The Shuffle

The only way for the United States to restructure its debt nationally is through bankruptcy, of course this would cause the collapse of the American government and economy however there is no other recourse as all of that is inevitable.

Debt is just the opposite of generational justice (a.k.a.: intergenerational justice). We should also have in the case of money what we should have in the case of all products and goods coming from nature: Nachhaltigkeit (“sustainable development”).

Debt has definetely to do with the future. Nobody can deny that.

So if you burden the generations of the future with debts and/or a dirty natural (and probably also social) environment, then you are not fair, not just, not good, not right.

As you most likely know, there’s good debt and bad debt. Good debt is when you borrow to invest in something that will bring in a return; bad debt is when you borrow to pay for something that won’t bring in a return. This is why debt is often separated into private and government debt. The former is often good; the latter is often bad as the government usually needs money just to keep things afloat rather than to invest.

If it wasn’t for the wars, the U.S. would have crashed ages ago. The perpetual wars are what’s keeping the U.S. going.

They’re not just keeping a huge military-industrial complex humming along or gaining access to more oil, but more importantly, the wars are taking out dictators who challenged the U.S. petrodollar.

There are several reasons for the never ending wars (which is why lots of interest groups support them) but the one that’s related to the economy/finance/debt is the U.S. petrodollar.

The recent turmoil started in the 70’s when Saudi Arabia threatened to use oil as a weapon against the U.S. for its support of the Zionist regime in Israel. The U.S. threatened to bomb Saudi Arabia back to being a desert if they didn’t start selling oil again and only trading it for U.S. dollars. They accepted. :laughing:

More recently, Saddam was attacked after he said he’d only accept Euros for his oil. Gaddafi was attacked after he dropped the U.S. petrodollar AND the Euro (notice the British and French largely led that war). Gaddafi went further by beginning to set up a new currency for a United Africa that was outside of the control of the International banking system.

My point being that if you stopped the wars, stopped overthrowing countries that wanted to take control of their own financial futures, stopped rigging the system and stopped inflating the value of the U.S. dollar through extreme violence, the U.S. would crash under the weight of their debt.

People like you, Carleas, speak about the economy as though everyone’s playing the game according to rules. Nothing can be further from the truth. The entire system is rigged from top to bottom.

(Sorry if I don’t respond further. I have a ton of work to do. Boomers are still booming :sunglasses: )
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That would only work if we had governments revolving around sustainable development of all kinds instead we have governments owned by banks and corporations. Until that changes nothing will and probably won’t until what has become of our unsustainable societies fully collapse internally.

The only reason the US can borrow money at 1% for a 30 year bond is because the federal reserve and other reserve banks such as in Japan and Europe are subsidizing that. The Fed Reserve has some 4 trillion dollars of assets on its books, including bonds and securities. The securities aren’t a problem so long as the Fed doesn’t dump them into the market (sell them) but simply keeps hoarding them, and continues to buy more with more invented money.

For the treasury bonds, the Fed is legally obliged to not make a profit, so when bonds come due and the US treasury transfers money to the Fed then at the end of the year the Fed simply transfers it back to the treasury again, minus costs of overhead and paying the dividends to large banks that own stock in the Fed. So it’s basically a huge scam.

Japan owns more US debt than does China. Japan is also heavily leveraged with its own reserve bank, and is doing the same thing. You notice a pattern: reserve banks around the world are printing or digitizing money out of thin air and using it to buy US treasuries, but why? Because the US is the globe consumer of reliability that keeps the world economy afloat. The world economy keeps going at the cost of the US importing a billion dollars a day from other economies, like those of China and Japan. That’s why China and Japan are happy to keep loaning money to the US.

How long is that sustainable? We are using borrowed money to over-consume so that foreign economies keep going by selling us their goods and services. And there is no way the US can ever pay back 20 trillion dollars. Although remember that maybe up to half of that is debt held in the US already, by the Fed and by US federal government departments like social security, and also by major banks.

The Fed Reserve is legally forbidden from purchasing treasury bonds directly so it does so via the intermediary of the large banks: large banks buy treasury bonds and then sell those to the Fed for a small fee, thus “everybody wins”… except the US taxpayer who is now born into the US owing over $300,000 from the very beginning.

Debt is bad, but a small amount of debt is good if managed well because it allows you more capital to invest in something that produces a rate of return higher than the cost of servicing that debt. But we aren’t just taking about the straight 20 trillion in already existing debt, we are also talking about unfounded liabilities in social security, Medicare and welfare that reach up into the quadrillions.

I’ve heard liberal leftists, always the apologists for big government (when was the last time you heard any democrat even mention the US debt or deficit as being a problem?), say the same thing as Carleas is saying, “don’t worry about the debt”. Sorry, but some of us have this little thing called common sense. We realize that the US economy, a consumer economy, with more outstanding debt than the size of the entire US yearly GDP and then constant deficits on top of that plus even more unfounded liabilities, in an economy that is basically stagnating and already not working for most Americans, is a bad thing. The US will eventually suffer a loss of its credit rating, it already has with the former crisis over raising the debt ceiling and shutting down the federal government over failure to pass budgets.

The Fed is propping up the housing bubble, which never really popped, with QE 1-4 and is artificially stimulating the market for treasury bonds in the same way. Other nations are in on the game so long as US consumers keep buying the goods and services made by those other nations. But how long can this scam keep going? One cannot print oneself into prosperity, and debt isn’t a recipe for success unless the debt is kept to a responsible minimum and that debt is being used wisely. Neither of those are the case anymore.

The US consumer is already crushed with debt, personal debt and car debt and mortgage debt and student loan debt, to the point where the middle class is no longer able to lift the economy back up into a prosperous situation. But people like Carleas are happy to tell you to “not worry about it” and keep on going with business as usual, probably because they are personally not affected by it and don’t want to admit the whole house of cards is going to collapse down the road.

^^^Essentially the BOJ, FED, and ECB are all propping each other up simultaneously. That’s how desperate this international financial debt is becoming. What will destroy this last ditch effort of all three central banks of course will be credit rates, treasury bonds, and stagflation which will eventually transfer to a hyperinflationary unprecedented disaster.

Right, and as others have pointed out these central banks are running out of places to stash their made-up money:

Does the Federal Reserve Print Money?

JULY 15, 2014 BY JOHN LAWRENCE

The Federal Reserve is America’s Central Bank

By John Lawrence

The Fed doesn’t actually “print” money in the sense of ink on paper hundred dollar bills. But what it can do is create money with a few keystrokes on a computer.

Money so created is called “fiat money” since it’s not backed by gold or anything else. The Fed currently prints the money to purchase $40 billion in mortgage backed securities and $45 billion in government bonds each month. The rationale for doing this is that it keeps interest rates low which is thought to be necessary to keep the economy humming.

Before the financial crisis of 2008-09, the Fed managed to keep interest rates low by adjusting the interest rate at which banks borrow overnight. But after the financial crisis, the Fed needed a more robust policy which is called Quantitative Easing or QE. This policy is mainly a giveaway to the big Wall Street banks to augment their reserves. The lack of sufficient reserves is thought to have been the problem that caused the financial crisis.

The Fed’s massive QE program was ostensibly designed to lower mortgage interest rates, stimulating the economy. And rates have indeed been lowered – for banks. But the form of QE the Fed has engaged in – creating money on a computer screen and trading it for assets on bank balance sheets – has not delivered money where it needs to go: into the pockets of consumers, who create the demand that drives the real economy.

Low interest rates will certainly stimulate the economy in the sense that they will encourage the sale of cars and houses, both of which are usually done by borrowing money at interest. So the Fed’s policies are all about generating economic activity by creating more debt for average Americans and this results in bigger profits for Wall Street.

The Fed’s QE policy means that the Fed buys government bonds and mortgage-backed securities from private investors – mainly the big Wall Street banks – and then credits the accounts of those banks with the cash. In return the Fed takes possession of the bond or security it has just bought which is just added to the Fed’s balance sheet.

Now if the Fed sells that bond back into the market or redeems it from the government, it would get the cash that it had created back and could just extinguish it by a few more keystrokes on the computer. At that point the money that had previously been created will have been destroyed and would be subtracted from the Fed’s balance sheet. So in that long run scenario the Fed would not have “printed” or created any money at all except on a temporaray basis.

The rub is that the Fed may never remove that money from its balance sheet. It certainly hasn’t done so thus far. The Fed has been buying bonds since early 2009. During that time its balance sheet has increased from $900 billion to over $4 trillion today.

A secondary effect of keeping interest rates low is that it lowers the Federal government’s interest payments on its gargantuan Federal debt.

That tends to neutralize the issue of government spending and deficits as a political issue. The Fed has also been buying the bonds being sold by the US government to finance its deficit. This is considered a Ponzi scheme by some writers as the Fed buys up government deficits and in effect disappears them making sure that bond redeemers always get paid. Bernie Madoff went to jail for doing the same thing except Bernie could not create money with a few keystrokes on a computer like the Fed can.

The negative side of low interest rates is that it hurts savers. Saving accounts produce hardly any interest so there is not much incentive to save. There is, therefore, an incentive to invest in the stock market which has risen dramatically and basically has become a bubble similar to the rapid increase in home values prior to the Great Recession of 2008. When that bubble burst, home values fell precipitously.

The same thing could happen to the stock market if the Fed eases off its policy of QE and interest rates rise. Then the stock market could deflate like a punctured balloon.

So what is the other negative aspect of the Fed’s QE policy? All that money the Fed is creating or printing, if you will, is pooling in the financial system mainly among rich investors. It is not going into the real economy or into the average person’s pocket. If that money were injected into the real economy, it could be used for rebuilding, repairing and building new infrastructure, for example, which would create jobs.

Instead the Fed’s idea of creating jobs is to keep interest rates low so that more cars and houses will be built and sold. The jobs created will be mainly for car salesmen and real estate salespersons as well as construction crews and assembly line workers.

Money pooling in the financial system and not entering the real economy has only an indirect effect on economic growth, and has the primary purpose of making rich people, especially bankers, richer. This is thought to be a good thing in that it shores up bank reserves which were drastically depleted due to the casino operations leading up to the Great Recession when the banks collapsed not essentially because they had little in the way of reserves but primarily because they had run up their gambling debts to excessive levels with nothing to back them up.

So what will the Fed do now? It may never be able to reduce its balance sheet by either redeeming government bonds or selling them into the market because that would raise interest rates and drive up the amount the Federal government would have to pay in interest on its debt. At that point paying interest on the debt might take up the entire or almost the entire Federal budget.

In addition raising interest rates would put a damper on economic activity in the form of discouraging people from purchasing cars, houses and other consumer items. Since consumption is 70% of GDP, this could lead to a recession. This would again place the big banks in jeopardy because, as economic activity diminishes, interest payments to the banks – a big part of their income – will go down, and this will add to the downward spiral which could produce Great Recession, Part 2.

Therefore, the government bonds and mortgage-backed securities that the Fed is taking on its balance sheet via their money printing operations may never be redeemed or sold and may have effectively disappeared into a black hole as the Fed’s balance sheet continues to increase. The Fed may be stuck printing money ad infinitum and subsidizing the banks at the expense of the average American in perpetuity.

The Wall Street banks, it should be pointed out, make money every time the Fed purchases a government bond or mortgage backed security from them. Since the Fed is prohibited by law from buying government bonds from the government directly, Wall Street banks effectively act as middle men and they do so for a price, a price the Fed gladly pays, and for no risk on the part of the banks.

As the Fed continues to subsidize the big banks with money pooling at the upper end of the income spectrum, inequality increases in American society. The Fed policy of QE is a policy designed to increase inequality as the price to be paid to keep the economy rolling. The price of increased economic activity and rising GDP is the further indebtedness of the American people as they buy cars, houses and other consumer items with borrowed money.

The Fed, which is not publicly owned, functions to improve the financial prospects of the Wall Street banks which are its real owners. (They actually own most of the stock in the Federal Reserve.) Is it any wonder then that the Fed’s policies primarily serve the interests of its owners – the big Wall Street banks? A truly public central bank, one owned by the people of the US, could have the same function of increasing the money supply as needed, but it might do so by using the fiat money so created to more directly benefit the American people.

Germany tried “abnormal” money printing in the early 1920s after WW 1 and the result was hyperinflation, collapse of the German economy, and the rise of Hitler. The same might happen in the US if hyperinflation were to start taking place while the Fed is stuck in handing out money to the big banks in order to keep them afloat.

To fight hyperinflation the Fed would have to raise interest rates and this might bring the US economy to a grinding halt. The policy of reducing the amount of QE on a monthly basis is called “tapering.” This doesn’t mean that the Fed is selling off the government bonds or mortgage backed securities on its balance sheet, just buying less of them than they had previously. The Fed will still be adding billions to its balance sheet every month. Inflation is the only thing that will force the Fed to reduce its balance sheet. Otherwise, it could disappear government deficits and bank owned mortgage backed securities into its black hole indefinitely.

If the Fed starts to taper, the big boys at the Big Banks might take this as a signal to short the stock market, and this might cause the stock market bubble to burst as stock values are driven down. The average non sophisticated 401k investor would probably panic and sell on the dip losing the value of his or her retirement savings as the Wall Street guys make a killing.

When the market reaches its lowest ebb, the Big Guys will start buying again driving the market back up. After the market rallies sufficiently, the average guy will work up the courage to get back in with his 401k, having lost a ton of money selling on the dip and buying on the rally, just the opposite of what sophisticated investors do.

Concomitantly, the Fed will probably reintroduce its policy of QE in order to stabilize the economy, and it might have to admit that this policy will continue indefinitely or even ad infinitum. The denouement is that the rich will have gotten richer while the middle class will have been reduced to penury, just the same tendency as happened after the recession of 2008.

This debt-based, Wall Street centric, unstable economy known as US capitalism could be changed by replacing the privately owned Federal Reserve with a publicly owned central bank that created and extinguished fiat money. This would more directly benefit the American people, and serve the needs of the real economy rather than being an effort to stabilize and profit Wall Street banks. Rather than providing jobs indirectly only if more debt for the American people is created, a public central bank could inject money as needed directly into the real economy creating jobs in the process and building wealth for the average American while reducing inequality.

sandiegofreepress.org/2014/07/d … int-money/

Basically things like quantitative easing is where central banks syphon money off the population at large to fund their corporate debt holdings and more importantly keeps their doors open or lights on. This of course is systematic financial parasitism and even more the host these financial parasites or vultures are feeding on is dying where once again this desperate measure of a last ditch effort to keep the west financially solvent will backfire tremendously. The question of course becomes when all of this will occur. For the United States at least there is chatter or rumors by banks and corporations to initiate some kind of QE4 next year as the United States economy has become anemic. There’s just one problem, there is no money or pound of flesh to extract left. Next year around April things are going to get very interesting. The western Ptomekin village is dying.

It’s sad but true. A massive scam, the largest in history, that has transferred pretty much all of the US, Canadian and European wealth out of the hands of the people and into the hands of elites. A scam perpetrated by traitors and subhuman garbage and defended by pseudo-intellectual, sycophantic useful idiots and hoards of virtue signaling people everywhere, none of whom with even an ounce of reasoning in their brains.

And as others have noted, when the coffers are empty and there is no pound of flesh, the last resort for such a society is to go to war. Indeed, war is coming.

The only problem with that is war requires funding, you can’t go to war if your country is bankrupted. If they’re going to start a huge new war time is running out for them.

They’re already in that war, in the Middle East and trying to wrap Russia in too. But I was talking about civil war.

Yes. Historically said: it would have been quite alright, if they had stopped their debt policy in the 1960s (and not later!); but what they did was just the opposite and more, which means even much more accelerated, thus even much more exponentially increasing debts and a bastard economy.

Yes, or they start or let others start a war, so that they can say after that war: “we need to start with a new economy, a new currency, a new law of this and of that” and so on (blablabla - always the same).

[/quote]
K: I was in fact researching this exact same thing for a post pretty much along
these lines… beat me to it…

Kropotkin

The United States started going downhill when the boomers elected Ronald Reagan. Wallstreet loved old Ronnie and the banks did also.

double post

And in spite of the fact that the debt proponents do not like it.

This subject is just too important.

True. But here too method and madness brew credibility. Debt and inflation are circular, but never really meet at the middle.

How it goes down as an asset, rather then a debit, is that longer term debt eats itself, because, the longer the term of the debt, the less it really costs and it becomes easier to digest, because, especially if fixed, it looses inflationary value. This is why at the very top of the US real estate bubble, they introduced variable rates, to put a brake on long term fixed effects. Variable adjustment was supposed to slow down the inflation, but it came way too late.

Normally, the need for inflation as an incentive to borrowing is a must, without that incentive a cash only, or a barter type economy would reappear, necessitating a return to the silver and gold standard, which are impossibly unaffordable to most economies, except to those, who manipulate currencies, like the Chinese.

I would be in favor of a program like this. A lot of people live the majority of their lives in just a few places. When you spend some time living in another place (not just vacationing/sightseeing) you can’t help but gain perspective from the experience. It’s cliché, but it really does broaden the horizon of experience. Some colleges have scholarship programs that require students to spend at least one semester abroad. The amount received for scholarship at the student’s home university is applied towards the tuition/room/board at the international school of their choice. Course credit earned abroad can be applied toward the student’s major program(s) if the course matches up close enough to what is offered at the home university.

Apart from funding, I can’t really see a downside to a similar domestic program for young people.