The government “not paying for all sorts of things” is how Tom Foreman messily defined a default on the debt-ceiling for the Chicken Littles of his news network. In one of many doom and gloom debt-ceiling segments for state broadcaster CNN, Foreman forewarned that a default on the country’s debt “would not be just about D.C., but it could be about YOU.”

In the same phillipic, Foreman carelessly conflated a debt default with a failure to raise the debt ceiling before its Oct. 17th deadline. But then President Pain has been setting the tone for the media, having accused Republicans, in his “Oct. 8 news conference on the shutdown and debt limit,” “of refusing to “meet our country’s commitments, pay our bills,” and of generally precipitating an “economic shutdown.”

The notion, however, that not raising the government’s credit limit must necessarily result in a default on the debt is untrue. The government takes in approximately $250 billion a month in revenue. Servicing the national debt costs about $30 billion a month. Three trillion dollars is what the federal government expects to loot in the fiscal year that began on Oct. 1, 2013 and will end on Sept. 30, 2014.

On reflection, the U.S. Treasury collects enough to pay down the interest on the debt as well as a portion of the principal.

Claiming that the president is powerless to prioritize won’t wash either. “There is no constitutional feature that says the president cannot allocate revenues,” David Stockman told Lou Dobbs. Paraphrased, the director of the Office of Management and Budget under President Ronald Reagan said this: Unless President Obama orders it, there will be no default on the government debt, because Obama has the power to prioritize and allocate the revenue coming in. Oct. 17 is a phony date, designed to intimidate Republicans—and anyone trying to stand against a massive increase in the “public debt.” The Beltway is silent about the ability of the president to honor the country’s debt, because of an opposition to entitlement reform.

Not to be outdone, the president has further asserted that “… raising the debt ceiling … does not add a dime to our debt.” (I confess to being impressed with this bit of logic, coming as it does from a man whose reasoning skills are hardly robust.)

Too true. “Technically, having the credit limit increased on a credit card does not force you to spend beyond your means and end up with a higher balance on the credit card,” averred Professor Jeffrey Dorfman of the University of Georgia. “However, it makes it much more likely.”

Increasing the credit limit on the deadbeat U.S. government’s credit card—it owes 17 trillion gigabucks and counting—guarantees more spending.

The distinction between the country’s “debt obligations” to bondholders and its “expenditures”—what Foreman called “all sorts of things”—seems to befuddle the president. Said Obama: “… we’ve got a lot of other obligations, not just people who pay Treasury bills. We’ve got … senior citizens who are counting on their Social Security check … We have veterans …farmers who are waiting for loans.”

And there are the promises made under the Medicare and Medicaid programs. But these are promises, not debts. Spending programs are not to be equated with debt.

David Henderson of the Library of Economics and Liberty’s EconLog made quick work of this fallacy: The president “is effectively saying that if the government wants to spend x and has only enough money to spend 0.67x, then not spending on the other 0.33x is a failure to keep an obligation. In a political sense, that might be: the government has made a lot of spending promises to a lot of people. But in an economic sense, it’s not.”

What this president has excoriated as a Republican demand for ransom is entirely reasonable. It is not a first for one party to use a government shut-down or the debt limit to get a policy concession, added the Cato Institute’s Chris Edwards during a Fox-Business broadcast. President Obama and the Democrats excluded Republicans from the Obamacare negotiations. The Patient Protection and Affordable Care Act got no Republican votes in both Houses. Unilateral decisions on Obamacare made by Obama have been the order of the day. Using the levers available to them to get changes in a rotten law is hardly unusual or unreasonable on the part of the Republicans.

How nice it would have been had Republicans stood firm; had they refused to raise the debt ceiling—and horrors!—forced the government to balance its budget. Alas, they’ve already been shoehorned into “exploring … a short-term increase in [said] ceiling.” The forces arrayed against the GOP are formidable. There are just too many Americans grubbing for free stuff and a preponderance of Republicans eager to parcel it out in exchange for power.

Considering the U.S. government’s set-in stone spending, the real phony construct is the debt-ceiling itself. In the words of economist and philosopher Anthony de Jasay, placing a ceiling on the federal debt is “a measure whose only effect is to oblige the Congress to raise the debt ceiling every time the rising debt catches up with it.”

To fund its Ponzi plan, America’s bankrupt government borrows and prints fiat money out of thin air. It then auctions off treasury securities—big batches of IOUs—to the highest bidder. This Ponzi scheme is not new. ‘W,’ now being canonized by Republicans, did not create the mess—but he worsened it by way of a massive drug prescription plan ~ilana

Compared to the United States government, Bernie Madoff is a mere babe in grand larceny boot camp ~ilana

The American economy would limp along—cleansing itself of mounds of bad debt and worthless, illiquid assets—if not for the American government. It now consumes more than its citizens are worth.

The government’s “debts, liabilities, and unfunded promises for Medicare and Social Security” amount to a stupefying $56.4 trillion. The household net worth of Americans is around $56.5 trillion.

The first frightening figure doesn’t take into account the bailout bonanza. The last omits more recent market losses. Nevertheless, warns David M. Walker, former Comptroller General of the United States, now of the Peter G. Peterson Foundation, as of September 30, 2008, “the sum of the US government’s liabilities and other financial commitments now exceeds the collective net worth of its citizens.”

This is huge. This—and not the non-stop “breaking” bulletins about a pilot who faked his own death—is news.

And it’s bigger than Bernie Madoff. Compared to the United States government, Madoff is a mere babe in grand larceny boot camp. Madoff’s $50 billion scam pales in comparison to the multi-trillion dollar Ponzi pyramid run by the United States government, a scheme that is carried out in broad daylight, and with legal impunity. Notes economist Peter Schiff:

The Social Security Administration runs its ‘trust funds’ with precisely the same methods used by Madoff and Ponzi. As money is collected from current workers, the funds are then dispersed to those already receiving benefits. None of the funds collected are actually invested, so no investment returns are ever generated. Those currently paying into the system are expected to receive their returns based on the ‘contribution’ made by future workers. This is the classic definition of a Ponzi scheme. The only difference is that Ponzi didn’t own a printing press.

To fund its Ponzi plan, the bankrupt government borrows and prints fiat money out of thin air. It then auctions off treasury securities—big batches of IOUs—to the highest bidder. This Ponzi scheme is not new. “W,” now being canonized by Republicans, did not create the mess—but he worsened it by way of a massive drug prescription plan.

Contra ditto heads, blame for the depression, however, belongs not with Obama the newcomer, but with Bush. With his foreign, fiscal and monetary policy, Bush broke the budget, balanced by Bill Clinton, and doubled the federal debt—it was $5.6 trillion when “W” took office; it is now $10.7 trillion. Although the trillions in bailouts were Bush’s, Republicans want only to prate about Obama’s planned “stimulus” spending.

The best that government gurus—outgoing and incoming—and the pundits in the peanut gallery have mustered in response to America’s meltdown is to concede that digging America out of the financial grave is a long-term goal. For the short term, it’s stimulus time, baby. Show me the fake money, shower me with cheap credit; and send me sailing on a ship of fools.

The debt the American government has incurred—which American serfs will service—approximates 75 percent of the GDP. As the federal debt stands, the US would not be admitted into the company of socialists. The statist European Union expects member nations to hold their debt below 60 percent of the national income.

Nothing much distinguishes Republican from Democratic vulgar Keynesianism. Republicans have offered no change in paradigm. Guru Gingrich, a “hard core” fiscal conservative, advised fellow Republikeynsians to offer Americans a more efficient, targeted stimulus, when no stimulus is the conservative way; when allowing markets to contract is the conservative way.

A natural shift must take place from a credit-fueled, consumption-based economy, to one founded on savings, investment and production.

Fresh off the printing press, the trillions in new spending Obama is planning will only make matters worse. Understand, government can’t create wealth; it only consumes it, or moves it about. Not even Magic Man Obama can make sustainable jobs materialize by borrowing and counterfeiting. Only the private sector can create sustainable jobs—sustainable because driven by consumer preferences, as opposed to bureaucratic whim. The more taxing, printing, and borrowing the government does, in the vain name of job creation, the less capital will the private sector have with which to create long-lasting employment.

MSNBC’s Rachel Maddow thinks make-work schemes are “sexy.” She, and other priapic sorts like CNN’s Anderson Cooper, will beam into American living rooms images of earnest men and women put to work by Obama’s spending. The multitudes thrown out of work because private economic activity has been crowded out by the Miracle Maker’s magic will remain unseen behind the scenes.

Barack will continue the bacchanalia Bush began.

When the market attempts to purge bad businesses, as it should, Obama will prop them up. When lenders raise the bar, Obama, like Bush before him, will bully banks into extending the ownership society to unworthy men and women. Bailouts will balloon. Socialization of the economy will deepen—if not directly via state control, then by regulation. Vast amounts of paper will be pumped non-stop into this phony economy.

With every infusion of fake money, as Peter Schiff and other Austrian economists have warned, the dollar will drop like a stone. Assets will continue to devalue. Saving will be difficult; retirement near impossible. Prices will soar, and the currency will eventually collapse (hyperinflation).

Fox Business Network bimbettes disagree. Some will find comfort in this fact; others will see the writing on the wall—and the American ship of state for the ship of pirates it is; pirates whose reach extends into every American home, and beyond.

©By ILANA MERCER
WorldNetDaily.com
January 16, 2009