It Is Now Mathematically Impossible To Pay Off The U.S. National Debt

It Is Now Mathematically Impossible To Pay Off The U.S. National Debt(theeconomiccollapseblog.com)

17 points by amutap 16 years ago | 15 comments

mseebach 16 years ago |

I'm nowhere near able to understand the economics behind this, but this quote sets off my BS-detector:

You see, this is what the whole Federal Reserve System was designed to do. It was designed to slowly drain the massive wealth of the American people and transfer it to the elite international bankers.

It is a game that is designed so that the U.S. government cannot win. As soon as they create more money by borrowing it, the U.S. government owes more than what was created because of interest.

I'm no fan of the brand of capitalism that involved politicians buying favours for everyone and his cousin as long as they happen to own a large company, but this smells like a conspiracy crackpot. If the US congress could print whatever amount of money they'd want, which seems to be the authors preferred solution, the US economy wouldn't be anywhere near as strong as it is. A strong, independent central bank is a very good thing for financial stability.

patrickgzill 16 years ago | |

Certainly the conclusion is open to debate. The facts however are that the Federal Reserve is owned, not by the "people" of the USA but by some number of presumably unknown owners.

The other fact is that unlike other money systems, the USA does use a system where every Federal Reserve Note created has debt attached to it - that is why the word "note" is on the front of it - a note is a promise to pay, not the payment itself.

Under the Constitution, only gold and silver stamped into a standardized form, is "money". That is why the FRN is declared by the government to be "legal tender" - only force, enforces its continued acceptance by people inside the US.

dantheman 16 years ago | |

Central banks and fiat currencies are the problem, what we need are asset backed currencies -- ones where politicians cannot inflate at will.

azzleandre 16 years ago |

I don't even know why this site is promoted here? HN, this is how you lose your readers.

You see, the truth is that the U.S. government now owes more dollars than actually exist. If the U.S. government went out today and took every single penny from every single American bank, business and taxpayer, they still would not be able to pay off the national debt. And if they did that, obviously American society would stop functioning because nobody would have any money to buy or sell anything.

The last sentence makes me laugh and stopped me from reading any further. The only thing thats obvious here is that the author hasn't any clue about economics.

It's not good to have debt above 100% of GDP, sure. It means that working that debt off takes more than 100% of GDP. So it takes more time or/and more effort to get rid of it.

That article is bs. The purpose of this article should be clear by looking at the pages it links to: Emergency Food, Home Security, Alternative 'more secure' investments... come on HN! #2 on the front page? really???

nazgulnarsil 16 years ago |

debt denominated in a currency you control doesn't work the same way as it does for everyday citizens and companies.

also, the original article is economically illiterate. you can pay off debts larger than the whole economy. say I live on an island and we have 1 dollar in coins that we use for trade. you go into debt to me for 2 dollars. how is this possible? easy, you do a dollars worth of work for me and pay me the dollar. then you do another dollars worth of work for me and pay me again. we're square.

getting sick of the "money = magic" line of grade school economics.

motters 16 years ago | |

See the historical UK national debt, which for most of the 20th century was above 100% of GDP.

http://www.economicshelp.org/uploaded_images/uk-national-deb...

nazgulnarsil 16 years ago | | |

yeah, it's not like we're even at our historic maximum (WW2).

spooneybarger 16 years ago |

The site is a thin veneer over an attempt to use people's panic to get them to buy:

gold coins: http://theeconomiccollapseblog.com/gold-coins silver coins: http://theeconomiccollapseblog.com/silver-coins emergency food: http://theeconomiccollapseblog.com/emergency-food water filters: http://theeconomiccollapseblog.com/water-filters alternative energy 'sources': http://theeconomiccollapseblog.com/alternative-energy home 'security': http://theeconomiccollapseblog.com/home-security personal 'security': http://theeconomiccollapseblog.com/personal-security

and truely wtf...

macbooks: http://theeconomiccollapseblog.com/macbooks and netbooks: http://theeconomiccollapseblog.com/netbooks

tibbon 16 years ago |

Funny, this is showing up right beside the "asteroids worth 20 Trillion" post (http://news.ycombinator.com/item?id=1154812). Sounds like the US just needs to get 1-2 asteroids!

motters 16 years ago |

This seems like a rather doomy web site. I'm always sceptical of excessive doom-mongering, which is often used as a vehicle for book selling or other merchandising. Qualitatively the current recession is no different from previous ones, with the primary cause being regular human folly/self-deception/greed.

lkozma 16 years ago |

My limited understanding is that national debt is not supposed to be paid off, actually attempting to do that is often a catastrophic move. If the interest is paid year to year, exponential growth of the economy takes care of things eventually. WW2 debt for example would be peanuts in today's money, so it's not really important if it was actually paid off or not. How long exponential growth is sustainable, and how is this whole system different from a martingale gambling strategy is another question.

nopassrecover 16 years ago | |

Except the WW2 debt was paid in 1945 dollars which are worth a hell of a lot more than 2010 dollars. If you imagine the loans as being in gold (and this might be a bad example because I don't know how gold has inflated) then they still have to return that amount of gold.

Skriticos 16 years ago | | |

In 1945, 1 troy ounce of gold was worth something in the vicinity of 35 USD.. As of today it's over 1100 USD, and going up really fast. It would have been unfortunate to have it paid back in gold.

http://www.nma.org/pdf/gold/his_gold_prices.pdf

Also some figures for what was mentioned in the article: http://mises.org/markets.asp (the last set of diagrams show the national debt figures over 60 years, useful to get an idea)

lkozma 16 years ago | | |

Since the debt is in dollars and not in gold, this does not matter. I never heared that national debt would be updated to reflect inflation. And I don't think WW2 debt was ever paid in any dollars. It's interest was paid in 1945 dollars, then in 1946 dollars, etc.

What you say about inflation matters only if debt is in a different currency, which was Argentina's case, but not the US.

Dove 16 years ago |

Wish I could downvote main page submissions. This is tripe totally unworthy of this site.

rms 16 years ago |

Probably, but let's all just keep pretending it isn't for a while longer.