What if……….It really doesn’t matter??

This was the beginning of a post I wrote from August 2012…………..images5QAT46C7

If you haven’t heard yet, the United States of America just hit $16 trillion in debt yesterday. On a gross, nominal basis, this makes the US, by far, the greatest debtor in the history of the world.

It took the United States government over 200 years to accumulate its first trillion dollars of debt. It took only 286 days to accumulate the most recent trillion dollars of debt. 200 years vs. 286 days. This portends two key points:

1. Anyone who thinks that inflation doesn’t exist is a complete idiot;
2. To say that the trend is unsustainable is a massive understatement.

At an average interest rate of 2.130%, Uncle Sam will shuffle $340 billion out the door just in interest payments this year… and it’s a number that’s only going up. To put it in context, China owns so much US debt that the INTEREST INCOME they receive from the Treasury Department is nearly enough to fund their entire military budget.

It’s rather disgusting when you think about it.

Yet when you look at the raw numbers, there is no sign of improvement anywhere on the horizon. Last year, the Treasury Department brought in about $2.3 trillion in tax revenue. They spent $2.9 trillion JUST on mandatory programs like Social Security and Medicare, plus the very sacrosanct defense budget.

In other words, the US government was $600 billion dollars in the hole before paying a dime of interest on the debt, or paying the light bill at the White House. In fact the government’s own numbers reflect a budget deficit through the end of the decade, i.e. the debt level is only going to get higher. These are their own figures………………..

What if it really doesn’t matter?  What does that mean?

All of the debt of the United States is issued in U.S. Dollars, yet the U.S. Treasury doesn’t print U.S. dollars; the Federal Reserve does, says so right on any denomination of bill.

But every coin is issued by the US mint from a penny to American Eagle silver dollar, so who would be on the hook in the case of a default or non-payment?

Nobody in Washington seems to care from Ted Cruz, Rand Paul to Harry Reid, Nancy Pelosi about the scope and size of the US debt.

What do they know we don’t know?

Is it true our debt really doesn’t matter, because if the United States decides to default, who and how do they pay it back?

Just a question to start, 2015?

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