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Debtism - The Legacy of Perpetual Debt (Art#1)
By: John Koraska
February 4, 2005 Updated: August 2, 2006
For my latest artice "Surviving Hard Times with Bank of America" please visit my new website http://USPUBLICPOLICY.COM
Debtism - The Legacy of Perpetual Debt is the American government's bequest to its hard working people. The practice of debtism has caused the USA to become the world's leading Debtor Nation. This did not happen because the nation is poor or in recession. The path from creditor nation to debtor nation is the direct result of faulty tax and welfare schemes that reward debt, penalize savings and erode the rights of a free people. The Social Security program provides prima facie evidence of how the U.S. economy has evolved from a system of private ownership and free enterprise to socialism and debtism.
The federal government has become the master, not the servant, of the people. Income that could be saved and invested for retirement and medical care (so the individual could provide for his own needs) is confiscated by self-serving politicians who believe they can administer personal welfare better than the individual. A review of government's and the Federal Reserve Bank's records of fiscal and monetary policies indicates a chimpanzee could probably do a better job and most certainly would be more entertaining. The coordinated efforts between these bodies and corporate America have promoted massive debt and government dependency while diminishing personal savings, equity, personal responsibility and the motivation for self-sufficiency to provide for one's own personal needs.
The arrogance of politicians, corporate and banking functionaries to think they can do a better job of managing money than an individual acting in his own self-interest is ludicrous and dangerous. The economic failures of the USSR provides an illuminating example of how dubious planning and excessive control by a central government erodes individual rights of the masses and diminishes the real value of labor and capital, over time. Vast wealth is concentrated into the hands of a tiny minority with increasing power over those who choose to surrender their individual freedom to socialist bureaucracies. History is a testament that centralized economic control, in the extreme, ALWAYS leads to ultimate disaster.
One might ask a Russian pensioner or retiree their thoughts on collectivism and paper money. Specifically, one might ask what happens to political promises when a fiat currency loses its luster, or debt service overwhelms income and creative new schemes to sustain economic bubbly? Then, one might ask, what is the United States doing to AVOID a similar outcome?
The United States of America was created to provide a common defense for the republics. The U.S. Constitution was designed to limit the power of centralized government, and to preserve sovereign rights of and for the people. Insidious usurpations by Congress, the Executive and the Supreme Court of explicit rights guaranteed in the document have placed this country on a perilous path. Finding new meanings in the document that do not exist is a hallmark in the political and judicial "Halls of Blame". Signals of the ultimate demise of the "American Dream" abound. The Legacy of Perpetual Debt heads the list.
Warning of Perpetual Debt
"I place economy among the first and most important virtues and public debt as the greatest dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt. If we can prevent the government from wasting the labor of the people, under the pretense of caring for them they will be happy."
Thomas Jefferson
United States of America - Debtor Nation
On March 20, 2006, President Bush signed a bill to raise the (statute) Debt Ceiling to $8.965 Trillion. The National Debt of $8.42 Trillion (July 8, 2006) has continued to increase at a daily average of $1.74 billion per day since September 30, 2005!
The Government's power to transfer wealth from one to another (regardless of equity or need) has grown exponentially since the advent of Socialism during the last Great Depression. As costs of Socialism exceeded revenues, new victims, i.e. MOTHERS WITH TOTS, were compelled to join the work force and Debtism was further developed to fill the gap; thus paving the way toward latch-key kids and perpetual debt.
It took this nation 205 years (1776 to 1981) to accrue $1 TRILLION in official "statute" US government debt. It has taken only 24 years (1982 - 2005) to exceed 8 TRILLION. On Dec 30, 2005, the debt was $8.17 TRILLION; but this is just the tip of the iceberg.
Under-funded or un-funded government social welfare programs ADD a significant multiple to the official debt. Recent studies provide a flavor of the inestimable trillions in shortfalls. An example:
The Treasury Papers, a study that former Treasury Secretary Paul O'Neill commissioned record:
"A fiscal gap (the present value difference between government's projected expenditures and receipts) of over $44 trillion "now more than $50 trillion thanks to the new Medicare drug benefit. Almost all the un-funded debt is a consequence of Social Security Retirement and Medicare benefits. Medicare now faces an imbalance exceeding $36 trillion. That is the amount of money in present value that Medicare is projected to pay out for future benefits in excess of the money in its trust fund, plus the money it is projected to collect in future taxes and premiums. Social Security's imbalance exceeds $7 trillion."
These estimates do not include inadequate funding of the military and Civil Service retirement programs, Supplemental Social Security (SSI) nor the Medicaid program that is growing faster than Social Security. While adverse consequence of Debtism is already being felt by millions of Americans, the worse is yet to come. Under current tax and welfare schemes, those who save and contribute to Social Security, IRA's, 401k's, etc. will increasingly subsidize those who do not. Only significant changes in law or those who enact them can alter the trend toward a welfare state.
Debtism n 1. A uniquely American socio-economic, fiat currency, tax and welfare arrangement created by unconstitutional law. 2. A fraudulent monetary system based on a fiat currency and fractional reserve banking that creates corruptive capital imbalances between equity and debt. 3. A scheme that encourages debt with tax incentives and devastates savings by taxing the inflation produced by a depreciating currency. 4. A practice of perpetual government borrowing to sustain an indebted consumerist driven economy until the currency and the economy collapses.
Note: Fiat currency decreases in value over time because it has no tangible backing such as gold or silver that have historically provided constraint on excessive creation of money and debt. Bogus government trust funds overflow with compounding government IOUs instead of real assets. EVEN THE EARNED INTEREST ON THE GOVERNMENT DEBT IS PAID WITH MORE IOUs. This insidious transfer of economic power from the people to their government is inexplicable. Long lines at bankruptcy courts will be the inevitable result.
Developing a tax and welfare system on a foundation of phony money is not just stupid, it is insane! UNLESS, of course, one can influence dictation of convoluted rules and benefit from the EXCEPTIONS! Corporations, rich folks, political actions committees and other special interest groups may fit into this category.
You will not find the word debtism in a dictionary or a thesaurus. Once the masses understand the corrosive effects of this economic phenomenon, they will demand change. The consequence of debtism is compounding inflation created by a LOSS IN PURCHASING POWER of fiat currency, a mirror image of the Magic of Compounding Interest (Compound interest pays interest not only on the principal, but on the interest as well.)
EXAMPLE: A 3 bedroom, 2 bath, 2 car garage, 1700SF home, in a well maintained neighborhood cost $12000.00 in 1960. In 2006 the nominal price exceeds $100,000.00. The 733%+ increase is a result of compound inflation of a depreciating US Dollar NOT an appreciation in tangible value of a depreciating asset.
Absent immediate, corrective action, the dire economic and social outcome is not only predictable it is unavoidable. And, it will be catastrophic! The money spent by the central government is your money. Government debt (U.S. Treasury obligations' bonds and notes) that is sold to investors and placed in government Trust Funds is debt that can only be redeemed by: further taxes on workers and investors, reduced benefits, more debt, or more printing press fiat phony money that through inflation, loses purchasing power.
The fundamental cause of this impending calamity is that the U.S. federal government has grossly exceeded the authority granted to it by the States and the People - expressed in the U.S. Constitution. The almost unrestrained growth in the POWER of the central government has irrefutably created unequal justice under law; that is demonstrated by economic inequality, social injustice and by perpetual, unsustainable, unredeemable debt.
A troubling and puzzling aspect of government's insatiable appetite for ABSOLUTE POWER, is that free citizens quietly condone the intrusion. The American Revolution was fought over less onerous issues. Even more puzzling is the public acceptance of a government that invaded Iraq without provocation while our own borders are like sieves. Uncountable millions of illegal aliens have silently invaded the US and all the Congress and the Bush Administration do - is talk about it. I can think of no country in history that has allowed itself to be invaded without firing a shot in defense. US laws are being violated by illegal aliens and their employers, everyday; while US citizens are being jailed for minor drug related offenses that overwhelm the courts, jails and law enforcement officers. Makes no sense!
About the Author
Recognizing that credibility of an informational source is of equal value to that of assigning a validity rank (eg. scale: 1 to 5) to the information being analyzed; I offer a brief personal history, for consideration.
I am John T Koraska, MSgt USAF, Retired. I am 70 years old. While in the service (1954 � 1974), I was a Communications Intelligence Analyst/Reporter. Although paid by the USAF, much of the time, duties were under the operational control of the National Security Agency (NSA). I held clearances of Top Secret, Cryptographic, and was indoctrinated for Codeword (Special Intelligence) with access to compartmented information (projects and intelligence). I spent most of my career overseas in places that were not tourist attractions (eg. Libya, Turkey, Shemya, Alaska and Vietnam).
Training received in the Air Force and at the National Security Agency provided opportunities to develop an ability to analyze complex situations and systems to create logical intelligence products. All available sources of information was analyzed to develop possible/probable scenarios of ongoing military activities (especially within the former USSR).
In recent years, I have used this analytical ability (acquired at the expense of previous taxpayers), to research and analyze US government tax and welfare programs, policies and enabling legal statutes; and the US Economy. Specifically, in the past two years my focus has been to discover how and why the most powerful country in history has transformed itself from creditor to debtor status. Specifically, I wanted to understand the basis for the conundrum of multi-trillion dollar explosion in federal fiscal exposures while business profits were enjoying double digit increases and employment is at historic high levels. It has been an educational experience. Each step along the way has produced an article, each succeeding article is an improvement since additional research, and analysis develops new insights.
I have written numerous articles with a primary focus on Social Security and have published them on this website. To access these articles, click: Social Security Articles Directory Most recently, Getting Ready for Hard Times was published in four parts, that summarize significant points made in previous articles. Since then, visits to the website have increased substantially. While the Social Security program was chosen as a token demonstration of flawed tax and welfare laws, it does not pose the greatest danger to USA economic well-being. That dubious distinction belongs to the Medicare and Medicaid programs.
Doing Your Part to Improve America
If you find value in this article, please help spread the word by E-Mailing this link http://debtism.com/ to those in your address book who you think will also be interested, including your own comments. If your friends and families also find the article interesting, request they repeat your action in E-Mail chain-letter fashion to those in their address books. The urgency for major reforms of tax and welfare laws is paramount. To expedite reforms, I can think of no more efficient means than this. There is no advertising on the debtism.com website. This assures fast navigation and the utmost privacy for those who visit. The purpose is to spread knowledge NOT invade your privacy.
Debtism - The Legacy of Perpetual Debt (Art#1)
By: John Koraska
February 4, 2005 Updated: August 2, 2006
For my latest artice "Surviving Hard Times with Bank of America" please visit my new website http://USPUBLICPOLICY.COM
Debtism - The Legacy of Perpetual Debt is the American government's bequest to its hard working people. The practice of debtism has caused the USA to become the world's leading Debtor Nation. This did not happen because the nation is poor or in recession. The path from creditor nation to debtor nation is the direct result of faulty tax and welfare schemes that reward debt, penalize savings and erode the rights of a free people. The Social Security program provides prima facie evidence of how the U.S. economy has evolved from a system of private ownership and free enterprise to socialism and debtism.
The federal government has become the master, not the servant, of the people. Income that could be saved and invested for retirement and medical care (so the individual could provide for his own needs) is confiscated by self-serving politicians who believe they can administer personal welfare better than the individual. A review of government's and the Federal Reserve Bank's records of fiscal and monetary policies indicates a chimpanzee could probably do a better job and most certainly would be more entertaining. The coordinated efforts between these bodies and corporate America have promoted massive debt and government dependency while diminishing personal savings, equity, personal responsibility and the motivation for self-sufficiency to provide for one's own personal needs.
The arrogance of politicians, corporate and banking functionaries to think they can do a better job of managing money than an individual acting in his own self-interest is ludicrous and dangerous. The economic failures of the USSR provides an illuminating example of how dubious planning and excessive control by a central government erodes individual rights of the masses and diminishes the real value of labor and capital, over time. Vast wealth is concentrated into the hands of a tiny minority with increasing power over those who choose to surrender their individual freedom to socialist bureaucracies. History is a testament that centralized economic control, in the extreme, ALWAYS leads to ultimate disaster.
One might ask a Russian pensioner or retiree their thoughts on collectivism and paper money. Specifically, one might ask what happens to political promises when a fiat currency loses its luster, or debt service overwhelms income and creative new schemes to sustain economic bubbly? Then, one might ask, what is the United States doing to AVOID a similar outcome?
The United States of America was created to provide a common defense for the republics. The U.S. Constitution was designed to limit the power of centralized government, and to preserve sovereign rights of and for the people. Insidious usurpations by Congress, the Executive and the Supreme Court of explicit rights guaranteed in the document have placed this country on a perilous path. Finding new meanings in the document that do not exist is a hallmark in the political and judicial "Halls of Blame". Signals of the ultimate demise of the "American Dream" abound. The Legacy of Perpetual Debt heads the list.
Warning of Perpetual Debt
"I place economy among the first and most important virtues and public debt as the greatest dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt. If we can prevent the government from wasting the labor of the people, under the pretense of caring for them they will be happy."
Thomas Jefferson
United States of America - Debtor Nation
On March 20, 2006, President Bush signed a bill to raise the (statute) Debt Ceiling to $8.965 Trillion. The National Debt of $8.42 Trillion (July 8, 2006) has continued to increase at a daily average of $1.74 billion per day since September 30, 2005!
The Government's power to transfer wealth from one to another (regardless of equity or need) has grown exponentially since the advent of Socialism during the last Great Depression. As costs of Socialism exceeded revenues, new victims, i.e. MOTHERS WITH TOTS, were compelled to join the work force and Debtism was further developed to fill the gap; thus paving the way toward latch-key kids and perpetual debt.
It took this nation 205 years (1776 to 1981) to accrue $1 TRILLION in official "statute" US government debt. It has taken only 24 years (1982 - 2005) to exceed 8 TRILLION. On Dec 30, 2005, the debt was $8.17 TRILLION; but this is just the tip of the iceberg.
Under-funded or un-funded government social welfare programs ADD a significant multiple to the official debt. Recent studies provide a flavor of the inestimable trillions in shortfalls. An example:
The Treasury Papers, a study that former Treasury Secretary Paul O'Neill commissioned record:
"A fiscal gap (the present value difference between government's projected expenditures and receipts) of over $44 trillion "now more than $50 trillion thanks to the new Medicare drug benefit. Almost all the un-funded debt is a consequence of Social Security Retirement and Medicare benefits. Medicare now faces an imbalance exceeding $36 trillion. That is the amount of money in present value that Medicare is projected to pay out for future benefits in excess of the money in its trust fund, plus the money it is projected to collect in future taxes and premiums. Social Security's imbalance exceeds $7 trillion."
These estimates do not include inadequate funding of the military and Civil Service retirement programs, Supplemental Social Security (SSI) nor the Medicaid program that is growing faster than Social Security. While adverse consequence of Debtism is already being felt by millions of Americans, the worse is yet to come. Under current tax and welfare schemes, those who save and contribute to Social Security, IRA's, 401k's, etc. will increasingly subsidize those who do not. Only significant changes in law or those who enact them can alter the trend toward a welfare state.
Debtism n 1. A uniquely American socio-economic, fiat currency, tax and welfare arrangement created by unconstitutional law. 2. A fraudulent monetary system based on a fiat currency and fractional reserve banking that creates corruptive capital imbalances between equity and debt. 3. A scheme that encourages debt with tax incentives and devastates savings by taxing the inflation produced by a depreciating currency. 4. A practice of perpetual government borrowing to sustain an indebted consumerist driven economy until the currency and the economy collapses.
Note: Fiat currency decreases in value over time because it has no tangible backing such as gold or silver that have historically provided constraint on excessive creation of money and debt. Bogus government trust funds overflow with compounding government IOUs instead of real assets. EVEN THE EARNED INTEREST ON THE GOVERNMENT DEBT IS PAID WITH MORE IOUs. This insidious transfer of economic power from the people to their government is inexplicable. Long lines at bankruptcy courts will be the inevitable result.
Developing a tax and welfare system on a foundation of phony money is not just stupid, it is insane! UNLESS, of course, one can influence dictation of convoluted rules and benefit from the EXCEPTIONS! Corporations, rich folks, political actions committees and other special interest groups may fit into this category.
You will not find the word debtism in a dictionary or a thesaurus. Once the masses understand the corrosive effects of this economic phenomenon, they will demand change. The consequence of debtism is compounding inflation created by a LOSS IN PURCHASING POWER of fiat currency, a mirror image of the Magic of Compounding Interest (Compound interest pays interest not only on the principal, but on the interest as well.)
EXAMPLE: A 3 bedroom, 2 bath, 2 car garage, 1700SF home, in a well maintained neighborhood cost $12000.00 in 1960. In 2006 the nominal price exceeds $100,000.00. The 733%+ increase is a result of compound inflation of a depreciating US Dollar NOT an appreciation in tangible value of a depreciating asset.
Absent immediate, corrective action, the dire economic and social outcome is not only predictable it is unavoidable. And, it will be catastrophic! The money spent by the central government is your money. Government debt (U.S. Treasury obligations' bonds and notes) that is sold to investors and placed in government Trust Funds is debt that can only be redeemed by: further taxes on workers and investors, reduced benefits, more debt, or more printing press fiat phony money that through inflation, loses purchasing power.
The fundamental cause of this impending calamity is that the U.S. federal government has grossly exceeded the authority granted to it by the States and the People - expressed in the U.S. Constitution. The almost unrestrained growth in the POWER of the central government has irrefutably created unequal justice under law; that is demonstrated by economic inequality, social injustice and by perpetual, unsustainable, unredeemable debt.
A troubling and puzzling aspect of government's insatiable appetite for ABSOLUTE POWER, is that free citizens quietly condone the intrusion. The American Revolution was fought over less onerous issues. Even more puzzling is the public acceptance of a government that invaded Iraq without provocation while our own borders are like sieves. Uncountable millions of illegal aliens have silently invaded the US and all the Congress and the Bush Administration do - is talk about it. I can think of no country in history that has allowed itself to be invaded without firing a shot in defense. US laws are being violated by illegal aliens and their employers, everyday; while US citizens are being jailed for minor drug related offenses that overwhelm the courts, jails and law enforcement officers. Makes no sense!
About the Author
Recognizing that credibility of an informational source is of equal value to that of assigning a validity rank (eg. scale: 1 to 5) to the information being analyzed; I offer a brief personal history, for consideration.
I am John T Koraska, MSgt USAF, Retired. I am 70 years old. While in the service (1954 � 1974), I was a Communications Intelligence Analyst/Reporter. Although paid by the USAF, much of the time, duties were under the operational control of the National Security Agency (NSA). I held clearances of Top Secret, Cryptographic, and was indoctrinated for Codeword (Special Intelligence) with access to compartmented information (projects and intelligence). I spent most of my career overseas in places that were not tourist attractions (eg. Libya, Turkey, Shemya, Alaska and Vietnam).
Training received in the Air Force and at the National Security Agency provided opportunities to develop an ability to analyze complex situations and systems to create logical intelligence products. All available sources of information was analyzed to develop possible/probable scenarios of ongoing military activities (especially within the former USSR).
In recent years, I have used this analytical ability (acquired at the expense of previous taxpayers), to research and analyze US government tax and welfare programs, policies and enabling legal statutes; and the US Economy. Specifically, in the past two years my focus has been to discover how and why the most powerful country in history has transformed itself from creditor to debtor status. Specifically, I wanted to understand the basis for the conundrum of multi-trillion dollar explosion in federal fiscal exposures while business profits were enjoying double digit increases and employment is at historic high levels. It has been an educational experience. Each step along the way has produced an article, each succeeding article is an improvement since additional research, and analysis develops new insights.
I have written numerous articles with a primary focus on Social Security and have published them on this website. To access these articles, click: Social Security Articles Directory Most recently, Getting Ready for Hard Times was published in four parts, that summarize significant points made in previous articles. Since then, visits to the website have increased substantially. While the Social Security program was chosen as a token demonstration of flawed tax and welfare laws, it does not pose the greatest danger to USA economic well-being. That dubious distinction belongs to the Medicare and Medicaid programs.
Doing Your Part to Improve America
If you find value in this article, please help spread the word by E-Mailing this link http://debtism.com/ to those in your address book who you think will also be interested, including your own comments. If your friends and families also find the article interesting, request they repeat your action in E-Mail chain-letter fashion to those in their address books. The urgency for major reforms of tax and welfare laws is paramount. To expedite reforms, I can think of no more efficient means than this. There is no advertising on the debtism.com website. This assures fast navigation and the utmost privacy for those who visit. The purpose is to spread knowledge NOT invade your privacy.
Debtism - The Legacy of Perpetual Debt (Art#1)