Great Analogy of the US National Debt

"A metal is also the most proper for a common measure, because it can easily be reduced to the same standard in all nations: and every particular nation fixes on it it's own impression, that the weight and standard (wherein consists the intrinsic value) may both be known by inspection only.

As the quantity of precious metals increases, that is, the more of them there is extracted from the mine, this universal medium or common sign will sink in value, and grow less precious. Above a thousand millions of bullion are calculated to have been imported into Europe from America within less than three centuries; and the quantity is daily increasing. The consequence is, that more money must be given now for the same commodity than was given an hundred years ago. And, if any accident was to diminish the quantity of gold and silver, their value would proportionably rise. A horse, that was formerly worth ten pounds, is now perhaps worth twenty; and, by any failure of current specie, the price may be reduced to what it was. Yet is the horse in reality neither dearer nor cheaper at one time than another: for, if the metal which constitutes the coin was formerly twice as scarce as at present, the commodity was then as dear at half the price, as now it is at the whole.

The coining of money is in all states the act of the sovereign power; for the reason just mentioned, that it's value may be known on inspection. And with respect to coinage in general, there are three things to be considered therein; the materials, the impression, and the denomination." http://press-pubs.uchicago.edu/founders/documents/a1_8_5s1.html

The paper money has no intrinsic value. There might be some advantage. When the foreign power says you owe $50 for the item, if you give them the Coin they could have got more than the $50 face value, if you hand them the paper or promissory note and they redeem it they get $50 in non-strategic items.

Precious metals have some strategic value, and that could be a good reason not to only use such metals. Consider "God's Little Acre" with the hottie Tina Louise, if money is of no intrinsic value no strategic resources are lost if Grandpa's gold is never found.

The criminal runs off with gold coin, knows that its imperfections could be well documented, it can be melted down into something else and have worth, but with paper that has a number it is easier to catch the criminal. So paper money can defraud the criminal.

A bank teller once handed me a counterfeit bill, and luckily I caught it right there.

That brings us to trying to detemine the intent of the founders, certainly it is clear they did not want another worthless "Continental currency":
http://en.wikipedia.org/wiki/Early_American_currency

It is far easier to put safety features in something that cannot be melted down to its elements by a barbarian and still have value.

Consider if a microscopic Coin was in the fabric of a bill, the larger paper bill is simply the medium for not losing it. Then it could be said that paper money is coined and no coining of a phrase need apply. They could include on the microdot coin "Ron Pods are Aliens." {a little humor}

I had a coin collection stolen and the only thing they did not take was an 1836 penny; I am looking at it now. So I guess I just no longer give a crap about coins that have more intrinsic value for a criminal to melt down.

Consider the guy who found the mother load of gold coins in a wreck, he could have melted them down, but sits swamped in debt living like a pauper.

I think these nitpicking issues of Constitutionality probably hurt the Ron Pods more than help them.

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You said: "With a debt of roughly $15 trillion that would equate to 300,000,000,000 $50 American Gold Eagle coins or 300 billion ounces of pure gold which is about 68-times more gold than all of the gold ever produced in the history of the world."

I am going to assume for purposes of argument your figures are correct.

Even with Coins and it being based upon a gold standard, or money for money, what goes in comes out, it would not stop the government from borrowing more money on the credit of the United States than money exists.

It is kind of related to my page 10 post, the FED rules "Under the rule, only an individual's own salary or other income -- rather than combined household income -- can be considered," limiting a person to using their own money instead of someone else's "stated" money; the banks opposed to the rules changes--as I directly quoted them on another message board before coming here and I am not going to look for it again because it is probably buried under a thousand layers--claimed that job growth would be hurt because they would have less money to lend businesses if they cannot continue the Je...usurer practice of stealing from people who had nothing to do with the bee's wax. The Je...usurers were more than happy to loan money on "stated-income," someone stating someone else's income, not real money or money the person they were stealing from was willing to part with or bee's waxed existed. And as I pointed out my Republican, Democrat, and current Tea Party was and is for debt without representation. There is not much of a difference between the criminal fraud of debt without representation (knowledge and consent) and debt without representation (Money for real Money).

So really, thank you for this topic. It is the end of the world and we are all going to die.

 

There is one common misconception and that is that gold and silver are not highly useful as commodities when, in fact, they are two of the most valuable commodities. Gold has more uses than any other metal. The only thing that keeps it from being used more by industry is it's rarity which makes it cost prohibitive. If the price comes down then there is more demand by industry which drives the price back up again. We don't have 1/1,000,000th of the gold we could actually consume in industry today. That's why it's industrial uses are so limited and it's chiefly used in jewelry and as a media of investment.

The other fallacy is that the increase in gold production changes it's value as a commodity. While the amount of gold has almost doubled since the 1950's the world economy has also basically doubled. As I noted earlier the price of a house is roughly identical today as it was in 1950's based upon the exchange value of gold. In 1950 my parents bought a house for $6000 and the same home valued at $200,000 (in FRN's) today can be purchased for $6,000 in American Gold Eagle coins.

I've actually gone back to the "price of eggs and bread" in 1920 when they were purchased with gold/silver coins and they still cost about the same amount in gold today. Very little change and that is attributable to larger bakeries and larger egg farms which have reduced the price slightly over the last 90 years.

 

Your math shows one reason why gold cannot be used as currency...simply not enough. And if gold production was increased by 500% for example, what impact would this have on the price of gold?

Greedy and self-serving Americans coupled with political idiots in Washington both of which don't give a rip about deficit spending and debt. The numbers regarding debt are so huge today it is basically unfathomable to understand how it can ever be paid down...

 

Last I read the tax cuts for the wealthier totalled about $70 billion per year. In order to 'save our children about a trillion dollars', this will require about 14 years of savings...and BTW...during this same time there must be a cap on spending otherwise the $70 billion per year will be spent on something...

 

That is very true and we see BS coming from Washington all of the time. Take for example the Buffet Rule that would increase federal revenues by an estimated $4.5 billion/yr while at the same moment the Obama adminstration is advocating reducing the Student Loan rates which will cost $6 billion/yr if implemented.

It's smoke and mirrors.

Obama is now touting that he's raised the increases in the cost of the federal government less than any president in 40 yrs which is apparently true. What he doesn't mention was that government was spending 166% of the revenues it received. By analogy it's like a chronic alcoholic that's has been drinking a gallon of whiskey daily saying he's only drinking one or two more shots of whiskey every day as opposed to drinking another pint of whiskey.

To just balance the budget, which can be done, it requires allowing all of the Bush era tax cuts to expire plus doubling up on those (i.e. not just allowing the rates to return Clinton era levels but then doubling that increase from today's rates) plus slashing the US military budget at least in half and dramatically reducing welfare benefits being paid for from the general revenues.... and that still doesn't address the future shortfalls related to Social Security and Medicare paid for with FICA/Payroll taxes.

Can it be done? Absolutely. Will it be done? Not unless we elect Gary Johnson (LP candidate) as he's the only presidential candidate promising that his first budget will be a balanced budget. Will it hurt? Absolutely but the hurt is being cause by past fiscal irresponsibility by both Democrats and Republicans.

 

I'd sure like to see how that 4.5 bilion figure was calculated. Cap gain and divident income are scores of billions annually, and we're talking about effectively doubling that amount, unless I misunderstand what the Buffet rule is supposed to do.

 

Originally the projected revenues for the "Buffett Rule" were $31 billion over ten years and then they were raised to $45 billion over ten years which averages out to $4.5 billion per year. In looking for a reference to link to I found a new estimate of $47 billion over ten years (see link) but regardless it's really pennies when compared to federal spending in the several trillion dollar range.

http://money.msn.com/tax-tips/post.aspx?post=5737b1c3-ac2a-4267-ac44-895e20f590b1

 

A quick note on why the revenues are so low. While a lot of people earn over $1 million in capital gains the vast majority of them earn between $1M-$1.5M and since the revenue is only on the excess above $1M there isn't much there. At $1.5M the government only gets $75K more in revenue than it does today. Even someone earning $2M the increase in federal revenues is only $150K. Not much skin on the bone. I read the numbers once and I believe that 90% of those earning more than $1M in capital gains annually earn less than $2M total for the year. There are very few Warren Buffett's or Mitt Romney's out there where the additional 15% rate for earnings over $1M makes much difference.

 

We have two opposing sides whose actions taken together have the potential of a collapse, giving either side their utopia in the fix; the Democrats want a Newer Deal and the Republicans want a Lesser Deal, the former needs the conservative to consider the bottom line and the latter only needs more bodies to have a loss to get Congress.

One "presidential candidate promising that his first budget will be a balanced budget" is only him promising he is for more bodies having a loss not that they have enough bodies in Congress to keep a promise. Such a promise is as close to my way or the highway as one can get, it just only works with bosses and dictators.(*)

When there is only one way or the highway to do something, and there is more than one way, it cost more people regardless of the odds they will need it:

"The federal government says the lifts must be fixed to the pool deck to meet the standard. Meanwhile, hotel owners want to use less expensive portable lifts that could be transferred among pools.

A fixed pool lift can cost as much as $9,000 when installation is included, while a portable lift is unlikely to exceed $6,300, according to the American Hotel and Lodging Association." http://www.news-journalonline.com/n...ule-on-chair-lifts-for-swimming-pools.html(*)

That is just one example of my way or the highway, and who do you really think is going to pay for it?(*)

 

It is true that the President only provides a recommended budget to Congress which Congress basically ignores but the President does have veto power to veto any budget. Congress can override that veto if it chooses but that takes a super-majority of both houses. I would highly recommend that a President dedicated to a balanced budget should force the Democrats and Republicans to over-ride a veto to demonstrate to the American People that it's the Democrats and Republican jointly causing the fiscal crisis in America today and that are driving the US into insolvency and bankruptcy. Remember, when the monetary system of the United States collapses because of the fraudlent issuance of Federal Reserve notes the saved "wealth" of 90% of Americans is going to be lost. Every "dollar" in every bank account becomes worthless because they're based upon contract fraud by the Federal Reserve.

 

I've seen the conclusions, but what I haven't seen is how those figures were calculated.

 

That makes some sense if you are correct. Obviously, putting the bar at $1 million before the special privileged rate is phased out is way to high.

 

The American People would have to be real serious about it, and they are not serious enough for even a line-item veto, or to go back to the way it was up to Nixon. So it is all or nothing.

And with all or nothing, there would be a shutdown which could backfire:

"The shutdown backfired on the Republican leadership, and is attributed by some with helping Clinton win re-election in 1996." http://en.wikipedia.org/wiki/Continuing_resolution#Continuing_resolutions_in_history

Could just as easily return the power of impoundment and accomplish some of the same goal. http://en.wikipedia.org/wiki/Impoundment

"The long-term effects of the Congressional Budget Act are in dispute. Iwan Morgan argues the Act shifted budgetary leadership to the Congress, which exacerbated the problems inherent in that institution by creating unrealistic deadlines and demanding a level of coordination of which Congress is incapable." http://bancroft.berkeley.edu/ROHO/projects/debt/budgetcontrolact.html

It is the all or nothing mentality that prevents a line-item veto amendment and got rid of impoundment.

Voting for a Libertarian president sure to veto would be asking for all or nothing on one side, which is not vary likely; a shutdown from veto is like a divorce or separation demanding the other side go it alone on the couch; the Congress is like a multiple personality spouse to the single minded President with regard to debt; the American People seem to want the crazy spouse (Congress) to have more power than the normal spouse (President), and avoid being made to go it alone and face their multiple personalites. With the power of impound the President is more of an equal partner, avoiding the separation of a government shutdown.

 

I would point out that it would be incumbent on a President to show and explain how budgetary cuts as well as increases in taxation can provide for a balanced budget. It's not magic but instead is generally based upon very solid principles that people can understand.

Earlier I mentioned just one item so let me expand on it a little. Food stamps, or the Supplemental Nutrition Assistance Program (SNAP), has an annual budget of $78 billion. This program provides food for families that really do need assistance and no one wants to see these individuals go hungry. The problem, as I pointed out, is that this money is being spent at the local grocery store and we're paying "retail" prices for the food. Local food banks, such as Northwest Harvest here in WA, can acquire food for about 1/4th of the retail cost. It is a realitively simple matter of replacing the existing SNAP program with grants to local food banks that can provide the same service to those in need. Even if a local food bank doesn't exist the local governments or citizens can be encouraged to open one to provide for those in need in their community. That $78 billion expendature can be easily reduced to $20 billion without any negative impact on society and, in fact, it could actually be highly beneficial because food bank like Northwest Harvest have no criteria other than simply showing up for a person to receive assistance. No government red-tape and the assistance is immediate for anyone walking through the door.

http://www.cbo.gov/publication/43175

The president can address many other social services in the same manner where each is logically addressed and where budgetary cuts are rational and reasonable.

When it comes to national defense the President could point out to not just Americans but to other countries as well that the governments of other sovereign nations have a responsibility to provide for their own self-defense and that we, the United States, simply don't have the money to pay for their defense anymore. We can't send a financial obligation to our children to pay for that which the governments of other sovereign states have a responsibility to pay for. We need to close the 150-200 foreign military bases that we currently have because "we can't afford the rent" that it costs our children to keep these bases open.

We do need to provide for our own national defense but in that regard we can do quite well with four carrier fleets, the backbone of the Navy, as opposed to twelve carrier fleets. With two fleets in the Atlantic and two in the Pacific one fleet can always be on partrol while the other is under retro-fitted and maintained as a US naval base. The other eight fleets can be moth-balled and maintained in case they're ever required. This could reduce the US Navy's $160 billion budget by almost 1/3rd lowering it to about $60 billion. By transitioning predominately to Naval Reserve forces instead of active members in the Navy further reductions could be made without impairing the mission capability to defend the United States from a foreign attack.

The US Army and US Air Force can also be converted to predominately Reserve military components and many Air Force Wings and Army Divisions de-activated.

American's aren't as stupid as some believe but often we're not getting the truth from the politicans so many believe what the Democrats and Republican politicans say as opposed to listening to the truth on what can be done to balance the budget. The US budget can be balanced without making the type of draconian actions many state must occur. We can continue to address the needs of America including our concerns for the welfare of the People, the environment, and national defense with a balanced budget.

We can even look at the USPS which has a budgetary crisis going on. How about keeping the Post Offices open Monday thru Saturday but only delivering normal mail on Tuesdays, Thursdays and Saturday's? Special deliveries can be made on other days but the customers have to pay a premium for that service. Not having bills show up in my mailbox quite so often doesn't bother me at all and think of all the manhours this would eliminate. It cuts the normal daily delivery costs basically in half without adversely affecting anyone. I really can wait until tomorrow to receive that letter or bill.

Yes, the frills and luxuries probably have to go. I love NASA for example but just I can't justify it when we have a deficit budget. It is a luxury that I wish we could afford but until we can afford to pay for it I can't see forcing my children to pay for it through deficit spending.

 

I also read that the student loan interest rate increases are ONLY on new loans after July 1st. Apparently this does not effect any current student loan balance. If someone is saying $6 billion/year, then they are making assumptions.

The interesting thing about balancing a budget is all it requires is math; spending equals income...period. If government wishes to spend more then increase the income. If income is low then adjust spending accordingly. Now everyone knows this math. Yet if anyone in Washington seriously tried to balance the federal budget they would be run out of town!

This is caused by two things; First, the deficit amounts have become so enormous that they represent 30+% of the government spending. Second, everyone is greedy and self-serving and simply won't sacrifice or pay their way.

So...I suspect 100% of the public discussion on deficit spending and debt, at least within the next few years, is nothing but talk. And all of this gets even uglier if we correctly factor in all the under-funded pension/retirement obligations...

 

Fact is the money is mouse-nuts, it doesn't solve a single problem, and is nothing but political grandstanding...

 

You are focusing only on the tax money. Don't forget there are direct effects, some negative, of arbitrarily increasing tax rates on anything...

 

That is absolutely correct. It is purely political smoke and mirrors that doesn't really accomplish anything.

 

That is absolutely true just like the individual that borrows to buy a new car today. Their future disposable income goes down and their standard of living is reduced because they borrowed to purchase the car. The US standard of living will be reduced when we're forced to pay for past borrowing. We've been living on a credit card and it's time to pay the piper.

Of course we have the Democrats and Republicans to blame if actually paying for government expendatures tanks the economy. They're the one's that are destroying the US economy with their deficit spending and increases to the national debt. Time to stop electing Democrats and Republicans IMHO.

 

If it was so easy to show and explain we should have a Civilization game, a Sim City, a Sims game, a program that easily tells the tale. Should be able to just plug in the numbers and get an output.

There is magic in "generally," as "very solid principles" tend to suggest raising of taxes produces crap that flows down hill, and any cutting of benefits produces crap that flows up hill; not saying regular causes constipation of debt to the toilet.

A litany of cuts is easier than selling that the rich crap flowing down hill does not have to just hit our workers.

The tax cuts for the irrational exuberance market correction was not staying regular; it was not just eating some prunes for some trickle down, it was a tape worm. And then to add insult to injury an army cannot march on its stomach if it has a tape worm.

When the taxes on the rich flow down hill to our workers that is a model that people can understand; taxes are simply passed on by the principle means of production to the consumer or worker (though layoffs and reduced benefits). When rich taxes crap more on workers who buy foreign goods raising rich taxes should demand more of our workers, who then pay taxes reducing the burden on the rich.

There is more magic in taxing the rich for an equilibrium between crap that flows down hill and crap that flows up hill, than there is magic in cutting and expecting those crapped on will not send it back up with a vote.

Every single commercial out of "Imported from Detroit" is a boat, a pimp mobile, a luxury; as if they have learned nothing from the (*)(*)(*)(*) Yankee who first owned the Toyota or the Volkswagen in the hood.

How about follow the Constitution and "establish," look the word up, USPS being the only ones delivering the mail and email: "To establish Post Offices and Post Roads?"

How dare you claim that a Post Road to a Mars Colony or a Post Office established there is a luxury. It is something we cannot do without and compete or stay alive when the big one hits. This freaking defeatism is sicking.

 

A simple fact that many "liberals" fail to understand is that if we just address US billionaires that their entire combined wealth was not enough to pay for the 2012 spending deficit alone. The deficits have been so huge that even the wealthy can't afford to pay for them. They just don't make enough money to do that even if we confiscated all of their wealth. Congress has long since passed the point in spending where the wealthy could bail out America.

 

I agree that it's past time to consider, or open our closed and biased minds, to candidates outside of the two primary parties. Problem is those tens of millions who are brainwashed by the two primary parties are incapable of opening their minds. So, IMO, if we are ever to see any positive change, it will take 'many' generations of young people getting involved in their nation. I also, as stated before, don't believe the American public wants to deal with the perceived personal sacrifice in order to reduce deficit spending and debt...

 

And even if we succeeded in confiscating their wealth, just imagine how horrific this would be to the private economy?!

Taking productive money from the private sector and transferring it to government MUST be minimized!

 

Good point.

Because remember how badly the 1990s economy sucked because we took more "productive money" from the private sector and transferred it to government?

Conservative mythology lives large.

 

Which liberal is saying we should just raise taxes on billionaires?