Ron Paul: "The U.S. Government Must Admit It Is Bankrupt"

The problem, in truth, is that we don't want to kill civilians. It's not that we aren't able to bomb the place back to the Stone Age.

Well, maybe we can't, since it's already basically there.....

 

Yes, it appears we are bankrupt. But, please stand by. A monkey wrench could appear. We do have two things to sell: weapons, and food. These are correlated.

 

California Declares Fiscal Emergency

Jerry Brown, California’s governor, declared a state of fiscal emergency on Thursday for the government of the most populous US state to press lawmakers to tackle its $25.4 billion budget gap.

Democrat Brown’s declaration follows a similar one made last month by his predecessor Arnold Schwarzenegger, the former Republican governor.

http://www.cnbc.com/id/41189521

 

FWIW:

http://m.economist.com/free-exchange-21014702.php

From the article:

"I’ve poked around on this, and it seems to be a legal black hole. A bond is in essence a contract; does a contractual obligation rank ahead or behind a statutory obligation such as Social Security cheques? This is a matter of interpretation that, I am told, is largely up to the federal government itself. Without explicit guidance otherwise, Treasury would pay obligations in the order that they come due, which could clearly mean missing an interest payment."

 

Mr Kotlikoff says the debt is actually $200 Trillion.

Mr Moylan ( director of government affairs for the National Taxpayers Union) says the number is likely about $60 Trillion.

"The Government is lying about the amount of debt. It is engaging in Enron accounting," said Laurence Kotlikoff, an economist at Boston University and co-author of The Coming Generational Storm: What You Need to Know about America's Economic Future.

THE actual figure of the US' national debt is much higher than the official sum of $US13.4 trillion ($14.3 trillion) given by the Congressional Budget Office, according to analysts cited on Sunday by the New York Post.

http://www.blacklistednews.com/?news_id=10626

 

VIDEO: Ron Paul: Quit Buying Bombs or We're Done. USA is Bankrupt.

http://www.globalresearch.ca/index.php?context=va&aid=17225

 

how much of that $1 trillion in monetized debt is / are directly attributable to the horrific damage done to the US, the American people, the upsetting and debasement of the American middle class by the 8 (eight) year Bush II administration and its policies?

how much?, certainly more than 3/4 of it, because he received a surplus and no 30yr T-Bond debt, and look at where we are at now, and what it is taking to stop that death spiral that that administration caused...

mission accomplished...

 

Your brain is limitdown! I would love to live in that bubble you call a residence.

 

I received a email reply from Laurence Kotlikoff (no big deal). He directed me to this website.

http://www.kotlikoff.net/content/us-bankrupt-and-we-dont-even-know-it

 

Misthos, that Economist article confuses issues considered in insolvency law, the law of bankruptcy with the issues that a sovereign would consider with regard to its obligations. The U.S. cannot subject itself to a bankruptcy proceeding, nor can any creditor of the U.S. demand any bankruptcy proceeding. The U.S. as sovereign will either pay its debts when due or it will not, and the result will be sovereign default but not bankruptcy (which is a legal process that take place in the federal court of the sovereign). Instead, the U.S. will consider its debt priorities not by the standards of bankruptcy priority and creditor’s rights, but by the severity of real world effects that will result in response to each potential event of default, and whether such potential default will necessarily be transparent or whether it can be made opaque. Here we really see the difference between Treasury Securities and intergovernmental accounting transfer, “faux securities.”

Because bankruptcy and insolvency priorities do not apply, the financially challenged Government will not use those non-sovereign guidelines to set its priorities. The Government understands that no real default will occur on the “faux security” ledger entries as it can simply change the terms of that debt so that there is no default, since it is all internal, one pocket to the other so to speak. These are not transactions with the public. With regard to its non-public ledger debt entries the Government can change the amount of the “faux security” balance at its discretion; it can play accounting tricks on its accounting tricks. It can simply reduce the ledger entry and say that it borrowed the money…this in turn would reduce the calculation of deficit or borrowing on the Feds unified books and it would let the government increase its public debt (by selling real Treasury Securities to the public under the ceiling; made possible by the arbitrary reduction on the intergovernmental ledger) with no effect on the accumulated deficit…it can get around a debt ceiling in this way…when it writes up the “faux securities” in the future, it will say that is has paid them back…but no real money would move one way or the other. So, you see there is no reason to consider these internal obligations as having any priority. These fake funds will be sacrificed long before any Treasury Security is even downgraded in the open market by fear of potential default.

The real issue for a functioning government is whether there is a market for its Treasury Securities, whether the public outside the Government itself will continue to buy Government Debt. If a Treasury Security auction fails, it will cause the public market to consider the question of the viability of the Government Debt; all the way through the yield curve, starting with its currency and going all the way out to the longest yield bonds. This is the stuff of “hyperinflation” (which is currency collapse and not to be confused with “inflation,” which is an insidious form of default that can progress only so long as currency remains viable). If Government continues to print money when there is no market for its Treasury Securities, it will initiate a hyperinflation, or stated differently, it will destroy its currency. Assuming the Government Political and Banking Class understand this, you can be sure that the Government will not default on its Treasury Securities in order to honor its entitlement promises.

The Government can change the terms of the entitlement promises, a kind of an insidious default passed off as fiscal accommodation policy, without destroying its currency. It cannot default on its Treasury Securities without destroying its currency. That should set out the priority for you.