Who is holding the bag? The future US taxpayers, right? As my friend, Brian, at the Frankenstein Government Blog , has often said : Debt is always paid. Either the borrower pays or the lender pays. So, will future generations of US taxpayers really pay-off our ever-increasing debt or will the lenders (the bond holders) write off their loses?
The US debt is currently over $15 trillion. The debt ceiling is $16.4 trillion and you can bet that our government will spend every penny of that.
CNBC.com recently ran an article that tells us who are holding the majority of these US Bonds. Let’s take a look.
- #15 Switzerland _ $113.9 billion
- #14 Taiwan _ $149.6 billion
- #13 Caribbean Banking Centers $185.3 billion
- #12 Brazil _ $206.4 billion
- #11 Oil Exporters _ $232 billion
- #10 Insurance Companies _ $250.1 billion
- #9 Depository Institutions _ $284.5 billion
- #8 United Kingdom _ $429.4 billion
- #7 State and Local Governments _ $484.4 billion
- #6 Mutual Funds _ $653.5 billion
- #5 Pension Funds _ $842.2 billion
- #4 Japan _ $1.038 trillion
- #3 Other Investors/Savings Bonds _ $1.107 trillion
- #2 China _ $1.132 trillion
- #1 Federal Reserve and Intragovernmental Holdings _ $6.328 trillion
So, the claim we often make that every time the government wants to spend more money we have to go cap-in-hand to China is a bit exaggerated. In round numbers, China holds about 7.5% of our debt.
The Federal Reserve, however, holds about 42% of the debt. Does that mean that 42% of the debt is debt we owe to ourselves? Not so fast. The Fed is not a government entity. The Fed is a private corporation owned by its member banks (think Wall Street Bankers) which are owned in part by the big European banks. In other words, 42% of our debt is held by what we like to call banlsters.
So, let’s get back to the question of who is going to get left holding the bag. There was a buzz in the MSM and the internet a while back that someone had calculated that to pay off the debt by raising taxes the current tax rate would have to double. That of course, that would destroy the economy so that ain’t going to happen not even if Obama is re-elected. The other option to pay down the debt is for government to spend less than they take-in. We are currently spending close to $1.5 trillion more than we take-in. That will clearly not happen if Obama gets a second term. If Romney or Santorum or Gingrich were to get elected, the best they are offering is to some day balance the budget. Assuming a Republican president actually pulled off that trick. we still wouldn’t be paying down our debt. Even Ron Paul believes the most he could do in the first year is to cut spending by $1 trillion. But Ron Paul is not going to be our next president. If a Republican controlled government really did cut spending sufficiently to start paying down the debt, they all be thrown out of office in the next election cycle. Although Americans are much more responsible than the Greeks, I fear Americans would see those cuts as too Draconian.
It appears then that there is no way we are going to pay down our debt. So, what is going to happen when the s**t finally hits the fan? The answer is that the markets will crash, including commodities like gold and silver. There will be world-wide panic. Whoever is the Treasury Secretary and whoever is the Fed Chairman at the time will be screaming: ” The sky is falling, the sky is falling. Quick turn-on the printing presses so we can pay off our debts!” Now this is exactly what the banksters want. They will be first in line to get these new dollars which they will use to buy gold and silver and anything else of intrinsic vale at rock bottom prices. Gold and silver will then skyrocket in price before those in groups 3,5,6,and 7 of the above table are able to react.Hperinflation will sweep the world but the banksters will be fat and happy because they will have more than secured their wealth, which is no longer in useless dollars but in fold and silver and other things of value.While the world is floundering in hyperinflation, the bankster will lay out a plan to save the world. They will present their plan for a New World Order with them in charge. They will create a new money system and the will begin making loans. Gradually new wealth will be generated. And, as always, this new wealth will eventually flow to the bankers again.
Yes. Yes. You are right! The old man has his tin foil hat screwed on good and tight. Yes I do. And I believe that something similar to what I just described will indeed happen. There is,in my opinion, one way to avoid the above scenario. We must elect politicians that will take control of the Treasury and the Fed BEFORE the s**t hits the fan. When the s**t hits the fan and America and the rest of the world are standing in a pile of ashes, we must resist the temptation to turn on the printing presses and instead America must declare bankruptcy just like Greece will do in the very near future. But, unlike Greece America can rebuild. We can restore our government based strictly on the constitution. We can create a new and sound monetary system. Please go to this CNBC.com site and click-through the pages. You will that the United Stated has by far the greatest gold reserves of any country or institution.. We can rebuild America if we have the courage and if we are willing to suffer a lot of pain in the process.
Well, that’s what I’m thinking. What are your thoughts?