Voice of the people
US must get debt under control
The United State is mired in $17 trillion of debt. The only thing keeping it solvent is the Federal Reserve having printed $2.7 trillion in fictitious money which it then lent to the treasury through intermediaries. The U.S. inflicted this wound on itself when it passed legislation (Dodd-Frank) that in conjunction with regulatory changes shrunk the U.S. capital markets by 85 percent. In a typical debt sale the U.S. now depends on China and Japan to buy 40 percent, New York bond dealers to buy 40 percent, and domestic investors to buy only 20 percent.
The usual question is why should I care as long as I get paid and they can borrow from somebody. The U.S. has become, in effect, a legal Ponzi scheme, based on confidence, not money. If China and Japan decide to sell their $2.3 trillion in debt, there is no bid, bankruptcy. If Germany tells Deutsche Bank not to bid and the other foreign banks withdraw from market, bankruptcy. If the Federal Reserve says we have to sell for policy reasons, it can't, bankruptcy. The Congressional Budget Office has indicated the U.S. will cross the threshold of 100 percent debt/GDP around 2020. Economically, no country achieving that level of debt has survived fiscally for long.
Survival rests on converting all entitlement programs to budgeted programs and means testing them. Debt is regressive, it cares not if you are rich or poor, it doesn't discriminate between programs of perceived value or no value. It simply says pay me, or I will render you insolvent. If this fiscal madness continues who will be the last "greater fool," China, Germany, the Federal Reserve or you?
David K. Perdue
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