Should we be worried about the debt ceiling or our abilities to form compromise?

What a dog and pony show going on in DC. :roll:

What a dog and pony show going on in DC. :roll:

I refuse to watch. P-diddy is railing about Aldus Snow in Get Him To The Greek right now on my tube.

This is not mine...just thought it was interesting...


Federal Budget 101
The U.S. Congress sets a federal budget every year in the trillions of dollars. Few people know how much money that is so we created a breakdown of federal spending in simple terms. Let's put the 2011 federal budget into perspective:
U.S. income: $2,170,000,000,000
Federal budget: $3,820,000,000,000
New debt: $ 1,650,000,000,000
National debt: $14,271,000,000,000
Recent budget cut: $ 38,500,000,000 (about 1 percent of the budget)

It helps to think about these numbers in terms that we can relate to. Let's remove eight zeros from these numbers and pretend this is the household budget for the fictitious Jones family.

Total annual income for the Jones family: $21,700
Amount of money the Jones family spent: $38,200
Amount of new debt added to the credit card: $16,500
Outstanding balance on the credit card: $142,710
Amount cut from the budget: $385

So in effect last month Congress, or in this example the Jones family, sat down at the kitchen table and agreed to cut $385 from its annual budget. What family would cut $385 of spending in order to solve $16,500 in deficit spending?

It is a start, although hardly a solution.

Now after years of this, the Jones family has $142,710 of debt on its credit card (which is the equivalent of the national debt).

You would think the Jones family would recognize and address this situation, but it does not. Neither does Congress.

The root of the debt problem is that the voters typically do not send people to Congress to save money. They are sent there to bring home the bacon to their own home state.

To effect budget change, we need to change the job description and give Congress new marching orders.

It is awfully hard (but not impossible) to reverse course and tell the government to stop borrowing money from our children and spending it now.

In effect, what we have is a reverse mortgage on the country. The problem is that the voters have become addicted to the money. Moreover, the American voters are still in the denial stage, and do not want to face the possibility of going into rehab.

Interesting posts TNJed! Very thought provoking...I hope people actually took the time to read them.

I believe that analogy kind of sums it up. It is kind of like we are living on borrowed time!

I say let's go broke, we're Americans and have proven time and again that we can make it through anything. Then, after we go broke remember everything that happened and who was in office in both parties. Just like the housing bubble had to pop I think the USA bubble could use a little air taken out and come back down to earth.

IMO, that is naive thinking.... Typical "we are invincible because we're AMERICA"... Just remember that in reality the USA is still a young country and history shows what this kind of crisis can do to a country...

whatiscmr, glad you got something out of it. I had many posts on here explaining this in great detail, but they went bye-bye with the axe of the political forum. (edit:those old posts are still there. Found them in my history. This was a hot little thread for a while. I gave a lot of good links here:http://www.sowal.com/bb/showthread.php/53004-The-American-Dream)

Some said I was long winded, some wanted to hear more, most remained silent or just wished I would go away. I will refrain from posting too much as I don't want to overstep any changes Kurt is trying to make politically, but please understand this isn't political.

Unfortunately, explaining what money really is doesn't fit into a cute soundbite or pithy comment. That's also part of the problem. Multi-tasking dilutes ones attention much the same way creating more debt/dollars dilutes your purchasing power. Inflation is a tax on the savers and the left vs right paradigm is a tax on intelligent discussion. You may win a battle here and there but you're losing the war of who controls the world's reserve currency. This isn't political though, it's math. Politricks keep the masses divided and under the illusion that what they think matters. Ron Paul has it right. Unfortunately, he too is cast aside in favor of who big money can control. All the more reason we should listen to him. Ah, it doesn't matter....a fiat currency collapse is inevitable.

Never in the history of the world has a fiat currency not collapsed. Average life span of fiat? 40 years. When did we become fiat? 1971. Hmmmm. Started with the gold confiscation in '34 making it illegal for US citizens to own gold until '74. But in 1971 Nixon closed the gold window because we were running out. That upset the Arabs who had been exchanging their reserve dollars for our gold because it was still convertible. We paid them for oil in the world's reserve currency, the Fed dollar. Then the dollar was suddenly non-convertible and fiat. So the Arabs said, "Who controls Bartertown?", and the oil embargo was on. Anyone remember this?

This is much bigger than just us. It's a global currency war. A race to outrun the inflation we have unleashed on the world these past 40 years. And the half-life of each monetary injection of debt to ease the debt is decreasing at an exponential rate. As any ponzi does. They work until they suddenly don't.

I would be remiss if I didn't mention that fractional reserve lending allowed western nations to grow our standard of living. It most certainly did. But after WWII we were the world's largest creditor nation. Now we are the world's largest debtor, in history. Game over baby. Time to exit before the music stops. I recommend getting out of all paper and counter-party risk. By holding dollars and paper assets denominated in dollars, you are in effect co-signing for the fiscal responsibility of the US government.

So, take heart. You don't buy gold, you sell dollars. Gold is a 5,000 year old international currency which preserves today's purchasing power before tomorrow's inflation.

In this two part video, Mike Maloney does a good job of explaining how money works to a group of bankers in Russia last year.


[video]http://youtu.be/0Wrrzsrb-wg[/video]

I usually hang out here:
http://www.tfmetalsreport.com/

Get news here:
http://www.zerohedge.com/

Save my purchasing power here:
http://www.apmex.com/

This weekend at the GATA Gold Conference in London, Mr. Jim Sinclair was interviewed by James Turk. Jim Sinclair predicted $1650 gold about 10 years ago. He predicted it would happen by Jan. '11, so he was off by 6 months. Not bad considering it was $300 when he made that statement. He says when it breaches $1764, it will really take off. You guys haven't seen anything yet. Think gold is expensive now? How about $5000? $10,000? It's coming.

Apmex stopped taking all orders this weekend until the market opens tonight. It's going to be a crazy next couple of days for all markets.

[video]http://youtu.be/IF24atvNkSo[/video]


P.S. Alan Greenspan just said on Meet the Press "The US can always pay it's debts because we can just print more money." LOL That's worked really well so far. Problem is, our currency IS debt. This basic building block, or Trojan Horse as it were, is the reason there is no fixing this. All "leaders" are kicking this can down the road because there is no solution. We're all used to last minute buzzer beaters in politics/economics and think this is the same old song. It isn't.

Alan Greenspan works for John Paulson's hedge fund and their largest holding is gold.

"Gold and silver are money. Everything else is credit." - JP Morgan