By Simon Johnson
In the nation’s latest fiscal mood swing, the mainstream consensus has swung from “we must extend the Bush tax cuts” (in December 2010) towards “we must immediately cut the budget deficit.” The prevailing assumption, increasingly heard from both left and right, is that we already have far too much government debt – and any further significant increase will likely ruin us all.
This way of framing the debate is misleading – and very much at odds with US fiscal history. It masks the deeper and important issues here, which are much more about distribution, in particular how much are relatively wealthy Americans willing to transfer to relatively poor Americans?
To think about the current size of our debt, start at the beginning of the American Republic. (For a very short history of US government debt, listen to my conversation with NPR’s Guy Raz from this weekend; we cover more than 200 years in about 3 minutes; if you want more detail, look up the annual debt numbers for yourself at Treasury Direct).
On the first day of 1791, the recently founded US Treasury had nearly $75.5 million in outstanding debt. This was roughly around 40 percent of GDP, a large amount of debt relative to the size of the economy – but not out of proportion to what we have become accustomed to in recent decades. However, relative to revenues, the US debts were enormous – about 20 times the amount that the government was then capable of taking in. In contrast, the total Treasury debt outstanding since 1950 has fluctuated between 30 and 90 percent of GDP, but the debt-revenue ratio was never worse than 5 – and in recent decades it was in the range of 2-3 times.
The debt-revenue ratio matters because this is relevant for whether the country can readily service the debt. Very few countries default because they can’t afford to pay their debts – either to their own citizens or to foreigners. Defaults occur when the political process in a country determines that, for whatever reason, the government cannot raise sufficient revenue.
At the beginning of the American Republic, this was the central fiscal fight – primarily whether Alexander Hamilton would succeed in imposing a tariff on imports as a way for the federal government to raise revenue and thus, among other things, create a way to “fund” the debt (meaning cover the interest and, over time, pay down the principal). The tariff revenue fight was nasty and drawn-out, pitting North against South in a way that would generate resentment and friction throughout the nineteenth century.
After losing numerous votes in the House of Representatives, Hamilton eventually prevailed – part of a larger deal with Thomas Jefferson and James Madison that was very much about who would pay what amount to create and sustain the new federal government. That debate was also very much about what kind of federal role the political elite wanted to achieve.
Once this political deal was done, US government obligations moved quickly from widely reviled status to being perceived as relatively safe. Fiscal mood swings go both ways.
The main difference between the debate then and now is with regard to spending. In the early 1790s – as after the Civil War, World War I, and World War II – the spending surge had already taken place and the issue was how to move the government into surplus and bring down the debt.
Previous U.S. fiscal debates have therefore very much been about the distribution of tax burden within a pro-growth system; this again needs to be a top of our political agenda – which was one reason I opposed extending the Bush-era tax cuts. But on top of this traditional issue, we are now confronting more directly than ever the question of redistribution that takes place through government spending.
In Growing Public: Social Spending and Economic Growth Since the Eighteenth Century (published in 2004), Peter Lindert traced out the changes in attitudes and actions towards redistribution that have taken place in the United States and other countries since the 18th century. The pendulum of opinion has swung many times and the US has followed a somewhat different path from other relatively rich countries. But now we find ourselves again about to debate the fundamental Hamiltonian questions: At the federal level, who will pay how much, to whom, and for what exactly.
Most of our government spending, now as always, goes on wars and transfers to relatively poor people and to older people. The military spending will come down – if we can end the wars (as we did in the past). The social transfers were constructed in a more open-ended fashion – and our long-term budget forecasts account for this form of future spending in a more transparent and more honest way than we do for the probability of future wars or financial crises.
The real budget debate is not about a few billion here or there – for example in the context of when the government’s “debt ceiling” will be raised. And it is not particularly about the last decade’s jump in government debt level – although this has grabbed the headlines, this is something that we can grow out of (unless the political elite decides to keep cutting taxes).
The real issue is how much relatively rich people are willing to pay and on what basis in the form of transfers to relatively poor people – and how rising healthcare costs should affect those transfers.
The consensus for Hamilton, Jefferson, Madison and their contemporaries was simple: No significant social spending was administered by the federal government. Lindert estimates social spending (including on “poor relief” and public education) in the United States even by 1850 was less than 0.5 percent of GDP.
We’ve come a long way since 1792, but the question is: How far exactly? And are we willing now to debate the real issues: taxes, healthcare costs, and what kind of redistribution we think is fair and sustainable?
An edited version of this material appears this morning on the NYT.com’s Economix blog; it is used here with permission. If you would like to reproduce the entire post, please contact the New York Times.
The Baseline Scenario 
Spot on, Simon.
We must have a national security rule that prevents us from discussing these issue in relationship to what other countries are doing. Otherwise we’re comparing one particular orange with itself.
I don’t really want to discuss “redistribution.” I don’t believe the government should be in the business of redistribution.
But globalization seems to have fundamentally and perhaps permanently altered the economic flows in this country away from the many and into the hands of the few. THIS is unsustainable, dangerous and wrong.
What I don’t want is for the government to redirect the sluices into itself, and then distribute as it sees fit. What I would LIKE to see is for government policies (through tax incentives, penalties, etc) to force business to pay its workers more and its top executives less.
The elite has broken the social contract by hoarding more and more of the nation’s wealth. But we have to honor Americans’ sense of fairness: rewarding hard work, not waiting for government “redistribution.” Work should pay. Period. Government should not set itself up as the paymaster for the masses. I think this is an uncharacteristically sloppy piece, Mr. Johnson. You are a great economist and I tend to agree with your arguments. But they should be framed in such a way that people with a conservative/libertarian tilt can buy into them. This one I really can’t.
The Fed extended its balance sheet by $7 trillion or so. Correct my figure if it’s off. That money was used to create new loans, it goes to big banks and from thence to investors. Investors are exclusively the wealthy and the uber-wealthy. So … there is massive redistribution of wealth going on – from the average person to the wealthy person. So in that sense, redistribution of wealth by the Fed is a bad idea, I agree. First step is to give back the $7 trillion, and the other $15 trillion or whatever the wealthy have received from the Fed without earning it over the years. Then give back all the government welfare to big corporations that has enriched the wealthy and not the country. Then give back all the land and property that was redistributed to the wealthy from the people. Once the wealthy (who will no longer be wealthy I think) have only exactly what they have earned through actual productivity and contribution to society, from actual value added in some production chain, such contribution being acknowleged by the actual payment from other people for value added, then we will have rolled back redistribution of wealth in this country. A man like Warren Buffet for example might have eaqrned maybe a few hundred thousand in his lifetime, as an investment advisor or whatever, actually adding value to other people such value being acknowleged via capitalism through payment for his services. But he has billion – these are dollars created from thin air without the permission of all other dollar holders – this is redistribution of wealth on a massive scale, from the productive and useful to the unproductive investor.
God, are you kidding? Redistribute from the rich to the poor? We would be happy if they just stopped redistributing our money supply to the rich, or backed it off by a few trillion. Are you kidding me? From the rich to the poor because the counterfeiters are being asked to pay 15% tax on their counterfeit money creation?
“The real issue is how much relatively rich people are willing to pay and on what basis in the form of transfers to relatively poor people”
Just crazy. Where do you think wealthy “obtained” their money? From actual value added to society? Do you know any wealthy people – I do. They obtained their money from investor payouts engineered by the Fed. This is directly traceable to new money creation by banks and Fed. Bill Gates for example is a very rich man. One assumes he got rich providing a product, Windows, to people who buy it. In fact, his wealth is stock value. In other words, he is “rich” because the Fed is counterfeiting money at an astronomical rate, and that money is being used for astronimcal unreasonable investment in things like stocks. He might still be rich if his wealth came from taking a small percentage of Windows sales, but not so rich. Not even in the same magnitude. We would be talking millions, not billions. Then you might have a point, if all rich people were people who actually provided something to society of value and were rewarded for that. From my personal experience, maybe 1% of wealthy people provide some utility to society, much less than their wealth, but at least some. The rest are beneficiaries of a massive wealth redistribution engine That is an example of how all the “wealthy” operate today – it is theft. When the Fed creates money, that money is theft from the capitalist system. So at this point just to stop this theft, that is, stop any new creation of money not backed by actual social value, would be a start. We have trillions and trillions flowing from the people to the rich in illegal counterfeit payments, and what are you talking about when you say transfer payments to the poor? Completely either a liar or an idiot, or someone with no financial background.
A great way to equalize the system would be universal healthcare for all. We could then “redistribute” half the lawyers and accountants into professions which actually benefit society as a whole. Let’s face is, most mega rich people would be willing to pay more taxes – but most corporations won’t even pay their share. Stop classifying corporations as individuals and tax them (oh my gosh, there goes another third of the lawyers and accountants).
Sharn… couldn’t have said it better myself and I have said it alot!
Starting back in the 18th century, continuing to about 1980, there was a firm American consensus (sometimes explicit, sometimes only implicit) that we had a national interest and purpose against creating a new aristocracy of inherited wealth and power here in the US. The American ethos was firmly anti-aristocracy. Those of wealth, of course, spent heavily to defeat that ethic by propagandizing against it, their hired mouthpieces making up all kinds of fantastic myths like “trickle down”, “low taxes increase revenues”, “low tax rates promote technological innovation”, etc. All are demonstrably false.
Starting in about 1980, these ideas gained real traction outside the aristocracy of wealth, to the point where you now have working-class conservatives mouthing these same myths, as if they expected to be billionaires tomorrow. Our inequalities of income and wealth (they are NOT the same thing!) are now getting dangerously out of line, with all kinds of social hazards for the US. “Redistribution” should not be a dirty word in the US — it is our way of ensuring that we do not allow aristocracies to arise or persist.
“God, are you kidding? Redistribute from the rich to the poor? We would be happy if they just stopped redistributing our money supply to the rich, or backed it off by a few trillion.”
Sharn Cedar — if you are not writing for publication, you oughta be. I would hawk your books on street corners.
Until you have a publisher, keep those comments coming!
“But on top of this traditional issue, we are now confronting more directly than ever the question of redistribution that takes place through government spending.”
I stopped reading after this sentence.
The Man with the Gold rules, regardless of how he came upon that gold. If he gathered his gold from the teeth of old, sick people or through putting crippled children to work in the mines, it could be considered “smart”, don’t you think?
1. Tax dollars – collected from all citizens, and collected daily on nearly every human activity – are put to use in protect the rich from loss all the time. Witness the abolition of the Estate Tax. Who did the Estate Tax effect? Approximately 400 uber-wealthy American taxpayers – who no longer have to pay it. Good for them.
2.) Tax dollars – collected from all citizens, and collected daily on nearly every human activity – are put to use to protect the solvency of the nation’s biggest banks. An insolvency created by wealthy men gambling and losing, rather than by building and investing. But they and their wealthy investors were made whole, unlike Joe Citizen who loses at the casino in Vegas. Good for them.
3.) Tax dollars – collected from all citizens, and collected daily on nearly every human activity – are put to use giving big business incentives and benefits to bring jobs to communities. Jobs which increasingly pay less, offer fewer benefits, and create poorer consumers. Illogically and irrationally, businesses now place a lower “value” on employees (A “cost” or “liability”) than it does on a worthless piece of paper (an “asset”, like fiat, for example. ;)). Good for them.
4.) Tax dollars – collected from all citizens, and collected daily on nearly every human activity – pay subsidies to the wives of wealthy bankers – Christy Mack and Susan Karches – so they, too, can get into the gambling business, risk-free. Good for them.
Are these the sort of “re-distributions” you were referring to, Mr. Johnson, or were you referring to all those underemployed and unemployed welfare mothers of color? Maybe you were referring to the sick, old retirees who sit at home watching tv because there’s no money to get out in the world and pay those daily taxes, thanks to their generous employers and generous government?
One could look at it as “redistribution”, I suppose.
Or one could look at it as clawback.
@jakepgh: Up until about 1980 the American “aristocracy” depended completely on the American consumer for all sales, and on American workers for all production. Thus, regardless of any “anti-aristocracy” ethos among the public, the aristocracy had a direct financial interest in maximizing the buying power of American consumers by maximizing employment, worker pay and even transfer payments, so that lots of well paid workers could provide a big market and thus big profits for the aristocracy. Once globalization really kicked in, about 1980, this virtuous cycle was no longer needed because the aristocracy could from that point forward, source and sell anywhere, and thus began the propagandizing against the anti-aristocracy ethos. I lived through this time and watched this happen at the beginning of my engineering career.
@BillGilwood: I don’t disagree with much you say. What’s peculiarly American since 1980 is that middle- and working-class people have bought into this pro-aristocracy ideology to the point where our electoral politics are very evenly balanced. Some of this has been accomplished by playing cards of race, religion, “social issues”, anti-immigrant hysteria, etc. And it has been enormously enhanced by the capture of mass communications by the fascist aristocracy.
This trend will eventually come to an end. It can end relatively well through progressive politics (as in the 1930s), or it can end very, very badly when the have-nots eventually realize how they’ve been played for dupes. As Mark Twain said, “History does not repeat itself, but it does rhyme.”
As noted by a number of commentors (Leviathan, Sharn Cedar) the idea that we need more redistribution, when it is obvious that every dollar redistributed to the poor is matched with …what, 1000 or 10,000 or a million dollars “redistributed” to the financial elites??? – is a losing proposition for the poor. This “redistribution” makes them poorer. Ask yourself this – what would really help a lower income person:
1. if house prices were cut by 75% and rents dropped by 50%?
2. They get another 6 months of unemployment, another 50$ a month in food stamps? (redistribution)
Funny how the debate (redistribution) is for nickel and dimes, while protecting the assets of bankers is the be all and end all of Federal policy. Stagnant wages for the poor for 30 years is unaddressable (funny how the word deflation is not used to describe it) while any thing that harms an asset of a banker must be battled with every tax dollar available.
If we can’t raise the wages of the poor, than why can’t we lower the prices of where they live??? Oh yeah, that would be bad for the financial system
At 17:22 in last Sunday’s “Meet the Press” NY mayor Bloomberg unveils a new way of thinking about the deficit problem. http://www.msnbc.msn.com/id/3032608/vp/42847925#42847925
Taking his thoughts one step further, instead of parsing the deficit, a more productive and satisfying approach is to take a proactive problem solving approach. Instead of trying to remove the causes of our dissatisfaction with the current situation, e.g. inequality of wealth and income, the deficit, unemployment, etc., a reactive approach in which we walk into the future facing the past, a better approach is to specify where we want to go and try to get there as efficiently as possible.
Focusing on deficiencies of our current situation tends to view each deficiency independently. Many deficiencies thus appear difficult to remove.
Focusing on an ideal reveals the relationships between different things that can be done in the future, tending to make us deal simultaneously with sets of interacting threats and opportunities, to treat them as a whole, as a system of problems. This is planning. Proactive planning consists of designing a desirable future and finding ways of moving toward it as effectively as possible.
For instance, medicare and medicaid are seen as deficiencies rather than steps on the way to comprehensive wellness for all citizens. Looked at from this perspective it is obvious that the way to the ideal is not to decrease the money spent on these programs – which only increases overall cost and suffering – but to work toward comprehensive wellness.
Idealized design facilitates widespread participation of all those who are potentially affected; tends to generate consensus among those involved; when explicit agreement is reached on ultimate values, differences over shorter-range objectives and means are more easily resolved.
@fresno dan: See Wm. Grieder’s “Come Home America” for a good examination of how 30 yrs. of FRB policies to control inflation has had the effect of keeping wages stagnate for working Americans. Also, why does our govt. allow (or encourage) behavior of large multinational corporations that is contra the best interests of America? Can you say “peasant revolt?”
Do not overlook the purchase of our national legislature, the executive and SCOTUS by corporate money and the really wealthy. A good example is the Bankruptcy Act of 2006 which was a welfare act for the financial and credit card businesses–it was and is extortion. Just try to file for bankruptcy now. This act was fraudulent on its face. Corporations have no controls, they are run by grossly paid CEOs and their trolls, ignoring stockholders who supposedly own the corporation–a standard lie. So who does control corporations, which are really multinational syndicates run and owned by elite who owe no allegiance to the US for any reason. And these corporations and wealthy essentially pay no taxed through offshoring. The only possible rectification for this is through the government, IF we can grab back control for a while. This issue is central to the upward redistibution which has been taking place since the 1970s. At present, corporations are thought to be sitting on 2 trillion dollars, a capital strike against the middle and lower classes. We have class warfare and it is against us. When do we really fight back and limit the depredations of corporations and their wealthy owners? Not soon enough.
The “Big Six” have a whole lot of mortgage debt to get off their balance (1st, 2nd, or 3rd off-books [?]) sheets. The housing market keeps crashing, or just going lower and lower with 25pc +/+ of american homeowners seriously under water.
Isn’t it in all reality – to say the least, that eventually most if not all will walk away or file bankruptcy just to get this financial burden off their backs. If not their dead in the water for a generation, unless of course their bureaucrats (and that’s not hallow-ground anymore), so what would you do…get out of Dodge?
Think of the trade-offs: mobility, and greener pastures! Jobs follow demographics to the “T” or vise-a-versa…with a fresh new start.
But wait…the banks won’t let that happen until they can “Mark-to-Market” your foreclosed home for pennies on the dollar. Lowering their debt-to-equity ratio too borrow more at “0 %”, buying out more unfortunate “American Dreams” at a discount…all the while D.C. looks the other way.
Repurchase my loss at a profit is what the “Communist were good at,…?
Thankyou James, and Simon
There is NO way up and out of this economic crisis, if, if, if if —- we do not do the following:
1) Eliminate/Suspend ALL Interest FROM the ENTIRE Economy. In fact, this will END the Crisis PAINLESSLY in as little as 24 Hours.
SEE: http://www.perfecteconomy.com/
2) Instituted the Sound Money Idea located here:
http://www.ivamu.com/pg1.htm
I mean, if we truly desire to see this entire mess swiftly brought to a HALT, then this 2 step solution is what we MUST do, regardless of ALL else.
America was known as the “land of opportunity” and boy was it for a lot of people, mostly the biggest con artists, criminals, and thugs. People who have no morals and a ton of ambition will do anything to rise up so what do we expect? The biggest, toughest, best liars, con artists, robbers, etc. will take over. Maybe it’s just human nature? So here we are with the smart boys having looted the nation, sold our real economy to China etc. and living on the brink of a total police state with a totally corrupted “government” while the fractional bankers sit anywhere on earth counting the piles of money they stole. The founding fathers warned us about bankers! Andrew Jackson tossed them out and Lincoln and Kennedy tried to bypass them but people didn’t pay attention and the crooks won. America is over, the cops are working for the criminals, the people are too weak and dumbed down to do anything, England wins! See Barclays Bank controls most of the private Fed/IRS scam, State Street in Boston comes in a distant second and Warren Buffet has a slice of Wells Fargo but it’s Rothchild and the British Lords, they have us all over doing their dirty work while fleecing us six ways til Sunday. We could nuke England and shoot everyone on Wall St. and fumigate DC but just think of who is really at the very top….high class British women who only care about ridiculous hats! That’s right, English hats. That’s about all it ends up being for. As I worked for NCS Pearson bought out just before that 911 “attack” by Pearson Plc. and they had GW Bush hand us all these no-bid cost plus contracts like to set up the TSA with Lockheed(overbilling by hundreds of millions!) No Child Left Behind linked to Federal funding and military recruiting, Psych. Corp. a nasty little place which determines who is a security threat, can get a job, who will keep their mouth shut, and who should be locked up(too honest) or call crazy. It goes way deeper than 13 bankers it’s global and Pearson operates in over 64 countries! Bilderbergers, global banksters and they’re going to chip everyone of you like cattle and you’ll bend over willingly say in about 30 years. Almost a done deal! Think credit cards-global currency already then add in the global sattelite grid for GPS and command and control and RFID etc. then refine it tweak it and it’s done. Can’t even park at the airport without their credit card now-cash doesn’t work in the machine-no people! It will be automated and you object? They’ll just turn off your chip! total control! Oh and you could burn down all of DC and what would that matter? They would laugh in Basel or Davos and raise your taxes to pay for the damage then loan you the “money” at 12% to rebuild.
James J. Hill’s ghost-“the Empire builder with my old buddy JP Morgan roasting weenies with the devil here in Hell.
Thats quite some juggleing your doing there Ken, do you have time for any R&R out there with the wild animals? Do they understand?? Or are they just your next possible meal???
AS far as the sound money is concerned, its easier to just put the silver back into coin and circulate it.
Simon, as usual, I wholeheartedly agree with your analysis. Sadly, those pols in Washington (and elsewhere, as we enter another election cycle) wish to obfuscate on nearly every point in favor of arguments which fail the rational sniff test and don’t actually address the problem head on. Almost every real (non-political) expert has seemed to agree that the path to deficit reduction must be paved with both Federal spending adjustments (note that I don’t say “cuts” in the traditional application of that term) and changes in taxation (note that I don’t say “reductions” in the tradtional sense, once again).
There is online a wonderful exercise which anyone can do to create their own budget at http://public-consultation.org/exercise/, and, for those willing to spend 15 minutes to an hour, it is easy to see that there are useful changes to be made. There is no question that there are lots of irrational answers (such as those offered by both Ryan and the White House Budget Office), or, more clear headed choices which can be brought to bear and clearly evince themselves by doing this simple exercise.
Sadly, if Congress is simply left to do its business as usual, no rational solution is likely to be proferred, largely because such a solution would result in harm to its supporters in the election cycle. Almost any economist will grant that our economic recovery is tentative and fragile at best, or that we will walk a narrow line between progress and regress for many more months, if not years.
I’m not even particularly interested in tax bracket changes, per se, but rather a substantial restructuring of current tax law. With in excess of 15,000 pages of the current tax code (which serves to create immense loopholes and subsidies for the wealthy individual and corporate interests), we need to talk about tax reform on a far grander scale than has previously discussed. Anything less would simply curb a small percentage of the vast inequities which presently exist without having any serious impact on revenues. Many tend to forget that for more than two decades following WWII the top earners were taxed at 90%. Obviously, that would not work today, and is probably not just unnecessary but might result in huge amounts of wealth moving to other places on the planet, and thus be counterproductive.
As to Federal spending, we need to do everything we can to reduce, by half or more, the present and unnecessary level of military spending (about $1.3 trillion a year if truly accounted for), we must look at the various functions of the Federal Government and its agencies and programs (as suggested by the President in his State of the Union speech), and work toward consolidation and reduction as possible). And, more than anything, Americans need to learn that the Federal government can’t be responsible for doing everything that it does. This means adjusting policies and programs to rational levels.
Sadly, these things are essentially unlikely to occur in the current election system, now that money talks and voters are given no choices of public servants who actually wish to work for our nation as a whole and not just for their massively wealthy supporters. As you have suggested, this is how plutocracies work, and America has become the world’s most historically large and effective plutocracy.
The debt we have can be referred to as “Odious Debt.”
You can use the phrase with the quotation marks in any search engine, and discover that it is a legal term and it is enforceable. It means that when a debt is fraudulently created in the name of a people/nation, that debt is NOT the obligation of the same, barring their explicit consent and/or approval, and is therefore owed ONLY by those who schemed to create it. That would be the Federal reserve, and certain of their subservient presidents and members of congress, but NOT you and me.
The debt is particularly Odious as it is all based on interest bearing fractional reserve currency and it is direct conflict with the Law that defines money in the US Constitution, as gold and silver. It, the US Constitution, has NEVER been changed or amended. It is still in full force.
The FRN money, and it’s debt is fraudulent and without value. it’s value depends on confidence alone. We withdraw our confidence in it, and it collapses. It will collapse anyway. It already IS collapsing.
So what needs to be done is to round up ALL the members of the Federal reserve and ship them off to China so they can spend the rest of their miserable lives working off their own fraudulently created debt monster.
When the Department of Treasury says that Federal Reserve notes have no value in and of themselves, (This letter is on the ivamu.com site),
it means that is a CON-mans form of money.
Mathematically, the federal reserves money debt monster can never be repaid. This is how to disresepct and enslave a Free people. CON them into believing they must become slaves to pay off a debt they did not create nor consent to, forever.
If you are willing to become enslaved, its all yours, but that will never extend to the rest of us.
The Federal reserve can swiftly go to HELL, — >right along with their phony and contrived system of debt enslavement.
ALL OF IT based on a lawless imposition of fake monopoly money, which is not even Authorized as valid by the US Constitution.
Right “now,” the REAL Value of just ONE IVAMU is generously offered to PAY OFF this fraudulent debt, for the value of just one IVAMU Unit of REAL, sustainable Value.
Then those at the Fed Reserve can use it to purchase one value meal as they seek to make their fast get-a-way, out of town.
“Owen Owens” — I wholeheartedly agree with your Idea of putting the precious metals back into the coins.
But the coins would contain perhaps a gram or half or even a quater of a gram, if gold. Its value will still vastly exceed the “equivalent” values of the Federal Reserve coins, even at half or quarter grams.
Plus, they will RETAIN their value. FRN’s can not.
Many are expressing their concerns about the amount of precious metals available to go back onto the old style of coins, being 90% precious metals.
A woman in Zimbabwe commented that it took 2 to 3 grams of gold per day to provide for her Family. She did not say how she was able to obtain the gold grams.
Last November (2010), a gram was valued at 30 ‘bucks’ in terms of Federal reserve Notes, (FRN’s).
So she was telling us how much she needed to take care of her Family, and in terms of weight, the precious metals is slight to be enough. It was, of course, 60 to 90 ‘bucks’ at 30 ‘dollars’ per gram.
We need to be questioning everything. Including the FRN based economy. Why do we “need” a central bank, when they are now, obsolete, and discredited? They are a Curse upon us.
What happens when new federal ‘debt’ is created?
It takes all of the principal needed, and endlessly refinances it, at additional, increasing interest.
Compounded interest. Lets call that process, a cycle.
How many of these kinds of cycles are possible?
It all ends when the interest/Usury it takes to service the debt vastly exceeds the amount of the principal, in effect swallowing it all up. Consuming all hopped for principal in the process.
There are a FINITE number of times this can be done before it “blows \straight/ up.”
This then leaves us with an Economic Armageddon.
And it might as well be the other Armageddon.
The interest/usury goes straight up on the exponential scale.
The problem we are having right now is that we are now there, fully to that given point.
The ONLY remedy, like water is to fire, is to SUSPEND and ELIMINATE ALL Interest/Usury from the economy.
The beauty of doing so is that it also resolves the problem in as little as 24 hours.
Either we rid our economy of interest, or, the interest will eliminate us.
Having said that, it is time for each one to prepare, as many are already doing. If you survive the ensuing carnage that will result — for about 2 or 3 weeks — you stand the possibility of surviving much longer after the initial chaos.
No matter what, it will not be easy.
Ken, all currency is based off the english pound. You need to be able to nullify any tangible silver they might have inorder to manipulate currencies around the world, or at least that is where I would start. How do your peoples reserves stack up against theirs? Use it to devalue the euro, then go after the dollar and finally buy yen products and your home free. Get back to me with a report of your portfolio status and we’ll go from there.
@owen
and they say there are no conspiracies…
@Anonymous
Those who say there are no conspiracies are either
A) Ignorance parading itself about ss informed.
B) All out Fools
C) Part of a conpiracy
D) Stupid
Most of our Federal courts would be out of business if not for the widespread nature of conspiracies.
I myself have been charge in Federal Court of being involved in a “Civil Conspiracy,” and NO, not all conspiracies are real as alledged.
My statement before the Court was simple: “I can only wish that there was a conspiracy. If there was, I would most likely have a boat load of attorneys, just like the Idiots sueing me, your Honor. So if it is a conspriacy (as alledged by Amway Corporation), it must not be a very good one.”
NOTE: Amway had named me in a conspiracy based lawsuit, claiming I was involved with P&G, to destroy them and run them out fo business. “I could only wish it were true, your Honor”
Important discussion. It does need to be informed by what happened over the last four years, and this is mentioned above by others. Specifically, $2.3 trillion in spending that can only be called social, went to save the banks, the economy and the stock market. All were in serious danger of failing. If they had, the wealthiest segment of the population which has almost half its assets in stocks and bonds, would have been hung out to dry.
There is no way around this, no way to finesse it. It’s probably the source of most of the seething anger that’s so palpable in political circles.
The wealthy stayed that way because their hired hands used our money to re-float the system. That’s where the deficits came from. Draw your own conclusions as to what is fair for the rich to pay back to the rest of us. But that is the basis from which the discussion has to be proceed.
The simple answer is NO! The more complex debate centers on this pile of ca ca.
“Most of our government spending, now as always, goes on wars and transfers to relatively poor people and to older people. The military spending will come down – if we can end the wars (as we did in the past). The social transfers were constructed in a more open-ended fashion – and our long-term budget forecasts account for this form of future spending in a more transparent and more honest way than we do for the probability of future wars or financial crises.”
This conjecture, or disinformation, or propaganda, or perceptionmanagement is pure fantasy and fiction. Wars will never end. Predators will never stop devouring prey, and there will never be any “peace on earth and goodwill towards men”. History proves this grim fact and forgotten detail.
This question is found in the pain threshold – the point at which a critical mass of the population (numbed and dumbdowned as they may be) experience a certain level of pain and uncertainty that drives them into the streets in protest and unrest, and ultimately resistance. When the underlying system is denounced – the party is over. The predatorclass can pretend the oldworldways exist, – but there will the borning of newworldways comewhatmay. We don’t have any choice. It’s kill or be killed. May the best mammal win. In a world where there are no laws – there are no laws for anyone predatorclass biiiiiaaatches!!!
@Norm
They are still taking and from what we have all witnessed on this blog, you still think they’ll *give* any of it back?
Nope, the head censor for aol- Fineman – is saying that Obambi is “seeing what else *we* can get done in Afghanistan” – so the hard on to get IRAN – the metaphysical beings of Iran who are an existential threat to BOTH, Saudis and Israelis – “it’s on…”
People are telling me that they are afraid to let loose their anger….I tell them that they have to ask themselves whether they have a moral responsibility to find a positive way to *act* to right the ship….
Theoretically, if we all freak out at the same time and get the plan going, it’ll be less of a threat to anyone….
I’m in the “Mr Y” camp for where “policy” needs to go.
Constitutional Convention – ENERGY POLICY effective immediately
and BURN THE PATRIOT ACT – there is NO PROOF that the banksters weren’t given all our net worth by Homeland Insecurity to manage to fund the *existential threat* – no proof whatsoever….
they are NOT DONE grinding us into the dirt.
Just the facts, Ma’am…
This has turned into quite a good thread, eh?
I am living proof that there is an active “Robin Hood in Reverse” syndrome. Corporate Amway sued me for effectively outing them for their ongoing THEFTS.
They are opulently wealthy, rich, and they STOLE from my Family. It is a lie that the rich do not Steal from the poor, they are, they did.
We have ongoing Welfare for the rich.
Rich people want the ONGOING “redistribution” of money FROM the poor to be endlessly be going into THEIR pockets. Not acceptable, forever lacking a moral component. Now, the money they steal from the poor is becoming worth less and less.
Not only are they rich, they are also very bad in business, consequently, they try to massage our rage by saying stupid things, like how “they” are “too big to fail.”
To HELL with such delusions. It is the Queen demanding the peasants eat cake all over again, then stealing all the cake.
To HELL with “Austerity.” It is their terminology which says, “we are still going to live well, but not you.”
To HELL with the federal reserve, and all its “subdomains,” like their World Bank, and their IMF.
They are seeking to back us into a corner. BUT THIS TIME, they are indeed going to LOSE B-I-G.
We have a multitude of folks who, as Gerald Celente says, “When people have nothing left to lose, they lose it.”
Janis Joplin also turned that one into a song. She was way ahead of her tiime.
The fundamental problem that lead to all these is the concept of “continue economic and consumer expansion capitalism”.
The law of nature is balance, not continue expansion; it’s an impossible task that we spend billions chasing after illusionary prosperity, instead, it lead to higher energy consumption and unsustainable environmental demands, and more debts!
Live simply, so that others may simply live!– Its time!
Communism is the ultimate expression of capitalism.
Even as they denounce capitalism, they are its’ fullest practioners.
To truly be aganst capitalism, as they claim, you must not be seeking to conentrate it all in the hands of the self-selected few.
Communism is total Monopoly.
We are now, already fully there.
That is why they also call it, the federal reserve.