Why Our Government is Creating So Much Debt
publication date: Jul 28, 2010
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author/source: Brad Hamill
There seems to be some confusion regarding whether our economy is seeing
inflation, deflation, or nothing. Also, we often hear the economic “experts”
warning us about a possible return to a recession – known as a “double-dip”.
Then, on the other hand, they will report economic data while referring to our
current recession. Which is it? Are we in a recession or not?
Let’s analyze what the data is showing us. Pictures are often easier to understand than the written word.
First off, we need to clearly define our terms. Inflation is an increase in the overall “money” supply relative to a level of goods and services. This increase of “money” will be absorbed into the economy and cause prices to rise, since there is a greater amount of money to spend. Each unit of “money” will be worth less than its value prior to the inflation.
Deflation is a reduction in the supply of “money” relative to a level of goods and services. Less “money” causes each unit of “money” to be worth more, since there are fewer units to go around. Goods and services will decrease in price in order to attract the scarce “money” supply.
I put the term “money” in quotes, since it refers to credit as well as physical currency. Each time you put a charge on your credit card you are increasing the money supply and helping to create inflation – even if you plan on paying the balance off at the end of the month. Defaulted loans decrease the money supply and contribute to deflation, since that “money” will never be paid back.
We are currently in an economic climate where the international banks are creating massive credit destruction all across the industrialized world. They loaned out easy credit to the masses for a long time, and then proceeded to pull the rug out from under those borrowers in order to acquire the underlying assets that the loans backed.
All of this defaulting credit (“money”) has destroyed our nation’s overall money supply. It has driven us into a deflationary spiral. People are losing their jobs, houses, and benefits. This has created a situation where our Federal government has found themselves in a quandary. They have three basic means of getting revenue to keep their greedy power structure in place:
1) Taxes and fees. These are going down since fewer people have jobs. Congress wants to increase taxes on those that still have jobs in order to recover some of this lost revenue.
2) Stealing. Our government steals any money that is left over in the various “trust” funds each year and uses it for other purposes. They replace those stolen funds with a bunch of IOU’s that will need to eventually be paid back by the future labor of you, me, and following generations. The Federal government is currently having a hard time finding anything to steal, since fewer people are working and contributing to the “trust” funds of Social Security, Medicare, etc. There are more payments going out to recipients each year than there are funds being collected. This is why Congress passed the recent Health Care bill in order to create a gigantic “trust” fund based on our health care premiums. Their goal is to capture these dollars into a pile that they can then steal from.
3) Selling US Treasury bills, bonds, and notes. The Federal government has been selling Treasury securities as fast as they can. It’s the only current revenue generator that they can ramp up to keep their greedy machinations going. Each bill, bond, or note that they sell is a promise of our future labor to the bearer. Our government sells us as debt slaves. “Slave” may be a strong word – but what do you call it when somebody sells someone else’s future labor without explicit permission? I call it slavery.
The following data can be explored via the St. Louis Fed web site if so desired.
We are going to explore the myriad of ways that the US government has been creating new debt (payable by our future labor) in an effort to offset the destruction of credit being purposely carried out by the international banking system. This first graph shows US government “net outlays”. In other words, how much more are they spending than they are taking in from one of the three methods I mentioned earlier:
This graph is showing data on a year-over-year basis. Each point on the line shows how much more the US government is spending than it was exactly one year previous. We can see that the government was keeping their increased spending to around $200 billion per year up until mid 2006. There was then a drop in 2007 to where the government was “only” spending $100 billion extra from the previous year. Now look at where things sit. This data shows that the government was spending about $550 billion dollars more in late 2009 than it was in late 2008. And it was spending about $250 billion more in late 2008 than it was in late 2007. This is why we have a projected $1.5 trillion dollar deficit for fiscal year 2010.
This next chart show how fast the Federal government’s gross debt is going up year after year. Remember, all of this debt is backed by our future labor:
We can see that the debt level in late 2009 was going up at a rate of $1.9 trillion dollars as compared to late 2008. Debt in late 2008 was $1 trillion dollars higher than late 2007. Do you now see how hard the Federal government is trying to replace the “money” being lost to intentional debt destruction by the international banks?
The next graph shows the “receipts” that the Federal government is seeing come in their door through taxes and fees:
Federal receipts are falling off a cliff due to so many without jobs or underemployed. The data from late 2009 shows us that receipts were down more than $400 billion dollars from late 2008. Receipts in late 2008 were down about $50 billion from late 2007.
Conclusion
The US Federal government has undertaken an enormous effort to keep the populace from seeing the economic deflationary spiral depression that we are truly in. There is no “risk” of a “double-dip” recession, since we have never left the first recession/depression. We are seeing where the Federal government has taken the place of the consumer in many ways. They are fighting tooth and nail to maintain their wicked power structure.
Many in the citizenry are oblivious to the true proportions of the problem. They believe the smiling people on the television screens that tell them how our nation is slowly climbing out of the recession. Nobody seems to care that these propaganda mouthpieces don’t have anything similar to an inkling of what they’re talking about. They wait to see what the market does and then they write a story “explaining” why it did it.
Economics is not hard if one understands the basic tenets, built on the bedrock of God’s revealed word. We must not only understand the underlying problems, but seek to apply scripture towards arriving at a better path forward.
Your comments are appreciated…
If you are not currently on the Economic Update email list you can email Brad Hamill at: brad@newfamilyeconomics.com to be added.
There is no charge and your email address will never be shared.
Thanks,
Chris Prang
Let’s analyze what the data is showing us. Pictures are often easier to understand than the written word.
First off, we need to clearly define our terms. Inflation is an increase in the overall “money” supply relative to a level of goods and services. This increase of “money” will be absorbed into the economy and cause prices to rise, since there is a greater amount of money to spend. Each unit of “money” will be worth less than its value prior to the inflation.
Deflation is a reduction in the supply of “money” relative to a level of goods and services. Less “money” causes each unit of “money” to be worth more, since there are fewer units to go around. Goods and services will decrease in price in order to attract the scarce “money” supply.
I put the term “money” in quotes, since it refers to credit as well as physical currency. Each time you put a charge on your credit card you are increasing the money supply and helping to create inflation – even if you plan on paying the balance off at the end of the month. Defaulted loans decrease the money supply and contribute to deflation, since that “money” will never be paid back.
We are currently in an economic climate where the international banks are creating massive credit destruction all across the industrialized world. They loaned out easy credit to the masses for a long time, and then proceeded to pull the rug out from under those borrowers in order to acquire the underlying assets that the loans backed.
All of this defaulting credit (“money”) has destroyed our nation’s overall money supply. It has driven us into a deflationary spiral. People are losing their jobs, houses, and benefits. This has created a situation where our Federal government has found themselves in a quandary. They have three basic means of getting revenue to keep their greedy power structure in place:
1) Taxes and fees. These are going down since fewer people have jobs. Congress wants to increase taxes on those that still have jobs in order to recover some of this lost revenue.
2) Stealing. Our government steals any money that is left over in the various “trust” funds each year and uses it for other purposes. They replace those stolen funds with a bunch of IOU’s that will need to eventually be paid back by the future labor of you, me, and following generations. The Federal government is currently having a hard time finding anything to steal, since fewer people are working and contributing to the “trust” funds of Social Security, Medicare, etc. There are more payments going out to recipients each year than there are funds being collected. This is why Congress passed the recent Health Care bill in order to create a gigantic “trust” fund based on our health care premiums. Their goal is to capture these dollars into a pile that they can then steal from.
3) Selling US Treasury bills, bonds, and notes. The Federal government has been selling Treasury securities as fast as they can. It’s the only current revenue generator that they can ramp up to keep their greedy machinations going. Each bill, bond, or note that they sell is a promise of our future labor to the bearer. Our government sells us as debt slaves. “Slave” may be a strong word – but what do you call it when somebody sells someone else’s future labor without explicit permission? I call it slavery.
The following data can be explored via the St. Louis Fed web site if so desired.
We are going to explore the myriad of ways that the US government has been creating new debt (payable by our future labor) in an effort to offset the destruction of credit being purposely carried out by the international banking system. This first graph shows US government “net outlays”. In other words, how much more are they spending than they are taking in from one of the three methods I mentioned earlier:
This graph is showing data on a year-over-year basis. Each point on the line shows how much more the US government is spending than it was exactly one year previous. We can see that the government was keeping their increased spending to around $200 billion per year up until mid 2006. There was then a drop in 2007 to where the government was “only” spending $100 billion extra from the previous year. Now look at where things sit. This data shows that the government was spending about $550 billion dollars more in late 2009 than it was in late 2008. And it was spending about $250 billion more in late 2008 than it was in late 2007. This is why we have a projected $1.5 trillion dollar deficit for fiscal year 2010.
This next chart show how fast the Federal government’s gross debt is going up year after year. Remember, all of this debt is backed by our future labor:
We can see that the debt level in late 2009 was going up at a rate of $1.9 trillion dollars as compared to late 2008. Debt in late 2008 was $1 trillion dollars higher than late 2007. Do you now see how hard the Federal government is trying to replace the “money” being lost to intentional debt destruction by the international banks?
The next graph shows the “receipts” that the Federal government is seeing come in their door through taxes and fees:
Federal receipts are falling off a cliff due to so many without jobs or underemployed. The data from late 2009 shows us that receipts were down more than $400 billion dollars from late 2008. Receipts in late 2008 were down about $50 billion from late 2007.
Conclusion
The US Federal government has undertaken an enormous effort to keep the populace from seeing the economic deflationary spiral depression that we are truly in. There is no “risk” of a “double-dip” recession, since we have never left the first recession/depression. We are seeing where the Federal government has taken the place of the consumer in many ways. They are fighting tooth and nail to maintain their wicked power structure.
Many in the citizenry are oblivious to the true proportions of the problem. They believe the smiling people on the television screens that tell them how our nation is slowly climbing out of the recession. Nobody seems to care that these propaganda mouthpieces don’t have anything similar to an inkling of what they’re talking about. They wait to see what the market does and then they write a story “explaining” why it did it.
Economics is not hard if one understands the basic tenets, built on the bedrock of God’s revealed word. We must not only understand the underlying problems, but seek to apply scripture towards arriving at a better path forward.
Your comments are appreciated…
If you are not currently on the Economic Update email list you can email Brad Hamill at: brad@newfamilyeconomics.com to be added.
There is no charge and your email address will never be shared.
Thanks,
Chris Prang
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