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National Debt Part One

National Debt Part One

Much has been said about the $16 trillion national debt.   Most of us have a hard time wrapping our minds around the numbers and grasping the real situation.  Confusing as it may seem, the reality is that most of the debt, an estimated $11 trillion, is owed to foreign and domestic investors (individuals and private groups) and the Federal Reserve, not foreign nations.  The Fed buys up treasuries in order to keep interest rates down through ‘quantitative easing’ (for a humorous, but frighteningly accurate explanation of quantitative easing, click here).  Most experts agree that sooner or later, this will cause serious inflation.

Despite what politicians of all stripe say, the nation of China is not our major creditor.  It has long been a political tactic to blame foreigners, specially Asian foreigners, for the nations’ problems.  The fact is that the Chinese Government owns about $1.25 trillion of U.S. national debt.   Another $1.12 trillion is owed to the Japanese Government.  Those two nations are the biggest foreign national holders, but other nations in combination, including Brazil, Russia, Taiwan, Switzerland, the Netherlands and the United Kingdom hold trillions more.

American individuals and corporations hold about $1 trillion in federal debt.  Two trillion is owned by mutual funds, insurance companies and state and local governments.

The balance, $5 trillion, is owed to the Social Security Trust Fund and federal pension systems.  Of all the numbers, this may be the most alarming.  And some say the number is not accurate because the government owes much more in unfunded liabilities.  But just using these numbers, consider the fact that the American Public owes itself at least $5 trillion.  That’s $5,000,000,000,000.

What does it mean to owe yourself money?  Can’t you just cancel the debt?  Sure, but then the money you lent to yourself is gone.  Where did it go?  It went to the government.  Doesn’t the government have sufficient assets to pay us back?  Perhaps.  But ask yourself this: when has the U.S. government (or any other government for that matter) voluntarily reduced its’ power and size in order to pay back the debt it owes to its’ citizens?  Foreign countries have armies to collect their money.  All we have is the ballot box.  We’d better start using it wisely.

An upcoming post will present some plans for real reduction in the national debt.

“I am for a government rigorously frugal and simple, applying all the possible savings of the public revenue to the discharge of the national debt.  I wish it were possible to obtain a single amendment to our Constitution….. taking from the federal government the power of borrowing…. I would be willing to depend on that alone for the reduction of the administration of our government.”

-Thomas Jefferson

 

One Response to “National Debt Part One”

  1. rich christ says:

    learning more about our gov. thanks dick

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