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Federal Government is Going Bankrupt

February 20, 2011

David Walker, the former Comptroller General of the United States said it in the following way.  Referring to those in charge, he stated “they are arguing over the bar tab on a ship that’s headed for an iceberg that can sink it.”  Indeed, President Obama is proposing virtually no cuts in spending and leading Republicans are pushing for token $60-100 billion in cuts, which is more of an insult to those in the know.  Freshman Senator Rand Paul and Representative Bachmann are asking for $500 billion in cuts, but they are among the rare exceptions who seem to “get it.”  As Comptroller General, Walker was the director of the GAO, the auditing arm of Congress, and one who would have a more realistic understanding of the situation than most.  He is warning that the next major threat to America is not men in far away caves or a nuclear bomb, but a “debt bomb.”

Let’s look at some numbers.  Federal government spending is expected to be $3.7 trillion this year.  The budget deficit is expected to be $1.64 trillion.  That means Washington will be spending $1.64 trillion more than it takes in.  Where does it get the money to cover this huge deficit?  It borrows.  The $1.64 trillion it borrows is added to an already gigantic $14 trillion of debt, only deepening the problem.  Here’s an example:  Let’s say you make $75,000 this year, but you end up spending $134,250.  You just borrowed $59,250 to finance your lavish lifestyle and the debt is added to your balance with Acme Credit Card.  The total debt you will owe at the end of the year will be $569,250 and yes, these numbers are in proportion to the government’s figures! Wouldn’t any sane person with a shred of common sense come to the conclusion that such spending must be drastically reduced?  Washington now owes $14 trillion and the amount is growing exponentially each year.  The debt crisis occurs when there aren’t enough buyers of our treasuries and the rates begin to climb in order to attract more lenders.  These events could lead to a crash in the dollar and possibly hyperinflation.  The following is the band-aid solution to the bullet wound dilemma.

The federal government sells about $100 billion of treasuries each week to roll over its debt and keep things afloat.  When buyers like China, Japan or Russia finally decide they have lost their appetite for our bonds, interest rates have to rise to lure more investors.  This increases the financial burden on us and heightens overall risk because we have to borrow more to pay the higher interest.  Eventually, treasuries are downgraded and then … well.  So, the Federal Reserve has stepped in to take the place of absent foreign buyers and has begun to create huge sums of fiat money out of nowhere to buy government securities.  You can call it self dealing, or it may be akin to making a payment on one credit card with another.  Quantitative easing is the electronic “printing” of money to buy up this government debt to keep the music playing, because as long as the music plays, the game can continue.  That is, until inflation rears its ugly head.  When inflation is manifested with higher prices, the trouble it presents can bring devastating results, because inflation is a most unjust kind of tax upon the poor.  You won’t hear this from the press, but this silent tax is now being levied upon Americans in the form of money printing and it will affect each of us.  This false  “solution” is taxation without representation in its purest form, exacted by an unelected financial dictator who chairs the privately run cartel called the Federal Reserve Bank.

Time is running out.  How long will we let the hourglass sand flow before we force our derelict Congress to stop the unrestrained spending?  First, we must look in the mirror and realize the solution starts with us.  There are government programs and subsidies that you and I refuse to relinquish, and this self-interest ties the hands of Congress.  We must mature to the point where we allow Washington to cut or eliminate even those programs we treasure, whether it be defense spending, a regulatory agency or some entitlement benefit.  It’s called sacrifice.  Remember what a popular President once said, “ask not what your country can do can for you, ask what you can do for your country.”  Now is the time to act on this very principle.  We must cut the government at least by half, in stages, and these adjustments must be accompanied with proportional cuts in taxes in order for the remedy to work.  Tax reductions will help stimulate economic growth that will be needed to present employment opportunities for laid off government employees.  Obama was right when he mentioned sacrifice.  It is this return to basic American principles of self-reliance, hard work and trust in God that will continue to make America the greatest nation on earth.

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4 Comments leave one →
  1. December 8, 2011 12:31 pm

    My only criticism is that, once again, the FED is being incorrectly characterized as a “privately run cartel…” That is false. The FED is, and always has been, a GOVERNMENT organization. I defy anyone to prove otherwise. (Hint: who pays Bernanke? Who pays the other members of the FED? Who enforces the rulings of the FED? Who created the FED in the first place? (I’m not talking about who supported the idea but rather who passed it into law).

  2. December 8, 2011 12:50 pm

    Thank you for your comment, however, there is ample evidence to prove the Fed is a privately run operation. Here is just one of many. Notice the sign toward the end that states “private property”? The security officer also admitted it was private.

    • December 8, 2011 2:20 pm

      This video is meaningless. It doesn’t show ANY private citizens weilding coercive force against the rest of us.
      The Board of Governors are all appointed for 14-year terms by the president and confirmed by congress. It operates per it’s charter and laws set by congress. it is overseen by congress. There is no structure or mechanism for private ownership at this level. Board members are forbidden by law to have any economic interest in a private bank.

  3. December 8, 2011 4:08 pm

    As to the first point, it does show the Fed grounds to be “private property,” not Federal (people’s) property, and that is significant, unless the sign was a prop planted by protesters. Then, the police and security admit it is private.

    Second point: There is a quasi governmental function, not to mention the origin of the Fed, but that only identifies the fascist nature of the institution. Fascism as described by Mussolini as the merger of state and corporate power (corporatism). Many utility companies are highly regulated by the state but are privately owned and controlled, within regulatory limits. Again fascism, but the Fed has been granted a govt. sanctioned monopoly over our currency, contrary to the US Constitution. The Fed is independent –

    So, it’s more than just private because of it’s power not to live within the laws we have to live by, however, the Federal Reserve Bank was birthed from the secretive meetings held at Jekyll Island in 1910 by international bank representatives and politicians favorable to granting more power to a banking cartel. The Jekyll Island meetings are well known.

    G Edward Griffin on the “Creature” –

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