In Fiscal Year 2011, for example, the US government spent $176 billion MORE on debt interest and mandatory spending than they generated in tax revenue.
In Fiscal Year 2012, which just ended 6 weeks ago, that shortfall increased to $251 billion. This means that they could cut the ENTIRE discretionary budget and still be in the hole by $251 billion.
Who do you think is the biggest owner of US government bonds in the world? Japan? China? Somebody else? Anyone care to guess?
The answer is that the US government is the biggest single owner of US government bonds. But how can that be? Is the US government selling bonds to itself? Yes. But how can anyone borrow money from himself?
This is a great read for anybody who is concerned about the economy. It reads easy and offers a glimmer of hope after the grim feature.
Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy, sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did in 2008 with the Fed-assisted rescue of Bear Stearns Cos. by JPMorgan and with Citigroup and Bank of America after the Lehman Brothers bankruptcy, the largest in U.S. history.
“Market participants believe that nothing has changed, that too-big-to-fail is fully intact,” said Gary Stern, former president of the Federal Reserve Bank of Minneapolis.
…our governments nominal GDP figures are greatly influenced by inflation. The influence of inflation is particularly pernicious in GDP studies. You see, inflation, which actually reduces our standard of living, drives up the amount of nominal GDP. So it creates the appearance of a wealthier country… while the nation is actually getting poorer.
The only real way to accurately measure per-capita GDP is to build our own model. The need to build our own tools tells you something important – the government doesnt want anyone to know the answer to this question. It could easily publish data far more accurate than the indexes it puts out. But government doesnt want anyone to know. And it wants to be able to say “those arent the real data” when studies like ours produce bad news.
Warren Buffett illustrates that the problem can be solved, it’s just a matter of incentive from the people who are in charge.
“I could end the deficit in five minutes. You just pass a law that says that any time there’s a deficit of more than three percent of GDP, all sitting members of Congress are ineligible for re-election. Yeah, yeah, now you’ve got the incentives in the right place, right? (Laughs)
So, it’s capable of being done. And they’re trying to use the incentive now that we’re going to blow your brains out, America, in terms of your debt-worthiness over time. And that’s being used as a threat. A more effective threat would be just to say, ‘If you guys can’t get it done, we’ll get some other guys to get it done.’”
From the position of global superpower since the end of WW2, the US has witnessed an unrivaled Pax Americana throughout the world. Military might, a global archipelago of bases, and the US dollar as the world’s reserve currency has allowed America to export her specific brand of fascism throughout the world: central banking, police state-ism, and crony capitalism.
Which means that when a part of the world struggles or finally hits the inevitable bust that results from central banking and the business cycle, the US must intervene. This is why during the beginning of the economic crisis a few years ago, the Federal Reserve lend out trillions to foreign central banks, providing the whiskey and ice to the alcoholic who badly needs sobriety.
But that previous loan has got nothing on what the Fed and the banksters are up to now.
Bank of America is shifting derivatives in its Merrill investment banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC.
This stuff always sounds like a foreign language to me. So to put it in more basic terms, this means that Bank of America’s $75 trillion worth of derivatives, and the risk, is now guaranteed by the American taxpayer.
$75 trillion. One’s head spins when comprehending this number, yet without hardly a whisper and without public input, we are on the hook for 75,000 billion dollars.
To say that we are little more than tax-cattle and debt-slaves to the US government – and its corporate leeches – is not hyperbole.
“…62 million Americans with zero or negative net worth, scratching their heads and wondering where the hell all their money went and why their votes seem to count less and less each and every year.”