Original theme by Bill Jenkins; Facilitated by Walter Sorochan
Posted December 11, 2009; Updated November 15, 2021.
This
article explains how the USA government gets money to pay for all of government programs and how debt is created! The revenue collected by United States government is not enough to pay for all expenses; hence, your government is living in debt beyond it's means!
So, how does the federal government get money [revenue]? Studebaker Gov't raises money 3 ways 2015
1. The first is to tax the people. The problem with that from the point of view of our masters is that everyone knows who's doing it. The politicians can't blame greedy capitalists or any others for what the tax-man does, and that's a problem for them.
2. The second source of revenue for the government is borrowing. But again, there's a limit on how much you can borrow, because everyone knows who's doing it - and has a good idea of how indebted the government is.
3. The third way is much, much better from their point of view, and that is to create money out of thin air. That may be done via fractional reserve banking, or printing fiat currency, or whatever. This is good from their perspective because not one in 1,000 people, or maybe not one in 10,000, knows who's doing it and that it is causing inflation. It's theft on a grand scale, understood by so few, so they can get away with it.
There is a cover-up to hide this truth from the American people!
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Here is Bill Jenkin's version of how the USA government gets money to pay for government expenses and creates debt: Jenkins: Gov't Paper addicts 2009 The amount of taxes collected here in the United States last year would not have been enough to fund Social Security and Medicare. It’s hard to believe, but true. Jenkins: Gov't Paper addicts 2009 So where does all the money come from to pay for the infinite number of other expenditures of the federal government? How do they pay for schools? Not just the aging and dilapidating buildings, but the books, supplies, teachers and the massive bureaucracy? How do they pay for the military… guns, tanks, soldiers, computers, jets, ships, submarines and planes? How do they pay for the Senate, House, Supreme Court, president, Secret Service, CIA, FBI, NSA, NASA, DOJ, DHA, HUD, DHS, ATF, IRS? Not to mention welfare programs of multitudinous varieties, college grants and national parks. How do they pay for all this? By means of two devices about which the man on the street knows little. Jenkins: Gov't Paper addicts 2009 The first is through bond and Treasury auctions. We — as in “we the people’ — sell these instruments to people who believe that we are a good risk. Then we pay them to let us borrow their money. Of course, borrowing money costs money… it’s never free. But when a country borrows more than it takes in by taxation, because it is spending more than it takes in by taxation, the result is a growing debt problem, which never gets paid down. So how can the United States, or any country, continue on this cycle of never-ending borrowing? Not to worry, my friend. Because here is where the second device comes into play. Countries begin paying off their debt with money that they “print.” It is commonly called monetizing the debt. It’s not hard to understand, but countries try to make it hard. When you’re stealing from your citizens, it is better if they don’t know it. If you make the example and the problem personal, it all falls into place. If I [Bill Jenkins ] had a nearly endless source from which to borrow, some deep-pocketed uncle for instance, I could borrow from him indefinitely, as long as I could pay him back in money that I printed myself. If he did not know the money I gave him was fake, or if he just didn’t care, I could continue that scam in perpetuity. I could borrow millions… billions… TRILLIONS! But let’s not get ahead of ourselves. Technically, I [ Bill Jenkins ] could only borrow from him until he was out of money. Right? Well, no… not exactly. If he had creditors who would take my fake money as real money, he would never have to stop lending. Until someone held his “wallet to the fire.” That is essentially what is happening. Only it is our Uncle Sam who is doing the borrowing. Then he prints his own money and uses it to pay his bills to his creditors around the world. Up until recently, our creditors had to take it. Because we had the bully power to force it on them. Plus since all the countries in the world were doing the same thing, our funny money was considered the best. That gave it some sort of intrinsic value. But now there are currencies more valuable than ours. And now we do not have the military firepower to force it on others. Some feel that means that the whole jig is up. If our paper money is refused, then everyone’s paper money will be refused. But just because our government has spent us into trouble and is trying to make it worse with bigger and bigger spending projects from stimulus to healthcare doesn’t mean that the other major economies of the world are ready to throw in the towel. Indeed, if they can hang on, they will, because perhaps they will move into the position of world’s reserve currency and can produce prosperity out of nothing, all while impoverishing their citizens and neighbors. |
Sorochan Commentary: Author Jenkins has revealed the bitter truth: US does not have enough money, cash on hand, to pay the interest on the borrowed money. Your government has also deferred payments on the principal [money borrowed]. Hence, more debt is piling up! Your government [ the congress and senate ] 'kicks the can down the road' by printing money that has no collateral to back it up! Economists refer to such money as junk.
Here's how that works. If you add up all of the U.S. government's promises to pay retirement and health care benefits for the next 75 years and subtract the projected tax revenue dedicated to those programs over the next 75 years, there is a gap. Depending on the year, for 2015, there is over a $ 100 trillion gap!
Your government has distorted the real truth about just how much we really owe. The government says about $ 20 trillion in 2015. At the end of FY 2016 the total government debt in the United States, including federal, state, and local, is expected to be $22.4 trillion. This is the amount that the federal government says it owns.
But this amount does not include hidden expenditures like entitlements. According to Edelson, the amount is at least over $ 100 trillion dollars in 2015. The plain truth is that Washington D.C.’s debts are far larger than most people realize.
Incidentally, entitlements must be counted in the amount that the government owes. Why? Because, for example, the federal government took [ stole ] the funds that retirees paid into social security as retirement funds and gave a worthless IOU. This social security amount was borrowed from the retirees on the promise that it would be paid back.
In addition to that debt of $ 20 trillion in 2015, according to the latest statistics [2015] from the U.S. Department of the Treasury, our government owes another $97 trillion that it never wants to talk about. These are what it politely calls “unfunded liabilities” — the money it owes primarily to veterans and to seniors in pensions, Social Security and Medicare payments. Below is a graph projected by Larry Edelson for 2015:
Altogether, Washington was on the hook for more than $115 trillion on 2015. That’s more than 6 times the size of the entire U.S. economy. The plain truth is that Washington D.C.’s debts are far larger than most people realize.
Why does the debt grow each year? Because the government spends more money than it gets. Your government does not live within its budget means. The video below explains this:
Video:
The Size of the U.S. Debt in 2015: length = 1:58 mns.
Lack of transparency: Why are the American people not told the truth about the national debt? Chris Cox, a former chairman of the House Republican Policy Committee and the Securities and Exchange Commission and Bill Archer, a former chairman of the House Ways & Means Committee explain this debt dilemma: "A better explanation is that the full extent of the problem has remained hidden from policy makers and the public because of less than transparent government financial statements. For years, the government has gotten by without having to produce the kind of financial statements that are required of most significant for-profit and nonprofit enterprises. The U.S. Treasury "balance sheet" does list liabilities such as Treasury debt issued to the public, federal employee pensions, and post-retirement health benefits. It does not include the unfunded liabilities of Medicare, Social Security and other outsized and very real obligations." Cox: Hints of true US debt 2012
The actual liabilities of the federal government—including Social Security, Medicare, and federal employees' future retirement benefits—already exceeded $97 trillion in 2015. The actual figures do not appear in black and white on any balance sheet. Cox and Archer blame the U.S. government for using shoddy accounting and for misleading the American public on their finances. In fact, the most misleading thing about that $97 trillion is the way the mass media often misunderstands and distorts the real truth about the national debt. Thompson: Real debt burden 2012 Cox: Hints of true US debt 2012 Weisenthal: Real US debt 2011
Former Reagan economic adviser Laurence Kotlikoff said the U.S.'s "true indebtedness" amounted to $211 trillion [in 2013]. That's more than 15 times the $14 trillion official figure. "We're focused just on the official debt, so we're trying to balance the wrong books," Kotlikoff said, naming Social Security, Medicare, and Medicaid for the skyrocketing unofficial figure. If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion. That's the fiscal gap .... Why are these guys thinking about balancing the budget?...They should try and think about our long-term fiscal problems. We don't hear more about this enormous number, Kotlikoff says, because politicians have chosen their language carefully to keep most of the problem off the books. Foxman: Actual debt 2011
Other countries, having similar problems, have copied the USA model of printing money in an effort to balance their budgets. “Overall debt relative to gross domestic product is now higher in most nations than it was before the crisis [of 2008],” McKinsey reports. “Higher levels of debt pose questions about financial stability.”
Still confused and in disbelief? Below is a video that summarizes how our economy works and how Uncle Sam creates debt:
Video: Length = 5:12 mns.
Reference:
Cox Chris and Bill Archer, "Why $16 Trillion Only Hints at the True U.S. Debt," The Wall Street Journal, November 28, 2012. Cox: Hints of true US debt 2012
Foxman Simone, "Economist Calls Entitlements A Massive Ponzi Scheme And Says US Is Actually $211 Trillion In Debt," Business Insider, August. 31, 2011. Foxman: Actual debt 2011
Jenkins Bill, "Paper Addicts," Whiskey & Gunpowder, December 11, 2009. Jenkins: Gov't Paper addicts 2009
Kotlikoff Laurence J., "Kotlikoff on NPR Hits US$211 TRILLION Debt," The Daily Bell, September 07, 2011. Article by Kolikoff: US debt $211 trillion is no longer active.
Louis James, “Walter Block inteview,” Casey Daily Dispatch, April 10, 2013. Article by Louis: Casey interview 2013 is no longer active.
Solman Paul, "David Stockman: We’re Blind to the Debt Bubble," David Stickman/s Contra Corner, February 3, 2014. Article by Solman: Debt bubble is no longer active
Studebaker Benjamin, "The 3 Ways Governments Raise Money Part II: Borrowing," 2015. Studebaker Gov't raises money 3 ways 2015
Thompson Derek, "Is Our Debt Burden Really $100 Trillion?" The Atlantic, November 28, 2012. Thompson: Real debt burden 2012
Weisenthal Joe, "OMG, Is The US Really $211 TRILLION In Debt?" Business Insider, September. 4, 2011. Weisenthal: Real US debt 2011