Search This Blog

Thursday, July 30, 2015

'Takes Two to Tango' or Who's Really to Blame for $16.9T Debt?

One question that was asked a lot from yesterday's post was how did the National Debt balloon so enormously in the span of 8 years to the $16.9T it is at today..

We already assessed blame to Obama but it would be inaccurate to attach All blame even though A&G has never once hidden the fact we think he's been a really bad President.

For instance, we live in a democracy so that means when a President says its time to raise the debt ceiling by a couple Trillion dollars, it doesn't just happen because he wants it.
It takes a lot of cowardly politicians on Both sides of the aisles in Both houses of Congress who Pretend and outright Lie to their constituents that they care about fiscal responsibility and balancing the budget, etc to vote 'Yay'

You also have to remember that with the exception of Sen Bernie Sanders and maybe a handful of other people in Congress, they are All millionaires at the very least, with some of them like Pelosi disgustingly wealthy.

It is one thing to vote to increase taxes by a percentage or two - these people have all their wealth well hidden from the tax man (or woman)

But do you really Honestly think any of these Republican and Democrat scum we keep electing again and again would ever vote to pass anything that sincerely hurt their personal finances for the greater good??
These politicians are Heavily invested in the stock market which is why they all had heads-up before the Lehman Bros crash to pull their money out (back then it was legal for politicians to have insider info which the public was not)

And that goes to the next culprit..  the Federal Reserve

We've written endlessly how the Fed has spent and spent and spent, and kept interest rates at zero for what feels like forever..

Well we've said it before and will say it again..

Every dollar the Fed spends, becomes new public debt.
In the simplest of explanations for those who really don't understand, it works like this:

The Fed wishes to put $250 Billion dollars of new liquidity (money) into the stock market to help artificially pump up asset prices and give the impression of a false 'recovery' so everyday people will stop saving and start investing...

So the Fed calls up the Treasury and says 'Hey Bro.. I need you to either print out $250B greenbacks, sell me $250B in Treasuries or hop there on your computer and wire the amount to me, pronto!'

And the Treasury says 'Bra.. I got it covered.. Done deal.. Check your account.. Wired like a hanger..'

The Fed then says 'Cool Beans.. Catch you later!'
When the Treasury either prints or digitally creates that new money out of nothing to circulate into the economy, it must be accounted for as a negative somewhere...  Public debt

So instead of the National Debt at say $3 Trillion, now the new total would be $3.25T

This is the reason why we won't ever (and can't ever default) -- We owe more money to ourselves i.e. the Fed, a private bank than we do to China or any other foreign nation.

And the Only reason we can get away with money creation in this fashion where say greasy Greece couldn't is the US dollar is the reserve currency.
Of course being a world Superpower with a massive military industrial complex and 2 million troops without even needing a draft helps deter the naysayers too.

So the debt was doubled to save those precious banks -- the ones that give you a penny for ever $1000 in your savings it holds, pump up corporate profits -- those entities that won't hire you at a fair wage thanks to availability of temps, and to pump up the market -- Trillions spent so your 401k will be worth a few thousand dollars more now vs then.

So its everyone's fault..
But we will stick with it being primarily Obama's since after 6.5 years in office, a President has to accept responsibility for Something and not pass off Everything bad to his predecessor...

Doesn't he?