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.
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.
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.
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