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The Article "MOUNTAIN OF DEBT" is a Pile of Poop

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The stupid news article that just exploded all over the major media, MOUNTAIN OF DEBT: Rising debt may be next crisis, does nothing but confound the debt issue and confuse Americans suffering through the worst economic downturn since the Great Depression.  It is just one bit piece in an onslaught of misinformation designed to deflect attention from the banking system and convince Americans that the financial crisis is of their own making due to the average person over-borrowing and over-spending, and austerity measures are the answer.

1) Lie: The Founding Fathers left us the legacy of the national debt.

The truth: This is so stupid it defies the basic principle of lying, that the lie should have a shred of credibility.  The article even contradicts itself just nine paragraphs later by admitting the US was debt free in 1834-1835.

The statement is flat out, false.  Interestingly, the time period coincides precisely with the years following President Jackson's withdrawal of funds from the Second Bank of the United States in 1933.

From Wikipedia:

"By the early 1830s, President Jackson had come to thoroughly dislike the Second Bank of the United States because of its fraud and corruption.


Jackson and 2nd Bank of the U.S.


This Democratic cartoon from 1833 showed Jackson destroying the bank, to the approval of the Uncle Sam like figure to the right, and annoyance of the bank's President, shown as the Devil himself.  Jackson then had an investigation done on the Bank which he said established "beyond question that this great and powerful institution had been actively engaged in attempting to influence the elections of the public officers by means of its money." Jackson worked to rescind the bank's federal charter. In Jackson's veto message (written by George Bancroft), the bank needed to be abolished because:

    * It concentrated the nation's financial strength in a single institution.
    * It exposed the government to control by foreign interests.
    * It served mainly to make the rich richer.
    * It exercised too much control over members of Congress.
    * It favored northeastern states over southern and western states.

In September 1833, Secretary of the Treasury Roger B. Taney transferred the government's Pennsylvania deposits in the Second Bank of the United States to the Bank of Girard in Philadelphia. The Second Bank of the United States was left with little money and, in 1836, its charter expired and it turned into an ordinary bank in Philadelphia. Five years later, the former Second Bank of the United States went bankrupt."
 
2) Lie: The debt has been growing ever since the Revolutionary War.


The truth: Whatever legacy of debt we suffer today stems from debt incurred after 1835, so it cannot be blamed on the Founders.  

This misrepresentation omits the obvious fact that the national debt cannot even be read on a graph that starts earlier than 1940, it was so small (blue line, graph on left).  The Federal Debt was less than $2,000 per person until 1970, (blue line, graph on right) when it started growing out of control.

The debt started growing too fast 40 years ago and started becoming a problem 20 years ago.

3) Lie: The mountain of debt easily could become the next full-fledged economic crisis without firm action from Washington, economists of all stripes warn.

The truth: It will not become the "next crisis"; it already IS THE CRISIS.  This is an attempt to divert attention from the resolution of the crisis, a resolution that is taking place NOW, to sometime in the future, so that the resolution taking place now will not be interrupted and the results will stand in the future as a fait accompli (feat accomplished).

We need to interrupt this process, AUDIT the FED, investigate fraud in: all the major banks, stock exchanges, the SEC, the CFTC, and investigate conflicts of interest between the financial industry and: the US Treasury Department, US Congress, and the US Executive Branch of Government.

4) Lie: WE need to demonstrate a strong commitment to "fiscal sustainability" in the longer term, otherwise higher taxes, or reduced federal benefits and services - or a combination of both - will be inevitable.

The truth: This is an attempt to convince people to volunteer for a lower standard of living by making it appear as if there is no alternative.  The fact is, there was a will to save the banks, so the banks were saved.  If there is a will to save the public, the public can be saved too.  

The US is in dire need of radical and fundamental reform of the financial industry and the monetary system.

5) Lie: The debt is complicating efforts by President Barack Obama and Congress to cope with the financial crisis and recession, crowding out all other spending.

The truth: The debt is not complicating the problem.  The debt IS the problem.  We have no other currency except circulating debt.  If we succeed in paying the debt down to zero as happened in 1834-1835, we would have no economy because we would have no currency.  Unlike then, we now have no significant alternative currencies in circulation to fall back on.  We only have circulating debt now.

6) Lie: The national debt is a function of war and peace.

The truth: Our debt-based currency controlled by the Fed and a few super-sized banks permits financing things in ways that should not be done at all, like loans with teaser-rates or interest-free periods that encourage people to get in over their heads, buying too much house, or plasma TVs they do not need.

Eliminating excessive credit in the financial sector would make it much more difficult to finance wars and meddle in the affairs of foreign countries.

7) Lie: Obama is worried about the US National Debt.

The truth: Despite all the election-year criticism of over-spending by ex-President Bush, Obama has bent over backwards to reward the people in the industry that helped more than any other industry to get him elected - the financial industry.  His spending plans include deficits many times what Bush was responsible for, despite the wars Bush got this country into.  That is not to defend Bush.  

Obama is beholden to the financial industry and has surrounded himself with financial and economic advisers representing that industry, and who are in many cases directly responsible for the current crisis.

8) True: The overall debt is now slightly over 80 percent of the annual output of the entire U.S. economy, as measured by the gross domestic product.

9) True: By historical standards, it's not proportionately as high as during World War II, when it briefly rose to 120 percent of GDP. But it's still a huge liability.

10) True: Also, the United States is not the only nation struggling under a huge national debt. Among major countries, Japan, Italy, India, France, Germany and Canada have comparable debts as percentages of their GDPs.

11) Lie: The US Government "borrows" money the same way you borrow might borrow a real thing from your neighbor.

The truth: The words "borrow" and "lend" in banking are so conflated in the minds of average Americans with common conceptions of borrowing and lending real objects, like a screwdriver or lawnmower that, it is difficult for most people to understand how banks and the monetary system really work.  In the world of finance, banks never lend currency at all, because they have no currency to lend.  The "loan" is in fact currency created on the spot by banks in response to a "borrower" signing a contract promising to pay the bank back the amount of money advanced, plus interest, over time.

When the Government exchanges Treasury bonds and bills for existing currency, it is in fact borrowing at interest.  When the Fed gives currency to the Government in exchange for Treasury bonds and bills, it is in fact entering into a contract to pay the Fed back the amount of currency advanced (currency the Fed created on the spot), plus interest, over time.

12) Lie: Treasury securities are suitable for individual investors and popular with other countries, especially China, Japan and the Persian Gulf oil exporters.

The truth: Treasury securities in the past were safe, but have always paid low interest rates.  Taking inflation into account, Treasury securities have almost invariably offered too low an interest rate to be a good investment for individual investors.  As a relatively safe investment against loss of face value in the past, they did serve a somewhat useful purpose for the elderly whose life expectancy was low and who needed a stable investment. 

Actions taken by the Government and the Fed in the past 20 years did much to weaken foreign confidence in the dollar.  Actions taken by the US Fed in the past year and a half have caused China, Japan, Russia, India, Brazil, and the Persian Gulf oil exporters to begin taking measures to protect themselves against an expected decline in the value of the dollar, no matter what their leaders might say publicly.  This is not something that might happen in the future; it is happening now.

13) Half Truth: If major holders of U.S. debt were to flee, it would send shock waves through the global economy - and sharply force up U.S. interest rates.

The whole truth: The value of the dollar would also plummet on the world market, and the price of US imports including commodities would rise sharply and cause the standard of living in the US to drop.

14) Half Truth: As time goes by, demographics suggest things will get worse before they get better, even after the recession ends, as more baby boomers retire and begin collecting Social Security and Medicare benefits.

The Whole Truth: This assumes no radical banking or monetary system reform, no big cuts in military spending, etc.  In other words, this is an attempt to focus on the difficulty funding Social Security and Medicare as THE problem, instead of a symptom.

15) True: While the president remains personally popular, polls show there is rising public concern over his handling of the economy and the government's mushrooming debt - and what it might mean for future generations.

And: Rightfully so.

16) True: If things can't be turned around, including establishing a more efficient health care system, "We are on an utterly unsustainable fiscal course," said the White House budget director, Peter Orszag.

However: The information surrounding this statement is not meant to stimulate public thinking.  The purpose is to guide it toward predetermined conclusions that will concentrate political and economic power in even fewer hands than today. 

For instance, as health care plans struggle or stall, watch calls increase for: austerity measures, tax increases, investing more power in the Fed, and centralization of regulatory power over stock, commodity, and money markets. 

17)  True:  Some budget-restraint activists claim even the debt understates the nation's true liabilities.

And: That is meant to frighten you into accepting whatever the financial industry proposes.

Information for the article was supplied by the Peterson Foundation.  Who is Peter Peterson?



Peter Peterson was Chairman of the Council on Foreign Relations until retiring on June 30, 2007, after being named chairman emeritus. He is the Senior Chairman of the private equity firm, the Blackstone Group.  In 2008, Peterson was ranked 149th on the "Forbes 400 Richest Americans" with a net worth of $2.8 Billion.

Willam F. Jasper had this to say about the Council on Foreign Relations.

Jasper:  "The CFR is an avowedly anti-Constitutional, elitist organization, in favor of a global government.  As far back as 1928, in its first Survey of American Foreign Relations, the CFR openly attacked the U.S. Constitution's intricate checks and balances as incompatible with "responsible government." The CFR study charged that our Constitution's most venerated features are actually defects:

CFR: The jealous control of the purse by Congress is a check which would inevitably curb an ambitious president.... The comparative equality of power of the two houses, rendering each a check upon the other, the "states' rights" sentiment which prevents a gradual subordination of the Senate, and the position of the Supreme Court as final interpreter of the constitutional separation of powers - all these militate against the development of responsible government.

Jaspar: Hence it was not surprising that in the 1980s top leaders of the CFR headed up a front group, the Committee on the Constitutional System, to remove those checks and balances. Their principal playbook, Reforming American Government, infamously admitted their subversive designs. It declared: "If we are to 'turn the founders upside down' - to put together what they put asunder - we must directly confront the constitutional structure they erected."

Turning the American founders upside down is precisely what the CFR-led globalists are attempting to do in their current drives for "global governance.""

If you really want to understand how the current financial crisis is being exploited by the money-power, you need to review history.  Then, just stand back, examine the pattern of recent events in the last year and a half, and listen to what the financial industry is saying it wants now.  It is not that hard.  Just do it.

 

Merchant marine experience on ocean research and oil exploration vessels in my youth. Ex-mechanical engineer, oil exploration equipment industry, commercial and military aerospace industries, SCUBA diving and respiratory protective breathing (more...)
 
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Enjoyed the article very much, Paul.You commented:... by richard on Tuesday, Jul 7, 2009 at 11:06:24 AM
Every dollar that they have just buys another knif... by John Hanks on Tuesday, Jul 7, 2009 at 1:12:23 PM
I think talking about debt misses the point.  It ... by Bill In HI on Wednesday, Jul 8, 2009 at 3:02:42 AM
and it is NOT the contract or the concept of debt... by reasonableperson on Wednesday, Jul 8, 2009 at 5:14:40 AM
What is not said Half truth: These are bad guys.... by Andrew Thompkins on Wednesday, Jul 8, 2009 at 2:04:36 PM