With the issue of raising the debt ceiling hanging over everyone’s head, UNRESOLVED, and especially with the House of Representatives off on their July 29th thru September 05, 2017 “RECESS” and the United States Senate taking it’s current “RECESS” from August 11th thru September 05th, 2017. (Who is left in Washington to address this most important issue???) not to mention all the talk about the Federal Government reaching the limit of its borrowing power, bringing up the portend of a “Government Shutdown”. I think that THE EVERYONE JUST MIGHT NEED THE FOLLOWING so the public can get a picture of just how bad things are?????
IS THE NATION BANKRUPT ALREADY AND CAN THE UNITED STATES EVER REPAY ITS DEBT???????
Virtually every day we hear/read about yet another bailout, another stimulus plan, more and more FEDERAL BORROWING, in spite of having a Debt Ceiling, ever higher and higher State Budget, “real”, deficits (no not the “mirror economics” they use to call their budgets balanced, but how much they haven’t got to meet current obligations, not to even mention “unfunded future obligations”) AND NO ONE AT ANY LEVEL OF GOVERNMENT (ESPECIALLY AT THE FEDERAL LEVEL) ever providing an outline or a plan to pay it all back. Just imagine the average household of Mr. & Mrs. American Taxpayer borrowing, endlessly and with abandon and never paying it back!!!!
It seems, to this commentator at least, that the real issue is whether or not we can pay it back at all….EVER.
If one looks at and starts to add up all of the “admitted to” federal debt, federal loan guarantees, un and under-funded federal pensions, endless future federal deficits, the trillion$$$ of dollars of debt now called the Social Security and Medicare “Trust Funds”, not to even mention the “who even knows the amount of “off budget borrowing” at every level and add those numbers to the under-funded corporate pension funds, plus credit card debt of $1+ TRILLION$$$; mortgage debt of $14++TRILLION$$$$; students loans of $1.4 TRILLION$$$ and personal debt of $18+ TRILLION$$$ and still more and more (how could I have not added the current “ADMITTED TO” National Debt of $19,973,000,000,000.00 (that’s nearly $20 TRILLION$$$, by the way!!!)
We “the people” owe more that the entire country is worth and it CAN NEVER BE REPAID. Remember, if you owe more than you can re-pay THEN YOU ARE ALREADY BANKRUPT!!!
Before we consider just how this mountain of debt “might” be dealt with, there are a few overriding issues we should look at….
1. Political America has no incentive to ever repay all this debt (somehow we gave them a blank check with an infinite account balance and their only interest seems to be to get themselves re-elected and continue to spend our money whether or not the money even exists. Furthermore, they simply don’t know how to reduce spending, only to keep spending, borrow forever and spend, spend spend…and let’s not continue to find ways (not to economize or reduce spending) to tax, tax and tax the public and generate fees (another word for a tax) to maintain the world’s largest PONZI SCHEME”. (they finally caught Charles Ponzi and locked him up…maybe more than just a few in government need that same threat at least?)
2. We have accustomed more than just one generation of Americans to believe that endless borrowing to fulfill every possible whim and dream and wish can go on forever by “just making the MINIMUM payment due”!!! Even an IDIOT knows that by making the MINIMUM payment due on any debt extends that debt nearly forever and even THAT VERY SAME IDIOT knows that no one (especially not Government) can borrow itself out of debt unless every dollar borrowed generates many, many more new dollars and a plan (amortization of those debts over a fixed/reasonable amount of time) exists. No such amortization plan, NAY, NO PLAN exists anywhere in government to repay or even pay down the debt outlined. Just borrow more and borrow some more and while waiting for those borrowed dollars to come in JUST PRINT MORE AND MORE WORTHLESS MONEY!!!!
3. Somehow, we’ve convinced ourselves that we are entitled to anything and everything we want and if we or our leaders or corporate America screws up anywhere along the line “they”, the government (funny, how quickly we forget that WE are that government) will fix it, pay for it, bail it out or make it go away painlessly.
ASIDE: lest we forget….ENTITLEMENT means that when anyone becomes “entitled”to anything someone else MUST BECOME DIS-ENTITLED it has to be taken away from you in order to be given to anyone else!!!
4. We continue to think that the rest of the world will keep on lending us anything we need even if we print some much money that it would wall paper the globe. Sadly, that party might be over as “The National Debt Clock” screams louder and louder. To pay all this mess of debt back and put the nation on solid ground and some teeth into that saying…”Sound as the DOLLAR”, that vacationing Congress and House might just want to “think about’ some or all of these suggestions………
A. Freeze borrowing at ALL LEVELS at all amounts…make them account for EVERY dollar
B. Have balanced budgets (without the “mirror economics”, deferrals, and new borrowings practiced by governments at all levels, mentioned earlier)
C. Drastically change our way of living and spending at all levels of governments and probably households as well.
D. Accept the fact that this country isn’t so “helpless” that it needs 23,500,000 people working for “government”….did you know that that’s roughly ONE “GOVERNMENT” EMPLOYEE for every 13 Americans….are we all really THAT HELPLESS???? 1/2 of 1/2 of that might suffice if they all just sweated a little.
( remember the line Frank Sinatra uttered in “The Pride and the Passion” when he wanted the Spanish peasants to help with the moving of the great cannon out of the mud???? He didn’t ask them to risk their lives for Spain and the Revolution…he just asked them to “sweat a little”!!!
E. Practice COLD/HARD ACCOUNTABILITY…if it isn’t really needed, you can’t have it…if a program doesn’t work, STOP FUNDING IT if an agency that collects a tax or a fee,. etc, isn’t collecting enough to pay for itself and contribute something to the operation of the government that agency needs closing down (by the admission of the Government’s Own Office of Budget Management more federal programs DON”T DO WHAT THEY WERE FUNDED TO DO than do.
Clearly we can never re-pay what some economists “guesstimate” to be the nation’s collective “unfunded” indebtedness of nearly $200,000,000,000,000.00++ (THAT’S TWO HUNDRED++ TRILLION$$$$ OF DOLLARS)
so, let’s talk about……..B A N K R U P T C Y
Debt is defined as “a state of owing”/”something owed”; an “OBLIGATION” and it is implicit, or at least understood and almost always put into writing, that the debt carries certain obligations, like:
The borrower will pay something in consideration of the debt (usually regular interest payments, at least, and some form of amortization or sometimes only one such payment of both principle and interest at some point in the life of the obligation
The borrower will repay the debt over some reasonable period of time (monthly, yearly or at some specific point of time in the future.
The borrower has pledged some form of collateral to secure the debt that could be liquidated should the borrower default…
and THAT THE BORROWER INTENDS TO REPAY THOSE DEBTS.
Having IGNORED most of the above (oh, yes, they roll the debt forward, they re-cast the debt, they even sometimes forgive some of the debt) it would seem that the obligation to pay off all the debts mentioned AT SOME POINT OF TIME……
SIMPLY DOESN’T EXIST
This writer would call that position BANKRUPTCY ALREADY
Bankruptcy quite simply comes as a result of owing more than you can repay
A recent article from the Federal Reserve Bank of St. Louis’ Review puts this issue into terms all Americans need to hear/read…..
The proper way to consider a country’s (The United States of America’s) solvency is to examine the lifetime fiscal burdens facing current and future generations (notice not just this year’s or even this life of the current administration) If these burdens exceed the resources of those generations, get close to doing so or simply get so high as to preclude their full collection, the country’s policy is unsustainable and can constitute present bankruptcy or inevitably lead to NATIONAL BANKRUPTCY.
Let’s just hope that the media and political Washington doesn’t use the possibility of default or a government shutdown (which in the opinion of this correspondent would label the United States a “Third World”, economically and create a Depression that would make the Great Depression of the 30’s look like “Utopia”) as a football to be thrown here there and everywhere blaming everyone but the real bad guys and putting into place another “Band-Aid’ while Rome burns.
Graduate of Columbia University in New York, spent early career working on the floor of the New York Stock Exchange, 35+ year financial broadcaster and still counting, author of numerous books on money, the markets, mutual funds, etc…..spent 20+ years on Wall Street… the Director of Corporate Finance & Investment Banking…trained over 20,000+ candidates to become licensed with the New York Stock Exchange as well as under the various State Securities Laws…conducted over 450 live public financial seminars etc. etc. etc.