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No More Debt!

As we approach election season here in 2010, American voters are seemingly more angry than at any other time in recent memory.  More than at any other time in modern American history, Americans are seeking out alternatives outside the “two party system” (such as the Tea Party movement) through which to express their anger.  So why are the American people so angry?  Well, the truth is that there are a whole lot of reasons, but one of the biggest reasons is the horrific mismanagement of our national finances that has been going on in Washington.  The “Congress critters” have been piling up the biggest mountain of debt in the history of the world, and millions of Americans are now waking up and are now realizing that our financial future has been absolutely obliterated.  We have accumulated a debt that is impossible to repay.  In fact, it is rapidly getting to the point where it will become impossible even to service the debt.  All of this debt is literally killing the American Dream.  An increasing number of Americans now realize the horror of what we have done, but the reality is that it may be far too late to reverse the damage that has taken place.

The amount of money that the U.S. government spends is absolutely mind blowing.  For example, did you know that the U.S. Congress will spend about 25.4 percent of GDP this year?

It is hard to continue to say with a straight face that we are not a socialist nation when the government is spending that kind of money.

And that is just the federal government – state and local governments spend massive amounts of money on top of that.

But we will get to that in a minute.

First let’s examine the horrific amounts of debt that the federal government is piling up.

In an article that we recently authored on another website, we noted that back in 1950, the total debt of the U.S. government was only about 257 billion dollars.

Just think about that.

From the creation of the United States until 1950, we had accumulated only 257 billion dollars of debt.

Today, the U.S. government accumulates over 4 billion dollars more debt each day.

Let that sink in for a bit.

We have a national debt that is exploding so fast that it is hard to even put the horror of it into words.

According to Erskine Bowles, one of the heads of Barack Obama’s national debt commission, the U.S. government will be spending $2 trillion just on interest on the national debt by 2020. 

So just how big is 2 trillion dollars?

Well, the entire U.S. government budget is less than 4 trillion dollars for the entire year of 2010.

So how in the world are we going to be able to afford to pay 2 trillion dollars in interest when the year 2020 rolls around?

It is hard to even conceive of amounts of money that large.

If you went out today and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

Are you starting to get the picture?

But things are even worse than the official numbers tell us.

If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the U.S. government budget deficit would be somewhere in the neighborhood of $4 trillion to $5 trillion.

Do you think a great politician can come along and fix that kind of a mess?

No, not under the current system.

But it just isn’t the U.S. government that is the problem.

As we have written about previously, state and local governments across the United States are completely broke.

In fact, it would be easy to make the argument that many of the states are in even worse financial position than the U.S. government is.

California is totally broke.

Illinois is in even worse shape.

There is a very real possibility that we could see a number of U.S. states actually default on their debts in the next few years.

Of course the federal government could step in and bail them out, but that would just add more debt at the federal level.

Meanwhile, the states continue to borrow money at a staggering pace.

It is being reported that the 50 U.S. states have racked up a record $2.4 trillion in bond debt during the recent economic downturn.

Ouch.

But things get even worse the further down the road you look.

Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern’s Kellogg School of Management recently calculated the combined pension liability of the 50 U.S. states.  What they found was that the 50 states are collectively facing $5.17 trillion in pension obligations, but they only have $1.94 trillion set aside in state pension funds.  That is a difference of 3.2 trillion dollars.

So where in the world are the 50 states going to get an extra 3.2 trillion dollars to meet those pension obligations?

What a mess!

America has become absolutely addicted to debt and it is destroying us.  If you add up all government, business and consumer debt, the total is equivalent to approximately 360 percent of GDP. 

In case you were wondering, that is really, really, really bad.

We have built an economy on debt and paper money and now it is starting to implode.

The truth is that we are all to blame.  There are very few of us that have not run out and piled up debt at some point in our lives.

At the end of 2008, the total credit card debt owed by American consumers totalled more than 972 billion dollars

That amount is greater than the GDP of the world’s 122 poorest nations combined.

Needless to say, America has a debt problem that is not sustainable.

This giant bubble that we have created is going to burst.

In fact, it has already started bursting.

The prosperity that we have been enjoying for the past couple of decades has been based on a lie.  We borrowed and borrowed and borrowed and we came to think of the affluence that all of this borrowing afforded us as normal.

But now we are going to learn some very painful lessons as a society.  The “good times” that we are enjoying are going to go away.  Society is going to undergo dramatic changes.  The entire economic system is going to implode.

So are you ready for all of this?

You better get ready.

You still have a little bit of time to prepare, but time is running out.

  • Gary

    I do not believe too many unemployed/under employed give two rips about the debt. I sure do not. I am sure if you ask the people I am in line with at the food pantry they also could care ;less about the debt.

    The entire debt issue can simply be solved by taxing the rich/corporations (who are sitting on piles of cash) and spreading the wealth along with paying off the debt. In one long weekend the wall street thugs got billions and trillions yet we do not have single payer and it takes weeks for the unemployed to get their extension? And now people who are worried about the debt want to extend the bush tax cuts for the wealthy? This fits the definition of a disconnect if I ever saw one.

  • Sarah

    I have a few questions.
    1. Do you think most Americans are waking up?
    2.If everything hits the fan how long will we live in poverty?
    3. If I move to another western country like Australia will I still be affected>

  • Owen

    It’s intentional. America will be sacrificed so that they can have their New World Order. It will not last long but billions will die in a very short period of time.

  • Mr Carpenter

    My college age son, now in his late 20′s, cannot stop going to University (in his opinion) because he has built up so much debt in 10 years of university schooling, that he essentially already knows that he cannot ever pay it back. His “plan” is to try to take 1/2 time classes until such time as he gets a “decent job” after finishing his Master’s degree.

    I haven’t had the heart to tell him that there aren’t any jobs for him once he gets out of university, with a degree in sociology and anthropology. Well, there might be a job at Wal-Mart or Burger King if he’s lucky. Actually, I suspect he knows it in his heart of hearts…. He is after all a very bright guy with near genius IQ. But then again, he couldn’t see his own debt-bomb…. (blinkers?)

    If he is really truly lucky, he’ll get a permanent job as a college professor. Except that he’ll never be able to pay off his debts AND live a life 1/2 as well as I did with a minor college degree (and a lot of hard work, and watching my debt level to keep it minimal – except for cars & mortgage, of course).

    Thing is? We’ve always lived well within our means – and our means has not always provided us with a luxurious lifestyle, but we’ve had a fun life and enjoyed travel, experiencing different things and people away from home, rather than concentrating on accumulating “stuff”.

  • Armageddon Thru To You

    Start studying bible prophecy and it will all make sense.

  • filboyd

    It isn’t the debt that ultimately hurts. Horrendous debt is just the precursor to the devaluation of our currency. That’s what will really hurt Main St.

    For example, my wife and I have accumulated nearly $1 million in assets over 38 years. I expect devaluation to whack us hard, even though we never carried debt above our home mortgage which retires August 2011.

    Our lifestyle is modest. We’ve done everything right (mostly). Yet TPTB have screwed us. We’ll be punished right along side the profligate. As one of my old bosses said, “It may not be fair, but it’s uniform.”

    Devaluation is uniform. I don’t see how anyone escapes it.

  • Greg

    filboyd – I suggest that you let Robin Hood wanna-bes like Gary take 90% of your million dollars in assets. You are surely one of the people he despises so once he steals it from you there will be no more worry about losing very much to devaluation! Don’t you just love Gary?

    You are correct about suffering along with everyone else. We are going to go through the type of disaster of Isaiah 24 where the lender and the borrower will all suffer alike. Of course the elite are going to have their plan in place to avoid the chaos but they will have the tribulation and eternity in hell to make up for what they are inflicting on the masses.

  • Greg

    Calling the debt crisis “mismanagement” is akin to stating the Mayans mismanaged their numerous heart surgeries. This chaos is as planned as the Mayan sacrifices and it serves a planned purpose.

    Just as the genocide and destruction of sovereign nations that our “defenders of freedom” are causing all over the world.

    Just as the influx of illegal invaders into our nation.

    Just as the drugs that our government has brought into our nation.

    Just as the bogus terrorist attacks that miraculously brought down three buildings.

    All chaos is “solved” with the plan that was desired prior to the chaos, but the chaos causes the sheep to willingly follow the wolves to safety. Our debt crisis will be solved with the surrendering of our sovereignty into the North American Union and the replacement of the dollar with the Amero.

  • Stephen Hardy

    I live in Asutralia, do you Americans know you can immergrate right? Western Autralia is starved for workers, from cooks and cleaners to anyone with a degree and the PAY IS AMAZING!

    We have sod all debt, the little bit of hock were in is going to build us a NBN (National Braodband Network) & thanks to a little inovation call the areoplane you can work in MINING in centeral Australia & fly to the coast for the weekends.

    I love this site, but the news is old, stale & repeated regularly with NO REAL SOLUTIONS. The ‘Tea party’ is just a wine fest thats being hijacked by FOX so get over it & immergrate. Its a big freakin globe, go were your welcome, speak english and can bring your kids up safe and sound. Tax here is dropping every year, basicly you pay a little payroll tax that has an effective rate of between 15-33% and a GST of 10% when you spend it.

    Education is free until Uni, then you owe a little HEX (gov backed debt) thats paid back with a slightly higher tax rate, you never notice it but you have the option to pay it out soon NAD AT A DISCOUNT TOO.

    Medical is free & universal, you can pay and if your rich enough to and dont you pay 1.5% extra tax. its fair & works.

    We have a funnded retirement scheme with gov backup and its awesome as you decide where and what to invest it in and as its non government they cant steal it! So basicly like your 401k, everyone has one…

    The only downside is that here you HAVE to vote or pay a $20 fine.

    Honest its the only downside.

  • Brazil Immigrant

    Isn’t it ironic that with all the complaints about immigrants, Americans are now starting to consider immigrating to other countries. I saw the writing on the wall last year and jumped ship while I still had a little of my nest egg still on my plate. I can’t say pay is as great as in Australia, but here the economy is booming and things are better every day. Probably the best part was to get away from the depressing atmosphere and negative gloom and doom fog that hung over Michigan. In a few months, I will be buying some land, and start building my “South” American dream house.

    My advice, if you don’t see much outlook for your future in America, don’t wait until you are stone broke to immigrate. I made the mistake of holding on a little too long and consequently didn’t have money for a car or to completely furnish my apartment here. It is much easier on the family to get a start at a new life when you are financially stable. If things do miraculously turn around in America, you and your family will return enriched with new experience, cultural insight and possibly bilingual capabilities.

  • Gary

    Greg-I am happy to see you call me names like Robin Hood etc. This must mean that my argument for taxing the rich and corporations (who just happen to be sitting on record amounts of cash)must be correct and sound. Otherwise you could comment on this instead of simply calling me names.

    I am sure you know deep down that I am right.

    BTW-if not taxing the rich was such a good thing for jobs and the economy then why are we in the current great recession? The rich have gotten the lions share of the nations wealth and income along with major tax breaks by Bush. Even better-this year there is no estate tax so where are all the jobs? This year is a huge windfall for the rich yet unemployment is huge. Can we simply put the right wing supply side lies to rest? They obviously do not work. The evidence which is right before your eyes shows you that I am 100% correct.

    I would welcome you trying to prove me wrong. Please do not use the bible or religion as even though I do believe it you need to have faith which does nothing to really prove it. Like Thomas-until I put my hand in his side and my finger through his hand I will not believe.

  • Sheryl

    To Gary,

    Just what percentage of income is “just taxing the rich”? 50% 75%? Did you go to school for years so you would have PhD or MD behind your name? NO? I didn’t either. I wonder just how much is enough to bleed from “the rich”? Why don’t we just take all their money? Is that fair to you? Surely you have thought of the fact that poor people don’t own companies. Poor people don’t hire employees. Many people in the U.S. don’t even pay taxes! Now how fair is that? Should the “rich” pay for everything? Should they go to school for years and work around the clock so that you can sit on your butt and complain? Should we continue to give the “give a ways” by the government? Those “give a ways” are funded by guess who — The rich! But, please why don’t you qualify how much money a “rich” person makes? Do you want a doctor who spent years in school and holds the very lives of his patient in his hands to make minimum wage? You really need to pull your head out, buddy!

  • Greg

    Gary – there have been numerous posts by me and others over the past few months that have shown the fallacy of your beliefs. My biggest proof is the fact that I have been a business owner for 17 years and I know what I do when there are tax breaks and I know what I do when there are excessive taxes. Obviously nothing is going to change your beliefs. You also don’t seem to understand that the elites already own and control most of the world and that our politicians answer to them. Even if you were correct, your “solution” is now akin to the sheep suggesting an uprising against the wolves.

    You previously stated that you were a Christian yet now state that you must first put your fingers in his nail and spear pierced body before you will believe. That doesn’t sound like Biblical Christianity to me but there are plenty of churches in America that will still tell you your trip to heaven is secure. You will see his nail pierced hands and his spear pierced side but it will be a sight that haunts you for eternity. There will be no doubters in hell.

  • Gary

    Sharon-I would say taxing the rich at 90% marginal tax rate (you do know the difference I hope) and treating all capital gains as ordinary income for people making over $250,000 (which is unimaginably rich in my book) and means testing SSI so the rich get nothing but still have to pay into the system and totally lifting the cap on wages subject to SSI tax.

    This what it was (sort of) under Republican Eisenhower. The rich did just fine then. Oh before I forget a 70% inheritance tax on the wealthiest 10% say on anything over 5 million indexed to inflation. This is a fair price for the rich to pay to live in and receive the benefits of the USA. It is very likely that the majority of the rich would not be rich if they lived in other countries.

    I would also like to see no companies get any gov contracts where the CEO makes more than a certain % of the lowest worker. If companies do not like this too bad, no gov contracts. I am sure another company will step up and do the right thing by paying fair wages.

    There I gave you specifics.

  • Gary

    To Greg-I was using the example of putting my fingers in his hands as an example that simply referencing the bible w/o a person already having faith is not very effective. I appreciate your clarification and I should have been more clear.

    BTW-If folks are so worried about the last days and all I will gladly accept your money as you will not need it. This will even help you getting into heaven, you know, camel/eye of needle/lazerous/rich man etc. I will provide you a valuable service and at the same time no longer need to frequent the food pantries/Salvation Army etc. It would be great to get a good meal now and then and to start living the good life of having lots of money.

    PS-I really wish I could do as I want and still go to heaven. Sort of having your cake and eating it too. I would love to indulge my sinful desires to the max and satisfy my sinful flesh and not have to give God or Heaven a second thought. I know this is not the way it is but it would sure be nice. Its not easy being a Christian.

  • Greg

    Gary, you seem to have a coiled spring inside of you that is causing you to go nuts, unable to rest. The Bible says that godliness with contentment is great gain. No one has everything they want, yet everyone can find contentment. Just as Paul was singing praises in the jail cell with raw open flesh wounds on his back and fetters on his wrists and ankles, I suggest that you stop focusing on your troubles. If the wealthy are deserving of judgment, God assures us that they will be judged (but not for being wealthy). There are despicable poor people and despicable rich people. Please give yourself some peace of mind and trust in the fact that God sees all things, he cares for his children, and when this short life is over we will have eternity to deal with what we have done, not with what others have done.