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    If Uncle Sam were a real person, would you lend him any money?

    Mac Slavo
    February 16th, 2010
    SHTFplan.com
    Comments (2)
    Read by 109 people

    uncle-sam-brokeSHTF Plan contributor Rick Blaine alerted us to a recent article on Nathan’s Economic Edge which discusses the [elementary] math behind our government debt, future liabilities (medicaid, social security, etc.), interest payments and federal tax revenues.

    On an individual level, it’s fairly easy to understand how debt works. An individual has X amount of dollars in debt, makes Y amount of dollars in income and has to pay Z to service the debt and interest on the loan. If Z exceeds Y, then the debt burden becomes too much and the individual must default on his payments.

    It’s simple math, and we don’t even need to replace the letters with numbers to understand how it works.

    In his article The Impossible Math of Debt Backed Money… and why we WILL take an Evolutionary Step Forward! , Nathan substitutes these letters with the government’s massive debt burden and income (tax revenue).

    You don’t have to be an economist to realize that we have a serious problem.

    If you combine the amount the Treasury spent directly on interest in 2009, $383 billion, and add it to the $1.5 Trillion used to keep rates low, then it can and should be said that the Treasury actually spent at least $1.88 Trillion on interest!

    How much money did the Federal Government take in? $2.2 Trillion is all. Remember, comparing debt or interest to GDP is a FALSE argument, a Red Herring. Income is the only thing that matters when it comes to carrying debt.

    $2.2 Trillion in income, $1.88 Trillion in real interest expense. How are we looking?

    Have you ever been trapped by logic? When this happens to your brain, it will know it. Oh sure, you may try to weasel your way out, but deep inside you will know you’ve been had.

    To those who think this can reverse or that it was a one-off expenditure, you simply do not understand the exponential growth that is occurring, nor will you see the parabolic collapse that is coming.

    The collapse of debt has already begun in the private sector, but the government is simply picking up that collapse and creating a parabolic growth phase of government spending and government debt. Here it is presented in the Fed’s own charts… What exponential growth? This exponential growth:

    That chart spans more than the past century and is experiencing a classic parabolic blow off move that has gone quite vertical. Parabolic moves ALWAYS collapse, it is just a matter of when. When this curve collapses, it is going to be very painful for many people indeed.

    Looking at that chart, is there anyway possible to believe the budget forecasts stating that the deficit is going to start coming down soon? What would that mean to the economy if it really happens at this point? Would the economy still be growing or would it be shrinking? Are those light bulbs I see coming on? Pretty illuminating isn’t it?

    Okay, now we’ve seen that our outlays (spending) are skyrocketing, let’s take a look at the collapse of current receipts, again our nation’s income, but this time let’s view it in terms of year over year change. Here you will see a historic collapse of tax revenue on the Federal level:

    http://martineasley.smugmug.com/Other/Economic-Edge/Federal-government-current/787544800_KYaeQ-L.png

    If that math doesn’t convince you that change is about to come to our monetary system, then nothing will! Remember the housing bubble? “Real estate never goes down,” remember? I was one of the few who was warning about it early on, but now everyone seems to think they saw it coming. Do you see this coming as well? Or, do you believe that it’s possible to “inflate away debt…” even though your money is backed by debt?

    YES, absolutely the rules are going to change, that’s exactly what I’m saying. But I’m also saying that the rule changes will not be simply printing money within the same old framework.

    Unlike a regular individual on the street, the government doesn’t need to worry about debt load, income and interest payments. As is evident from the above charts, rather than decreasing spending, we are actually increasing it. And why not? Our Vice President as well as some (most?) members of Congress believe that we are not going to save our way out of recession, we must spend our way out!

    How long can the charade go on? Perhaps it will go on for many years to come, or maybe it’s finally that time when the rest of the world realizes that we are broke, we don’t produce enough income, and we can’t make our payments without printing phantom money out of thin air.

    If  Uncle Sam were a real person, would you lend him any money?

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    Author: Mac Slavo
    Views: Read by 109 people
    Date: February 16th, 2010
    Website: www.SHTFplan.com

    Copyright Information: Copyright SHTFplan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.shtfplan.com. Please contact us for permission to reproduce this content in other media formats.

     

    2 Comments...

    Vote: Click here to vote for SHTF Plan as a Top Prepper Web Site
    1. Joseph says:

      Random question: Does anyone know why APMEX does not buy back Silver American Eagles that are dated 2008 or older?  Appreciate it.

    2. zukadu says:

      No. I do not lend money to liars, cheats, and thieves. Uncle Sam has lied to me, personally, since 1963 on every major issue of the day; and he has cheated me, short changed me, and stolen my earnings at every opportunity.

      Uncle Sam, sad to say, is NOT trustworthy. One should not lend money to unsavory characters.

     
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