greece and Spain), but look at the other countries that are in equally bad condition. Countries like the UK, France and Germany are the ones providing the loans to the PIGIES, but when the PIGIES default, who will cover those countries? One guess is allowed. Guess who will be left to save them all?
Analysts know that Italy and Spain are close to default and will soon be followed by England and France. It isn’t a matter of the amount of debt. Japan and the U.S. have shown that they can and will pay it back. It is whether they can finance the debt and at what price. The U.S. and Germany finance their debt for practically nothing (in the 2 percent range) whereas the PIGIES are paying all time highs of 14 to 30 percent. These are holes they can’t dig out of and as one country after another defaults, Europe will be torn apart. But will the Euro die? Probably not. Once the PIGIES drop out of the EU, then the EU will survive. The PIGIES however are doomed because they won’t be able to finance their debt. I would like to emphasize at this point that Europe and the rest of the world will look, perhaps grudgingly, to America to save them and establish order.
America and the Debt Crisis – Smoke and Mirrors!
America has a debt problem, no doubt about that and neither party faced it. The so-called $4 trillion in cuts are not cuts at all. It is not a cut in spending but a cut in the increase. The deficit was slated to double from $14 to $28 trillion over a ten year period. The agreement was to cut that increase in debt back to only $10 trillion. The graph on the left shows the growth in the national debt through 2020 at that rate.
It shouldn’t take a rocket scientist to realize that this is not sustainable. One lesson we should have all learned from the recent debt ceiling debate, is that if the rating agencies downgrade the US economy, we pay a higher interest rate on our debt. Let’s look at some round numbers for a moment. If we say that our national debt is $14 trillion and we pay 2 percent on that debt that makes our debt payment a mere $280 billion and everyone agrees that is okay. That represents about 8 percent of the total Federal budget. Historically, we paid 8 percent on our national debt. That would quadruple the amount spent on debt. You do the math. What would the debt payment be at 8 percent on a $24 trillion deficit? The more you tax, the more you grow government, the more of the GDP allocated to government, the smaller the productive economy and the higher the tax rate to pay for this massive debt. This is why some legislators are screaming about debt and wanting a balanced budget! The “compromise” reached by Democrats and Republicans did not limit spending but merely the size of the increase in deficit spending.
So what does this mean? Bottom line it means massive tax increases if the administration has its way or massive cuts in government programs such as the military, Social Security, Medicare, Medicaid and Education.
The question you all may have is how did we get into this situation?Where has all the money gone? What about the stimulus and bailouts? According to Bloomberg News in 2008, the total bank bailout amounted to $8.5 trillion. According to the first audit ever done in the 99 year history of the Federal Reserve, they loaned over $16 trillion to US and foreign banks. Now think about it, the federal banking system is run by a private banking cartel called “The Federal Reserve” which oversees our financial system made up of dollars – those little greenbacks that are backed by the “full faith and credit of the United States of America.” We’ve heard those words before but what do they really mean? “We the people” are the ones backing these huge loans. Please read this article about the “Greatest Bank Robbery”. For more information on the Federal Reserve, please see the article I wrote some years ago [ Modern Alchemy: The Money Illusion ].
Some of you may think that I am contradicting myself. How can I say America is strong when it is destroying itself? There are two answers to this question. First, America is still golden to the rest of the world. In spite of the downgrade in the credit rating, interest rates have gone down rather than up and the world is flocking to buy our debt. Second, it would appear that the long term plan is to destroy all fiat currency and come up with some kind of digital world currency in order to help establish the New World Order. It is also impoverishing those of us in the middle while the rich seem to grow richer.
Where do We Go from Here?
I would remind Christians that the book of Revelation clearly indicates that there will be an increasing gap between the rich and the poor, a subject I explored in great detail in the chapter on the four horses of the apocalypse. Please see the section on the black horse. Most Christians are also familiar with the absolute control the Antichrist establishes by requiring everyone to take the Mark of the Beast in order to buy or sell (Revelation 13:13-17) so the end of the age will have not only a one world government but a one world economy – talk about going global!
There is some truth to the debt crisis, but like most crisis in America this is manufactured, apparently designed to rob from the tax payers. We are not a PIGIE. We do not have the tremendous population pressure experienced by China or India, pressures that will eventually tear them apart and stall their miracle economies. America still has tremendous natural resources and a population that is being molded into a patriotic frenzy that highlights America’s “Manifest Destiny” to save the world (whether they want saving or not). There will soon be another Middle East war in Israel, a defense treaty with Israel, followed by a more massive civilization conflict between the Islamic and post-Christian worlds and the ultimate rise again of China and the powers to the East as armies mass for the final conflict in the battle of Armageddon. We know the sequence of events.
Meanwhile, don’t trust in your 401K’s, your IRAs, pensions, investment or even gold. The world is having birth pangs and a new era is about to begin. Unfortunately, the Laodicean Church will be found Lukewarm and asleep in their “blessed rapture hope” of escape. We are closer than we think and it is no coincidence that the year 2012 finds prominence throughout the world, and, as you will soon see, even in the sacred Scriptures. Doug is about to present some earth shattering revelations. Now is the time to not look to Mammon or anything in this world for our salvation, but to get out of the little box that has programmed our minds and open our hearts and minds to fresh revelation that God desperately wants to share with us – that generation spoken of in Daniel 12 that has a “need to know” what is coming down and why. This is the generation of destiny, of sacrifice and of glory. We need to humble ourselves before Him and present ourselves a holy sacrifice and let Him speak to us and reveal His purposes to us.
During the 18th, 19th and early 20thCenturies, periodic failures plagued the banking industry. Experiments with fiat (paper) money always ended in inflation and devaluation of the currency. After the Civil War, the National Bank Act tried to regulate bank notes issued by state banks but the public at large had little confidence in this chaotic banking system. Then along comes the Federal Reserve Act in 1912 to restore order and public confidence in the monetary system.
