A Layman's Understanding of Debt by AnthonyT

Quote:
Originally posted by AnthonyT:
Hello,

I was reading a Pirate News post recently where part of the responses entered the arena of National Debt. The idea was floated that borrowing more money was a good way to stabilize the economy.

I myself have a tough enough time with algebra, and zero understanding of economics. That having been said, I'm skeptical that we as a Nation can just keep borrowing our way out of trouble.

I can't do it as an individual. I can get new credit cards to pay old credit cards. I could, at one point, get home loans to pay for credit card debt. At some point, however, my lending limit is reached. I reach the point where I just can't borrow enough money to keep making the minimum payments on the debt I already have. And then it's bad news for me.

Why should a Nation be any different than Me? How can the U.S. just keep borrowing mountains of money forever? Aren't we actually digging ourselves into a hole so deep that we can't climb out of it?

--Anthony

"Liberty must not be purchased at the cost of Humanity." --Captain Robert Henner

You are on to something , Anthony...

If you lived your life the same way that the Government conducts 'Our' business , you would be in Jail for Fraud , or at least for writing Bad Checks...

Let me run and get you a Link to a new Documentary Film that explains the bind that we are in...

Meanwhile , check out these two interviews , and pay particular attention to the second interview , where Celente reveals the 'ownership' of the private corporation known as the 'Federal Reserve'...

PART 1 :

PART 2 :

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Friday, November 14, 2008 7:30 AM

I.O.U.S.A.

August 21, 2008

Cast & CreditsFeaturing David M. Walker, Robert Bixby, Paul Volker, Ron Paul, Warren Buffett, Paul O'Neill and others.

Roadside Attractions presents a documentary directed by Patrick Creadon. Written by Creadon, Christine O'Malley and Addison Wiggin. Running time: 85 minutes. Rated PG (for some thematic elements). Opening today at local theaters.

By Roger Ebert

A letter to our grandchildren, Raven, Emil and Taylor: I see you growing up into such beautiful people, and I wish all good things to you as you make the leap into adulthood. But I have just seen a documentary titled "I.O.U.S.A." that snapped into sharp focus why your lives may not be as pleasant as ours have been. Chaz and I had the blessing of growing up in an optimistic, bountiful America. We never fully realized that we were paying for many of our comforts with your money.

Let me explain. There is something called the "national debt." In the movie's interviews with ordinary people, it has a hard time finding anyone who knows exactly what that is. Well, I've never exactly known, either. I thought I knew, but it never came up in conversation, and it became a meaningless abstraction, even though in 2009, the debt will pass $9 trillion. You might think of those as dollars our nation has spent without having them.

What will this mean to you? It will mean you will live in a country no longer able to pay for many of the services and guarantees we take for granted. In 40 years, when you are still less than my age, it looks like the government will only be able to pay for three things: Interest on the national debt, "some" Social Security and "some" Medicare. It will not be able to afford any of the other functions it now performs.

How did we get into this situation? With a federal government that has been throwing bad money after good. Of all the presidents in the last century, the only one who was able to achieve a balanced budget and produce a surplus was Bill Clinton. He did that by bravely raising taxes and cutting spending. Our current president, George W. Bush, is now finishing up eight years of throwing around money like a drunken sailor. His fellow conservatives, like Rush Limbaugh, like to talk about "tax and spend Democrats." But they seem to be "don't tax and spend even more Republicans."

Not that this film takes sides. It is non-partisan and includes many Republicans who agree with its argument that the country is headed for disaster within the lifetimes of many now living. It centers on David M. Walker, until recently the U.S. comptroller general, and Robert Bixby, the head of the nonpartisan Concord Coalition, who have been on a national "Fiscal Wake-Up" tour that will last until the November elections. They are trying to sound the alarm, but they speak to half-empty town halls and captive Rotarians and get pushed off the local news by a story of a man who swallowed a diamond.

I don't really believe this review will inspire enormous numbers of people to go see the film. But if they do, they'll find it accomplishes an amazing thing. It explains the national debt, the foreign trade deficit, the decrease in personal savings, how the prime interest rate works, and the weakness of our leaders. No, not only George W. Bush, but politicians of both parties, who know if they vote against tax cuts, they will be lambasted by their opponents and could lose their jobs. In the film, we see President Bush being asked about the debt and replying: "Ask the economists. I think I only got a B-minus in economics." Then he gives that little chuckle. "But I got an A-plus in cutting taxes."

Yes, he cut taxes while our national spending mushroomed. What we have to do is bite the bullet and pay higher taxes while spending less. The war in Iraq is a much sexier issue. But no matter what happens in Iraq, the real crisis we face is the debt. The movie includes testimony by former Fed chairman Paul Volker, former Treasury Department secretary Paul O'Neill, billionaire Warren Buffett, congressman Ron Paul and others on both sides of the fence who all agree: Don't buy what you can't pay for.

Here's an interesting statistic. I remember when "Made in China" meant cheap and shabby merchandise. No longer. In the ranking of the trade imbalance among all the world's nations, China is first with the highest surplus, and the United States is last with the largest deficit. The Chinese now hold a huge chunk of our debt. If they ever call in the loan, it would destroy our economy. In the presidential debate earlier in the year, Ron Paul was a lonely voice talking about the debt; the others on both sides paid lip service to the problem and moved on.

So here's the bottom line, kids. The United States is probably going to go broke during your lifetimes. Actually, it's already broke, but getting deeper into debt allows it to keep running on thin air, like the Road Runner. My advice? Learn Chinese. Start savings accounts. Don't buy what you can't afford. Any politician who tries to win votes by promising to cut taxes is digging our country's grave.

* * * *

http://rogerebert.suntimes.com/apps/pbcs.dll/article?AID=/20080821/REV
IEWS/329

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Friday, November 14, 2008 7:47 AM

A 30-odd Minute overview of the 85-minute theatrical release :

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Friday, November 14, 2008 8:25 AM

HERO

Quote:
Originally posted by AnthonyT:
I myself have a tough enough time with algebra, and zero understanding of economics.

I appreciate this sentiment. You don't see me out there doing brain surgury just because I can change my own mind.

Quote:

I can get new credit cards to pay old credit cards. I could, at one point, get home loans to pay for credit card debt. At some point, however, my lending limit is reached.

Thats because of how you are using the credit. The credit they are talking about is not the same thing.

Quote:

Why should a Nation be any different than Me? How can the U.S. just keep borrowing mountains of money forever? Aren't we actually digging ourselves into a hole so deep that we can't climb out of it?

Yes. Except its not a zero sum game. Credit in this case, unlike your personal credit card, is actually capital. Capital investments grow the economy. That means more jobs, more cash flow, higher tax returns, and a larger economy.

In your example, suppose you use your home refinance to get a better job or start a business thus increasing your income which in turn allows you to either pay off your debt or to afford large minimum payments or even take on additional loans so that you can further increase your income.

That's what they are talking about. Does not always work that way...but the availability of capital is a fundamental part of capitalism. Its why God invented banks, money, contract law, and the corporation. So that we would have the means to create capital and move it into large scale investments like factories and Chick-fil-a franchises.

H

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Friday, November 14, 2008 8:26 AM

SIGNYM

I believe in solving problems, not sharing them.

Anthony, you've touched on a huge, huge question. Entire treatises have been written on the topic, and there is still a large disagreement about the definition and consequences of “debt”.

There is personal debt: What you and I owe (mortgages, car payments, credit cards).
There is county, state, and Federal debt (deficit): The difference between what they take in through taxes and fees, and what they spend.
There is the trade deficit: How much we purchase from abroad versus how much we sell.
There is corporate debt.

It all depends on where you want to draw the boundary between money flowing in and money flowing out, because one entity’s debt is another entity’s income. And then there is the money supply, which is a whole ‘nother story.

We can compare the economy to a poker game in which “the house” takes a percent each game (profit). Some players get more chips, and some get less, but as time goes on there is overall less and less money to play with. When one person gets all of the chips, the game stops, unless the other players borrow money to keep playing. But at some point even the borrowing stops, and the game stops for good. This is what Rue referred to as an economy getting “stuck” and not being able to find its way out without help. The solution to the problem (as proposed by Keynes) was simply to make more chips available... increasing the money supply, as it were. Roosevelt’s solution was to take some of the chips from “the house” and the winning player, and redistribute them so the game can go on: “spreading the wealth”.

The same thing happens under capitalism. Each time something is produced, businesses skim some off the top as “profit”. As time goes on, fewer and fewer people get richer and richer, but more and more people are unable to buy anything. They depend on borrowing to keep their lifestyle afloat, but when that runs out the economy slows down to a crawl, because people are no longer buying as much.

It doesn't really matter whether the chips are gold, paper, or plastic: as long as some people wind up with all of the chips, the game stops. And so the entire economy depends on debt, or increasing the money supply, or redistributing the wealth, or some combination.

Now, you might ask: What happens with the profit? That's an interesting discussion but i'm going to have to stop for now.

---------------------------------
Let's party like its 1929.

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Friday, November 14, 2008 8:44 AM

Freedom is Important because People are Important

Hello,

I think I understand what Hero is saying. He is saying that if we use the borrowed money to grow the economy, we actually end up with more money than we borrowed in the long run. (Is that right?)

But it would seem to me that if we were doing that, we could stop borrowing money, and start using our money surplus to grow the economy. Thus not having to borrow any more money.

But instead it feels like we keep borrowing more money forever, a bigger and bigger chunk of money. I'm having trouble imagining that such a thing can continue indefinitely. I'm also having trouble imagining that we've been successful in growing the economy, because if we were, I'd think we would have enough money to pay back what we borrowed and not have to borrow any more.

Now Signy's statement suggested that we don't have to worry about all this stuff so much, because every once in a while we shake the etch-a-sketch, either create more money from nothing or re-distribute the money we have, and we get to sort of start over until the picture gets muddled again.

But shaking the etch-a-sketch would only seem to work if we control the etch-a-sketch. If we borrow tons of money from another country, don't they control the etch-a-sketch? If we create enough money to pay them, aren't we making the money worth less? If so, what's their incentive to keep lending to us? And we can't re-distribute the wealth from them to us, can we? Without going to war, I mean?

I'm not sure I understand how either of these things keeps us out of trouble.

--Anthony

"Liberty must not be purchased at the cost of Humanity." --Captain Robert Henner

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Friday, November 14, 2008 9:32 AM

Quote:
Originally posted by AnthonyT:
Hello,

I think I understand what Hero is saying. He is saying that if we use the borrowed money to grow the economy, we actually end up with more money than we borrowed in the long run. (Is that right?)

But it would seem to me that if we were doing that, we could stop borrowing money, and start using our money surplus to grow the economy. Thus not having to borrow any more money.

But instead it feels like we keep borrowing more money forever, a bigger and bigger chunk of money. I'm having trouble imagining that such a thing can continue indefinitely. I'm also having trouble imagining that we've been successful in growing the economy, because if we were, I'd think we would have enough money to pay back what we borrowed and not have to borrow any more.

Now Signy's statement suggested that we don't have to worry about all this stuff so much, because every once in a while we shake the etch-a-sketch, either create more money from nothing or re-distribute the money we have, and we get to sort of start over until the picture gets muddled again.

But shaking the etch-a-sketch would only seem to work if we control the etch-a-sketch. If we borrow tons of money from another country, don't they control the etch-a-sketch? If we create enough money to pay them, aren't we making the money worth less? If so, what's their incentive to keep lending to us? And we can't re-distribute the wealth from them to us, can we? Without going to war, I mean?

I'm not sure I understand how either of these things keeps us out of trouble.

--Anthony

"Liberty must not be purchased at the cost of Humanity." --Captain Robert Henner

You are completely correct , Anthony...

The way the 'economy' is being run doesn't make sense for average Folk...

It defies 'common sense' .

It is still true that you cannot get something for nothing , unless you are a Bankster or one of their cronies...

There is no 'free lunch' for common folk .

Don't believe anything from anyone who tells you that Deficit and Debt are interchangeable terms...They are Not :

Deficit - Financial shortage that occurs when LIABILITIES exceed ASSETS.

Debt - General name for money, notes, BONDS, goods or services which represent amounts owed.

http://www.nysscpa.org/prof_library/guide.htm#d

Because of compounding interest , the National 'Debt' is destined to be unpayable...

It's further complicated by 'inflation' , which is another form of 'hidden' interest which constantly eats away at the 'worth' of the U.S. 'Dollar' , the paper 'money' that is in circulation presently...

Roger Ebert's review , above , expects the US National Debt to exceed 9 Trillion dollars in 2009 .

Because of the 'Bailout' , that figure has already been drastically Exceeded...

I very much recommend that everyone see at least the condensed IOUSA Video at the youTube Link I listed above...

We're Humped...

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Friday, November 14, 2008 9:40 AM

http://revolutionradio.org/2008/04/05/1984-grace-commission-report-und
er-ronald-reagan-showed-irs-is-a-fraud-that-collects-taxes-for-the-banking-dynasties/

"...The final report of the 1984 Grace Commission, convened under President Ronald Reagan,
quietly admitted that none of the funds they collect from federal income taxes goes to
pay for any federal government services. The Grace Commission found that those funds
were being used to pay for interest on the federal debt, and income transfer payments to
beneficiaries of entitlement programs like federal pension plans."

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Friday, November 14, 2008 9:51 AM

HERO

Quote:
Originally posted by out2theblack:
The way the 'economy' is being run doesn't make sense for average Folk...

It defies 'common sense' .

True. Economics is not something everyone understands. But lack of general understanding does not make the science invalid.

I have no idea how to perform brain surgury. But, if a person with the right education and experiance comes along and says "I'm a Brain Surgon, you need stereotactic radiosurgery", I'll take his word for it. Sure, we all know stereotactic radiosurgery is a radiation therapy technique that uses a large number of narrow, precisely aimed, highly focused beams of ionizing radiation and the beams are aimed from many directions circling the head, and meet at a specific point. But you call Joe the Plumber to unstop your pipes and Joe the Brain Surgeon to perform stereotactic radiosurgery.

Quote:

It is still true that you cannot get something for nothing , unless you are a Bankster or one of their cronies...

There is no 'free lunch' for common folk .

Unless your on welfare, collecting unemployment, or eating a "free lunch" at a local shelter.

Or, like myself, you collect 'Free chicken sandwhich' coupons to the local Chick-fil-a.

H

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Friday, November 14, 2008 9:59 AM

Freedom is Important because People are Important

"if a person with the right education and experiance comes along and says "I'm a Brain Surgon, you need stereotactic radiosurgery", I'll take his word for it."

Hello,

I wouldn't, actually. I'd get a second opinion, probably. And then I'd make sure I understood what the procedure entails, why I needed it, and how it would cure my condition.

I'm not sure that telling me, "We borrow ever-increasing sums of money forever because economists say so" is a very good answer. That probably sounds like a criticism, and I'm sorry, because I know the fact that you bothered to respond means you are trying to help me understand.

If the average person (me) can not have the system of 'borrowing more money forever' explained to them in a way that makes sense, then I can't be expected to select leaders who will implement fiscally responsible policies for this country. And that makes me a sad panda. Worse, if no one can explain to me how 'borrowing more money forever' is going to work, I might elect people into office who won't do it. And, if 'borrowing more money forever' is a sound fiscal practice, I may inadvertently break the country.

--Anthony

"Liberty must not be purchased at the cost of Humanity." --Captain Robert Henner

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Friday, November 14, 2008 10:00 AM

Hero ,

At the moment I'm trying to understand what compels you to 'volunteer' for Brain Surgery...

In the light of some of your prior posts , it becomes somewhat more clear...

You're feeling a kind of deficiency , aren't you ?

Not sure that a surgery on your noggin can help that...

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Friday, November 14, 2008 10:07 AM

I have a vote and I'm not afraid to use it!

When a business seeks to expand they will often borrow money or sell stocks or bonds, in other words, they go into debt to finance future gain. It's standard business practice.

When government seeks to improve the economy by building or repairing infrastructure, creating human capital (education, health care), or researching new technologies, it will also incur debt to finance future gains.

Government may also raise taxes, and if it raises taxes more on the wealthy, money is redistributed down to keep the economy running.

***************************************************************

Silence is consent.

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Friday, November 14, 2008 10:22 AM

Quote:
Originally posted by rue:
When a business seeks to expand they will often borrow money or sell stocks or bonds, in other words, they go into debt to finance future gain. It's standard business practice.

Hasn't always been so...

A hundred years ago , it was still common practice for both businesses and households to have a fund (savings) that were called a 'sinking fund'...

It was 'seed money' for capital expansion or rainy days...

At the time it made complete sense , because even Common Folk had the Constitutionally-prescribed Gold & Silver Coin , that was resistant to the inflationary trends common to the 'paper' currencies...

A 'buck' was a buck...

'Savings' made sense...And Banking Dynasties had yet to secure complete control of the finances of the United States...

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Friday, November 14, 2008 10:28 AM

I have a vote and I'm not afraid to use it!

ahem ! ...

stocks and bonds go back hundreds of years:

What were the five oldest stock exchanges worldwide?
Antwerp Bourse 1460
Lyons Bourse 1506
Toulouse Bourse 1549
Hamburg Bourse 1558
London Royal Exchange 1571

What were the three oldest stock exchanges in the US?
Philadelphia Stock Exchange 1790
New York Stock Exchange 1792
Boston Stock Exchange 1834

What were the three oldest commodities exchanges in the US?
Chicago Board of Trade 1848
Kansas City Board of Trade 1856
New York Cotton Exchange 1870

What were the first publicly traded securities in the U.S.?
$80 million in U.S. Government bonds that were issued in 1790 to refinance Revolutionary War debt.

When where the beginnings of the New York Stock Exchange established and what was the name of the founding document?
In 1792, the Buttonwood Agreement, signed by twenty-four brokers and merchants on Wall Street, agreeing to trade securities on a common commission basis.

What was the first listed company on the New York Stock Exchange?
Bank of New York, which was the first corporate stock traded under the Buttonwood tree in 1792, and the first listed company on the NYSE.

Who were the 24 brokers who signed the "Buttonwood Agreement" on May 17, 1792, and became the first New York Stock Exchange members? Leonard Bleecker , Hugh Smith , Armstrong & Barnewall , Samuel March , Bernard Hart , Alexander Zuntz , Andrew D. Barclay , Sutton & Hardy , Benjamin Seixas , John Henry , John A. Hardenbrook , Samuel Beebe , Benjamin Winthrop , John Ferrers , Ephraim Hart , Isaac M. Gomez , Gulian McEvers , Augustine H. Lawrence , G. N. Bleecker , John Bush , Peter Anspach , Charles McEvers, Jr. , David Reedy , Robinson & Hartshorne

***************************************************************

Silence is consent.

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Friday, November 14, 2008 10:29 AM

Freedom is Important because People are Important

Hello,

I understand the idea of incurring debt as an investment.

I borrow a million dollars so that I can open 3 manufacturing plants. These plants allow me to produce 3 times the merchandise which I can sell to 3 times as many customers and earn 3 times the money.

My 'future gains' are the increased profits that result from this investment. They are used to pay off my debt.

This seems to me to be a normal debt cycle. Normal debt cycles, to me, involve an end.

However, our country does not seem to have an end to the debt cycle.

We also do not seem to be maintaining a constant level of debt.

Rather, we seem to be escalating debt indefinitely, and our 'future gains' or profits from these investments do not appear to be exceeding our debt. This is a debt cycle that can not end. We will always need to be borrowing more money - and eventually we would seem to be in the position of borrowing money merely to pay for our borrowed money.

Recent events have taught me that an economic balloon can not inflate forever. I would imagine that this applies to debt, too? If we can not maintain a stagnant amount of debt, or preferably reduce our level of debt, what will prevent the debt from eventually inflating to an unsustainable size?

--Anthony

"Liberty must not be purchased at the cost of Humanity." --Captain Robert Henner

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Friday, November 14, 2008 10:38 AM

Freedom is Important because People are Important

Hello,

As an aside, Out...

I know you probably are trying for some good natured ribbing by suggesting that Hero is a mental defective, but it's not that funny, and is particularly not earned. Hero was simply contributing to the conversation. We don't need to belittle people whose ideas we disagree with. And we ought to focus our arguments on ideas, not people.

--Anthony

"Liberty must not be purchased at the cost of Humanity." --Captain Robert Henner

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Friday, November 14, 2008 10:49 AM

I have a vote and I'm not afraid to use it!

Hi AnthonyT

And yet, just a few short years ago the government was taking in a surplus and starting to pay down its debt.

How did they do it ? :

They raised the minimum wage (redistributed wealth downward to stimulate the economy, which it did), raised taxes (mostly on the wealthy), and cut certain kinds of spending (including military).

The official deficit as noted in the budget started going back up under Bush due to the tax cuts. (I read several analyses many years ago so I will probably not be able to find them.) The unofficial off-the-books debt is mainly due to the Iraq war and totals about $1trillion. (Iraq has never been funded in the budget as I think you are aware, but through yearly 'emergency spending' bills. I also read those analyses many years ago.)

Reversing the tax cuts for the wealthy (allowing them to expire) as Obama has proposed is a step in the right direction. So is getting out of Iraq which will stop the economic bleeding, as he also proposed.

These are what I consider obvious and prudent moves.

I personally haven't given a lot of thought to solving the economic crisis, but increased government spending similar to the public works programs only geared to energy infrastructure also seems like a good idea.

***************************************************************

Silence is consent.

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Friday, November 14, 2008 11:00 AM

Freedom is Important because People are Important

Hello,

I remember some years ago... Seems like ~8 years ago, now, we had a budget surplus.

The President at the time decided to give the surplus to the people. This sounded good to me, as someone who would receive a chunk of change in the mail, and who generally disliked taxes.

However, my father was livid. He explained to me that the proper thing to do with the surplus was to decrease the national debt. He said the savings in interest payments would create an even larger budget surplus in subsequent years, allowing us to pay down the debt even faster. He said that eventually, the national debt would be nearly eliminated, and the amount of money that the government could give back to the people at that time would be staggering. He said it could change the nation forever, and make U.S. citizens legitimately wealthier, instead of the 'paper wealth' we maintained by borrowing money to support a lavish lifestyle.

Well, that made a lot of sense, but I still took my check for a few hundred dollars and bought something frivilous with it, laughing all the way to the electronics store.

Looking back now, I see that my father was right.

I agree, Rue, that we may need a temporary tax increase, a massive spending decrease, and a real effort to pay down our national debt. That makes 'common sense' to me. That puts us on the same page.

--Anthony

"Liberty must not be purchased at the cost of Humanity." --Captain Robert Henner

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Friday, November 14, 2008 11:09 AM

I have a vote and I'm not afraid to use it!

"He explained to me that the proper thing to do with the surplus was to decrease the national debt."

And it was beginning to be paid down.

http://zfacts.com/p/318.html

***************************************************************

Silence is consent.

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Friday, November 14, 2008 11:15 AM

SIGNYM

I believe in solving problems, not sharing them.

Quote:
If the average person (me) can not have the system of 'borrowing more money forever' explained to them in a way that makes sense, then I can't be expected to select leaders who will implement fiscally responsible policies for this country. And that makes me a sad panda. Worse, if no one can explain to me how 'borrowing more money forever' is going to work, I might elect people into office who won't do it. And, if 'borrowing more money forever' is a sound fiscal practice, I may inadvertently break the country.

A capitalist nation CAN'T "borrow money forever" because it will either eventually go broke or create more currency to pay it's debt. OTOH it can't NOT "borrow money forever" because then currency circulation will eventually grind to a halt. That is the essential conundrum of capitalism: it's unsustainable in the long run. And that's where we are now: At the point where capitalism "breaks" and turns into a depression. But in the sort run, "we" have several separate problems:

Federal deficit
Trade deficit
Personal debt ("Main Street")
Business debt ("Wall Street")

Thanks to Bush's profligate spending, the Federal deficit is out of control.
Thanks ot America's desire for cheap goods, our trade deficit is out of control.
Thanks to the reduction in real wages over the past eight years, our personal debt is out of control.
And thanks to corporate greed and malfeasance, business debt is out of control.

We can't solve ALL of these problems at once. One or more problems will have to go unsolved in the short run even tho they are ALL significant. IMHO the best solution is to put the typical American back into solvency by undoing the massive concentration of wealth that GWB engineered over the past eight years. That means "spread the wealth" by taxing the rich and giving to the poor.

Additionally, once wealth is placed into the hands of consumers, we have to make sure that wealth is spent on AMERICAN goods to create AMERICAN jobs so it doesn't just "leak" to China. For one thing, we could insist that China be as open to our products as we are to theirs, or we start slapping trade restrictions on imports. OR we focus in raising the incomes of "service" jobs like teachers, day-care workers and nurses. Or we focus on a jobs-program like infrastructure, or on investments towards a new kind of energy production - and leave China in the (coal) dust.

But in the short run, I don't see our federal deficit going down. That will have to be tackled a few years from now.

---------------------------------
Let's party like its 1929.

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Friday, November 14, 2008 11:24 AM

BLUESUNCOMPANYMAN

Where is Chrisisall in this conversation? The next great depression is the backdrop of the Dark Angel future.

Do not fear me. Our's is a peaceful race and we must live in harmony.

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Friday, November 14, 2008 11:52 AM

Quote:
Originally posted by AnthonyT:
Hello,

As an aside, Out...

I know you probably are trying for some good natured ribbing by suggesting that Hero is a mental defective, but it's not that funny, and is particularly not earned. Hero was simply contributing to the conversation. We don't need to belittle people whose ideas we disagree with. And we ought to focus our arguments on ideas, not people.

--Anthony

"Liberty must not be purchased at the cost of Humanity." --Captain Robert Henner

My comment was intended as a good-natured poke in his ribs , nothing less , nothing more...

It was just a tease , no offense intended , none deliberately implied...

No one should infer more than was necessary to 'get' the joke , particularly not Hero...

Not to put too fine a point on it , but brain surgery IS a serious matter...I think that is what he intended to say , in so many words...

I just had a little fun with the WAY he said it...Sorry if that offended anyone .

I expect that Hero knows how to take the joke , but if he doesn't , I'm sure I'll hear from him about it...

No one should feel discouraged about conveying their point of view...

But , your point is well taken , AnthonyT , so I'll take it under advisement for the next occasion...

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Friday, November 14, 2008 1:39 PM

Quote:
Originally posted by rue:
ahem ! ...

stocks and bonds go back hundreds of years:

No one said they didn't .

Fiscal responsibility goes back thousands of years...

As does self-reliance and 'Independence'.

Making money using 'other peoples money' also goes back thousands of years...

For as long as people have had objects of value , there have been systems of trading those valuable objects...

Nothing about that is in dispute...

But , the discussion is concerning our present-day unsustainable governmental and economic practices...

Any historical information should inform and be particularly relevant to our present concerns , and how to address those matters .

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Friday, November 14, 2008 1:57 PM

Freedom is Important because People are Important

"we have to make sure that wealth is spent on AMERICAN goods to create AMERICAN jobs so it doesn't just "leak" to China."

Hello,

I've been thinking about this.

When I was a young child, the U.S. made televisions and radios and cars and computers and cameras and clothes and all kinds of things.

Do we still manufacture the full gamut of consumer items? If we all wanted to 'buy American' could we?

Lately it seems to me the only things we produce are foodstuffs and war machines.

--Anthony

"Liberty must not be purchased at the cost of Humanity." --Captain Robert Henner

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Friday, November 14, 2008 2:16 PM

I have a vote and I'm not afraid to use it!

OTB

I was addressing your post

"Hasn't always been so... A hundred years ago , it was still common practice for both businesses and households to have a fund (savings) that were called a 'sinking fund'... It was 'seed money' for capital expansion or rainy days...
At the time it made complete sense , because even Common Folk had the Constitutionally-prescribed Gold & Silver Coin , that was resistant to the inflationary trends common to the 'paper' currencies...
A 'buck' was a buck...
'Savings' made sense...And Banking Dynasties had yet to secure complete control of the finances of the United States..."

You implied that stocks, bonds and borrowing to finance future gain were rarities. Nothing could be further from the truth.

Here are some definitions of 'sinking fund'

First, understand that a sinking fund provision is really just a pool of money set aside by a corporation to help repay a bond issue.

A fund into which a company sets aside money over time, in order to retire its preferred stock, bonds or debentures. A fund into which a company sets aside money over time, in order to retire its preferred stock, bonds or debentures. In the case of bonds, incremental payments into the sinking fund can soften the financial impact at maturity. Investors prefer bonds and debentures backed by sinking funds because there is less risk of a default.

A fund accumulated to pay off a corporate or public debt.

Rather than a fund set up to accumulate money for investment as you said, they are in fact a fund set up to pay off debt.

Then, well, you went on your usual rant about gold and silver which really doesn't add to the discussion.

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Friday, November 14, 2008 2:22 PM

SIGNYM

I believe in solving problems, not sharing them.

It would require re-investment in our manufacturing capacity... in itself a producer of jobs.

---------------------------------
Let's party like its 1929.

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Friday, November 14, 2008 2:49 PM

Quote:
Originally posted by rue:

I was addressing your post

...You implied that stocks, bonds and borrowing to finance future gain were rarities. Nothing could be further from the truth.

Here are some definitions of 'sinking fund'

...Then, well, you went on your usual rant about gold and silver which really doesn't add to the discussion.

No , you weren't...

You inferred something that I neither stated , nor implied...

Black's LAW DICTIONARY : sinking fund

" In General Accounting , segregated assets that are being accumulated for a specific purpose..."

What you're doing is attempting to apply modern definitions to a situation that was commonplace a century ago...

Once again , historical context is important , to the extent that it informs our discussion in the present day...

The Gold and Silver issue is not a 'rant' ; it is rather , a Constitutional Mandate...

Have you ever had one of those , a mandate ?

Article 1 , Section 8 , US Constitution :

Duties of Congress :

" To coin Money , regulate the Value thereof , and of foreign Coin , and fix the Standard of Weights and Measures ; "

And ,

Article 1 , Section 10 :

" No State shall enter into any Treaty , Alliance , or Confederation ;
grant Letters of Marque or Reprisal ; coin Money ; emit Bills of Credit ; make any Thing but gold and silver Coin a Tender in Payment of Debts ; etc , etc...

Only gold and silver coin is Lawful Money...

Only Congress can authorize the issuance of coined Money , and regulate the Value thereof...

You get it ?

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Friday, November 14, 2008 2:59 PM

Quote:
Originally posted by AnthonyT:

...When I was a young child, the U.S. made televisions and radios and cars and computers and cameras and clothes and all kinds of things.

Do we still manufacture the full gamut of consumer items? If we all wanted to 'buy American' could we?

Lately it seems to me the only things we produce are foodstuffs and war machines.

--Anthony

A barrel of oil should be linked to a bushel of grain , pricewise...

If the oil producers of OPEC decide that they would like to eat , they will begin to see this as a good deal...

Aside from that , we can't make it here , anymore...

Something is wrong with that picture...

Why does the United States actually export
oil ?

We do...we really , really DO...

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Friday, November 14, 2008 2:59 PM

I have a vote and I'm not afraid to use it!

Speaking of historical context -

" No State shall enter into any Treaty , Alliance , or Confederation ;
grant Letters of Marque or Reprisal ; coin Money ; emit Bills of Credit ; make any Thing but gold and silver Coin a Tender in Payment of Debts ..."

You do know what they meant by STATE --- right ?

They weren't referring to 'state' meaning 'country', they were talking about the STATES that comprised the United STATES. They didn't want each STATE issuing money which might or might not have value to a greater or lesser degree than that of other STATES and which would exist in competition with the national currency. Hence, they set restrictions on what STATES could mint as currency.

When it came to the federal government, I see no such restrictions. They reserved for the federal government the right to define national currency.

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Friday, November 14, 2008 3:03 PM

Quote:
Originally posted by rue:

" No State shall enter into any Treaty , Alliance , or Confederation ;
grant Letters of Marque or Reprisal ; coin Money ; emit Bills of Credit ; make any Thing but gold and silver Coin a Tender in Payment of Debts ..."

They weren't referring to 'state' meaning 'country', they were talking about the STATES that comprised the United STATES. They didn't want each STATE issuing money which might or might not have value to a greater or lesser degree than that of other STATES and which would exist in competition with the national currency. Hence, they set restrictions on what STATES could mint as currency.

When it came to the federal government, I see no such restrictions. They reserved for the federal government the right to define national currency.

That's an Absurdity...

If the definition of the National money is one thing , but no State may make any Thing but gold and silver Coin
a Tender in Payment of Debts , then the National currency would be completely useless...

Once Again , reference the Coinage Act of 1792 for the specific Meaning and Intent of the Government regarding what comprises a Constitutionally-Lawful 'Dollar'...

It's a Specific Quantity of precious Metals...

The so-called 'Federal Reserve Act' is repugnant to the letter and Intent of the Constitution , and therefore invalid from its inception...

http://en.wikipedia.org/wiki/Coinage_Act

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Friday, November 14, 2008 3:10 PM

I have a vote and I'm not afraid to use it!

"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures ..."

It looks to me like the Feds get to define how much it's worth.

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Friday, November 14, 2008 3:20 PM

Quote:
Originally posted by rue:
"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures ..."

It looks to me like the Feds get to define how much it's worth.

Not 'the Feds'...

The Congress...

That's why the Coinage Act (1792) was enacted virtually contemporaneously with the U.S. Constitution...

It Defined the specific Weights and Measures of the precious Metals that comprised a Lawful 'Dollar'...

Up until that time , in the Colonies , and in the subsequent States , the Spanish 'milled dollar' was the accepted currency...

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Friday, November 14, 2008 3:31 PM

There is No Branch of the U.S. Government , authorized by the Constitution , known as 'the Feds'...

Rather , the Constitution authorizes the duties of the Legislative , Executive , and Judicial branches of government within the United States...

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Friday, November 14, 2008 3:37 PM

I have a vote and I'm not afraid to use it!

If you want to be tedious, I was referring to the federal government, as opposed to state governments.

But yes, CONGRESS gets to pass ordinary federal LAWS (not Constitutional amendments) defining the value of money, or delegating that function, as it chooses.

There is NO 'constitutional' definition of the national currency.

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Friday, November 14, 2008 3:48 PM

Quote:
Originally posted by rue:
If you want to be tedious, I was referring to the federal government, as opposed to state governments.

There is NO 'constitutional' definition of the national currency.

Again , not being tedious , but IF there's a difference between the States' Lawful Money , (Gold and Silver Coin) , and the Federally-defined Lawful Money , then there exists a Legal Conundrum...

No such divergence was intended , or enacted , by the Federal Constitution...

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Friday, November 14, 2008 3:53 PM

Quote:
Originally posted by rue:
But yes, CONGRESS gets to pass ordinary federal LAWS (not Constitutional amendments) defining the value of money, or delegating that function, as it chooses.

Congress may NOT Lawfully 'delegate' , abdicate , or abrogate , its Constitutional Duties...

Otherwise , the Constitution would have no force or effect...

You are either a friend of the Constitution , or you make yourself an
'enemy' of it , by definition...

That's why there's an Oath of Office , requiring the True Faith and Allegiance to it...

You either fully Support it , or you are its Enemy...

http://www.history.army.mil/faq/oaths.htm

http://en.wikipedia.org/wiki/Oath_of_office_of_the_President_of_the_Un
ited_States

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Saturday, November 15, 2008 8:00 AM

I have a vote and I'm not afraid to use it!

"but IF there's a difference between the States' Lawful Money , (Gold and Silver Coin) , and the Federally-defined Lawful Money , then there exists a Legal Conundrum..."

No.

Since the states have been bound to a fixed currency item the federal government gets to determine their value in relation to the federal currency - just like it gets to deterime the value of foreign currency, as written in the constitution. No problemo.

"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"
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Saturday, November 15, 2008 8:06 AM

I have a vote and I'm not afraid to use it!

"Congress may NOT Lawfully 'delegate' , abdicate , or abrogate , its Constitutional Duties..."

Uhhmmm ... the constitution allows the congress

"To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof."

In other words, if they pass a law delegating the making and distribution of money, they've acted within their constitutional authority.

BTW, I find your arguments to be very limited in their Constitutional understanding.

Congress clearly has the Constitutional authority to determine the currency of the US AND to delegate or empower entities to carry out the task.

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Saturday, November 15, 2008 2:45 PM

As usual , your 'opinions' are meaningless , and have no standing in the face of Facts :

...The Roosevelt Administration decided to implement a policy suggested by Professor George F. Warren of Cornell University.

This policy advocated controlling "inflation" (firmly defined by this time as "rising prices") by raising and lowering the "gold content" of the Dollar.

This policy was implemented, amongst many others, under the first big measure of the New Deal, the "National Recovery Act" (NRA). By January of 1934, the "adjustable Dollar policy" was an obvious and perceived failure, and it was dropped.

The NRA itself was declared Unconstitutional on May 27, 1935.

___________________________________________________________________________________________________________________________

The NRA was overturned in May, 1935 when the Supreme Court of the United States unanimously ruled in the case Schechter Poultry Corp. v. United States (295 U.S. 495, 1935), that the Act infringed upon states' authority, unreasonably stretched the Commerce Clause, and gave legislative powers to the executive branch in violation of the Nondelegation doctrine.

Moreover, the opinion fell back on the question of constitutional authority by stating, "extraordinary conditions do not create or enlarge constitutional powers."

Plainly , there is precedent of long standing that Congress oversteps its bounds and violates States' rights , Nondelegation , and Separation of Powers doctrines of the United States Constitution , when it fails to uphold its duty to Coin Money and regulate the Value thereof...

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Saturday, November 15, 2008 3:12 PM

I have a vote and I'm not afraid to use it!

And yet, you have failed to show that Congress is not allowed to determine the value of currency or to pass laws to empower bodies to carry out the task.

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Saturday, November 15, 2008 3:42 PM

Quote:
Originally posted by rue:
And yet, you have failed to show that Congress is not allowed to determine the value of currency or to pass laws to empower bodies to carry out the task.

The Highest Law is the Constitution , here in these United States .

The duties of Congress , and the Rights of the States , are enumerated therein...

The ruling of the Supreme Court which disestablished the National Recovery Act , is sufficient to alert any reasonable person that the duties of the Congress with regard to the monetary responsibilities , prescribed by the Constitution , are both specific , and limited , in scope...

Clearly then , as before , you are just not a reasonable person...

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Saturday, November 15, 2008 4:00 PM

I have a vote and I'm not afraid to use it!

First of all, it's not the NRA, it's the NIRA. The NRA was the National Recovery Administration.

Second, at issue was direct effects on interstate commerce, which the court ruled was within scope of the congress, v indirect effects which the court ruled was not.

And finally, a mere two years later, the court reversed its ruling and allowed more expansive discretion to congress, a position that has been upheld since.

Ya' gotta' keep up with the times. You're 71 years behind.

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Saturday, November 15, 2008 5:25 PM

Quote:
Originally posted by rue:
First of all, it's not the NRA, it's the NIRA. The NRA was the National Recovery Administration.

Second, at issue was direct effects on interstate commerce, which the court ruled was within scope of the congress, v indirect effects which the court ruled was not.

As always ,

You strain your gnats while gulping the camel...

The National Recovery Administration was established for the purpose of administrating the National Recovery Act .

Officially , it was the National Industrial Recovery Act...

That is the way that it was originally written...

But , you are the one who is decades behind...

It was commonly known as the National Recovery Act , colloquially , and contemporaneously...

It has been known in the vernacular ever since , as the National Recovery Act...

Many references designate it that way...Most of them either call it the National Recovery Act , or the N-R-A letters are bolded , while the 'Industrial' portion is not , to reflect the way that the Act has been commonly and historically known .

Seems that you are the one decades behind .

The Act was BAD LAW...The Supreme Court found it to be so within a fairly short time after its enactment...

The Constitution allows Congress a role in regulating interstate commerce...That was not the portion of law at issue ; rather , it was the aforementioned Un-Constitutionality of having a floating value to the U.S. Dollar that the Court differed with .

http://www.civics-online.org/library/formatted/texts/recovery_act.html

http://www.ourdocuments.gov/doc.php?flash=true&doc=66

Rue , you belong at the zoo...They'll put you in with the primates , where you may feel free to nit-pick...

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Saturday, November 15, 2008 5:32 PM

To put the ball in your Court , where in the Constitution is there an authorization for any Branch of the Federal government to allow , authorize , or permit a Private Corporation (Federal Reserve) to " regulate the 'money' supply " ?

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Saturday, November 15, 2008 5:46 PM

Here's a page that describes some of the history of Lawful Money in the United States .

Folk should look especially at the 'Note' from 1934...

Interesting , the way it reads :

"This Note Is Legal Tender For All Debts Public And Private And Is Redeemable In Lawful Money At The United States Treasury
Or At Any Federal Reserve Bank".

What is Lawful Money ?

According to the Constitution , it's Gold and Silver COIN !

There has been NO AMENDMENT to change that !

We've been swindled !

http://www.the-privateer.com/paper.html

http://www.civil-liberties.com/pages/money.html

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Saturday, November 15, 2008 6:01 PM

http://www.halexandria.org/dward299.htm

"...Any paper Money, which is not backed by something with intrinsic value, is always subject to becoming worthless once those using it begin to lose confidence in it. This was the case in the American colonies before and immediately after the American Revolution. It is also the reason that the Constitution of the resulting nation went to significant lengths to establish a national currency which was backed by tangible assets. It is also the gist of those Jeffersonian Concerns which dealt with the dangers of a Central Bank (as in The Federal Reserve), and the incompatibility of being free and in debt.

In the united States of America, paper money is illegal and unconstitutional. Article 1, Section 10, of the Constitution for the United States of America states, in part:

“No State shall.. make any Thing but gold and silver Coin a Tender in payment of Debts.”

The United States Code, Title 12, Section 152, states: “Lawful money shall be construed to mean gold or silver coin of the United States.”

Money is in fact defined as: “Coin, stamped metal; any piece of metal usually gold, silver, or copper stamped by public authority.” Bouvier’s Law Dictionary [1870, page 192] makes the definition even simpler: “Gold and silver coins. The common medium of exchange in a civilized nation.”

A 1934 Federal Reserve Note, however, contained the following statement: “This note is ‘legal tender’ for all debts public and private and is redeemable in ‘lawful money’ at the United States Treasury or at any Federal Reserve Bank.”

It might be thought curious that the Federal Reserve Note is ‘legal tender’, but can be redeemed for ‘lawful money’. Obviously, the two are not the same. In effect, Federal Reserve Notes are a legal tender, but not of the United States. Dollars are legal tender, but not all legal tender are dollars. Federal Reserve Notes cannot be “lawful money” for the United States.

More recent Federal Reserve Notes state: “This note is legal tender for all debts, public and private” Please note that there is no period at the end of the statement, suggesting that perhaps the statement is not complete. E.g. not redeemable? There is also the aspect that the note is for all debts... not necessarily a means of accumulating wealth, but merely a means of addressing debts (and not necessarily even paying off a debt!).

Take, for example, the case where a Court orders a judgment to be paid in dollars. Because the Federal government is not currently coining any Dollars (and the States are prohibited from doing so), no person can pay any debt arising from a judgment of the Court. Since there are no Dollars available to an accused to pay the debt judgment of the Court, the Court has no capacity to enforce the judgment, and therefore lacks the ability to effect a remedy (as in Remedy and Recourse). Thus, the Court has no jurisdiction in the case, and the case should be dismissed. [But don’t assume that the above constitutes legal advice, or that the Court will buy the argument for a nano-second! Their idea of remedy might be to throw you into jail! And thus not allow you to pass go.]

The founding fathers of the country specifically forbade the use of paper money as legal tender for good reason. This has been described in some detail by Robert S. Getman (an attorney, practicing with the firm of Kelley Drye & Warren in New York City) in his article, Gold and the Founding Fathers. His thoughts (and others’) include the following:

Emperors and kings in previous centuries were not totally free to increase taxes, inasmuch as they had to consider just how much their subjects were able and willing to bear. In the cases where their subjects might have reached a breaking point, the kings often resorted to skimming off some of the precious metals of their coins (thus reducing the actual weight of the coins), or more slyly, reducing the precious metal content of the coin’s alloy.

In modern times, considerable research has gone into finding ways to replace silver coins with coins of almost no silver. As a simple test, pick up an older American quarter dollar coin and compare it to a newer American quarter, one commemorating one of the States of the union. There is a noticeable difference. The newer coin is lighter! Surprise!

But this is just the tip of the iceberg. Modern governments have gone far beyond royal coin-clipping and debasement by the use of printing-press financing. Rather than openly imposing unpopular taxes, they simply create increasing quantities of paper money and credit without any regard for the resulting shrinkage of money’s value. It’s like a corporation constantly increasing the number of shares it issues, and thus causing the value of any single share to decrease due to unrestricted dilution of the company’s per-share value. It’s illegal for Corporations to do this without prior approval. Governments are not so inhibited.

Governments have, in fact, initiated “legal tender” laws that require citizens (i.e. leave them no viable alternative) to accept newly-printed paper money of increasingly less value in payment for goods and services. In this way, government raises revenues by covert theft. “The complexity, indirectness, and relative invisibility of this taxation-by-inflation has made the government's spending activities unaccountable to the governed.”

It was because of the widespread fiscal frauds in the printing of money prior to and during the American Revolution, that the writers of the Constitution went to such great lengths to insure that gold and silver would be the only constitutional legal tender. Thus, from a constitutional point of reference the current issuance of alleged dollars in the form of irredeemable paper as legal tender is both unjustifiable and unjust.

“The Common Law Heritage is that Money is property. A basic question that the law has always faced is: Whose property -- that of the government or that of the governed?

“Under the traditional legal precedents of the Common Law, this issue was framed in terms of the power of the sovereign. By the eighteenth century, the common law had progressed to the point at which it regarded money as private property whose debasement was beyond the rightful power of the sovereign.” [emphasis added]

Under the precepts of Common Law, the Rights of the governed were superior to that of the sovereign, and limited the sovereign’s power. Not the other way around! The limits on money contained in the Constitution was an attempt to ensure the Common Law aspect of limiting any sovereign or government’s ability to debase the national currency. As per the Supreme Court, the Constitution “must be interpreted in the Light of the Common Law ... and [can] not be understood without reference to the Common Law.”

When the Constitution was written, the States had powers and constitutions already in place. The Constitution did not grant the States new powers, but did impose limitations on pre-existing powers (including the printing of money). At the same time, the federal government derived all of its powers from the Constitution. And under that directive, the federal government was to have no powers other than those expressly granted it.

One of those powers not granted was the power to make paper into legal tender. In the Constitution, Article 1, Section 8 gave Congress the power: “to coin Money, regulate the Value thereof, and of foreign Coin...” This principle is unambiguous, and important! The States are expressly prohibited from making anything but gold and silver as legal tender, and Congress has no power granted to it, but to coin silver and gold.

Various Justices of the Supreme Court have noted that the power of coining money and regulating its value was delegated to the Congress by the Constitution in order to create and preserve the uniformity of such a standard of value. Gold coinage was indispensable to that goal. The purpose of the Constitution’s monetary provisions was intended to exclude everything from use, except gold and silver. The intent was that the dollar might represent property and not a mere shadow of it.

The Constitution recognized the Common Law precept that money was private property and not to be debased by the government. Its framers forged a clear mandate for a metallic money, specifically one of gold and silver.

But this constitutional mandate was and is being flouted on a daily basis."

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DEFINITION : LAWFUL MONEY

"...Any form of currency issued by the United States Treasury and not the Federal Reserve System,including gold and silver coins, Treasury notes, and Treasury bonds. Lawful money stands in contrast to fiat money, to which the government assigns value although it has no intrinsic value of its own and is not backed by reserves. Fiat money includes legal tender such as paper money, checks, drafts and bank notes.

...Oddly enough, the dollar bills that we carry around in our wallets are not considered lawful money..."

http://www.investopedia.com/terms/l/lawfulmoney.asp

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Sunday, November 16, 2008 2:00 PM