Copyright © 1996-2006. Mel West. All rights reserved
Prologue
The US Government since 1981 has been providing false information on the National Debt, misrepresenting the nature of the debt and covering up its consequences
Catch 22 the 1% Style!
page 1
Prior to President Reagan's term of office our National Debt had remained within our financial means. If one would compare the National Debt prior to 1981 and our deficits (see figure 1 below), and examine our income/receipts (National Tax Income, etc.), a startling revelation will occur. In 1970, for instance our receipts were $192.8 Billion. Our National Debt was $270 Billion. Interest paid out of our receipts to service the debt was approximately ten percent of our receipts. In 1970 our government ran a $2.8 Billion deficit. In 1981 our receipts were $599.3 Billion against a $997.9 Billion debt. Interest on the debt was then $95.6 Billion. Sixteen percent of our income after Reagan began his scandalous administration, became accountable to service the National Debt. Reagan, through the inane concept of deficit spending, did not allocate any of our income to service the debt and rather borrowed that money in addition to other funds borrowed to run Reagan's government. Congress went along with the plan. They referred to the plan as laying the debt against our children; and our government continues to play out that theme, as if we are not now, nor have ever been, paying for the debt. This is the first part of a great fraud, as most people today have no idea how the National Debt has been collapsing our economy. In short, the debt has been financed by printing bonds. The printing of bonds is not much different than printing money. The more a market is flooded by paper money, for instance, the less value the money has. At the moment the government is printing such a huge amount of bonds to service the debt, when the bonds are issued they literally take over Wall Street trading, causing the stock market to have jitters. For there is at any one time a finite amount of capital available for trade in either bonds or stocks on Wall Street. As US bonds increase in quantity, from one bond cycle to another, the greater the influence the bonds have on the market. Supply and demand is the factor which drives the market here. Normally, a flood of US bonds on the market would cause the value of the bonds to collapse, since the bonds are really paper money promising a higher value when traded in on their maturity, many having a 5-7 year maturity.
When US bonds are traded in the market, the money the US government realizes from the sale of bonds is not used to pay off any of the principal of the National Debt, but rather to run the government. Since Reagan, as can bee seen in Figure 1, the interest on the debt and deficit have been about the same.
page 2
We do not show any figures on the National Debt since Clinton came into office. As of a year ago January it was believed that the interest on our debt was running $1 Billion per day ($365 Billion per year). According to the 1995 1040A Tax Instruction booklet, 1994 income was $1.082 Trillion. Interest on the debt, $176.12 Billion, was 14%, they allege. They also allege that the deficit was $203 billion. We know that the government has been running a deficit each year since President Bush left office. The deficit is added to the National debt. If President Clinton inherited a $4.5 Trillion debt and ran a $200 billion deficit each year since 1993, we know that the National Debt should be at least $5 Trillion. The real interest (long term-the debt is long term) on the National Debt will average 7%.
page 3
The Push me Pull you effect
 |
|
Click on image for larger view |
page 4
We all know that salaries today are about what they were in 1981, but individual expenses have skyrocketed. A $10,000 luxury car in 1981 now costs at least $35,000. An inexpensive Plymouth colt, as I recall, cost about $2,500. That category now costs $10,000. Each of us can make up a list of what major individual outlays cost in 1981 compared to today. Also we know ourselves how various sectors of employment in our economy have literally collapsed. Many large corporations in aerospace, airlines, furniture manufacturing, electronics manufacturing, retail chain stores, etc.; and then, many military bases and government operations which also employed people, no longer exist today. The jobs are fewer and lower paying.
The only ones making any money are those who are running the corporations. In the early 90's, for instance, Anthony O'Reilly of H. J. Heinz, had a salary of $75 million per year. The highest paid executives have been listed in the World Almanac during the past years. These high salaries are mixed into government data bases which show growth in income in our economy. If there is any growth in income, it has not been among the poor and middle class. Remove these high income drains on our economy and one will find the growth is not what our government has alleged.
Manipulating Supply & Demand
to protect the Stock Market
In order to finance the debt, selling bonds, the government must attract buyers. The greater the number of bonds issued at any one time, the less attractive the bonds will be to buyers. To make the bonds attractive the government must increase interest rates. Everyone moves their capital into the bond market, being attracted by it, and this causes those sectors depending upon the capital moved away from them to fall. Because the debt is increasing every year, and with it the amount of interest to service the debt, each year the government must increase proportionately the same amount of bonds in the market as the debt/interest have increased. Because the debt has been running on an exponential curve (see Figure 2), and because we are now at that point of the curve where it is almost impossible to service the debt, a complete collapse of the economy is certain for the near future. Unless the government stops the borrowing altogether, there is no way out. As you will see in figure 2, at 7% interest, the amount of interest to service the debt is now equal to the entire debt in 1974. To determine what impact this will have on the National Debt during the next 20 years examine figure 2. In 20 years what is now about 365 Billion to service our debt will be about $5 Trillion.
page 5
It is unlikely that our government income will be $5 Trillion per year,
as the economy has been collapsing, leaving middle class incomes either stagnant or falling. Also, the numbers of homeless and those near homeless who need welfare support will continue to increase. We recall that before about 1984 there were few homeless in our streets. Two years ago the Secretary of the Interior, in an interview on the MacNeil/Lehrer News Hour, indicated that there were about 7 million homeless on our streets. In San Francisco there were about 2,500 beds to shelter the homeless against an estimated 7,000 homeless population. In San Francisco it has been illegal for a homeless person to raise a tent or other shelter or to take shelter underneath a doorway or overpass; and they are prevented from sleeping under the protection of trees in our parks. We mention this because one of the consequences of the collapse is the increase of homeless people and their persecution. This now becomes a moral problem as well as an economic one, since our nation has been persecuting the homeless on the same level as the Jews were persecuted in the early days of the holocaust. For the Jews were prevented from obtaining jobs, evicted from their homes, then denied the right to beg, and finally shuttled into ghettos where most of our homeless can be found. The final solution Hitler contrived was to murder the 6 million Jews, to hasten their demise.
page 6
As in Nazi Germany, in order to persecute the Jews, those people had to be vilified. In America today, when I speak to people on the plight of our homeless, often they respond that the homeless are into drugs, etc. causing their own plight. Americans, like the Nazis, have been vilifying the homeless so to avoid any responsibility for their persecution.
Touching upon the persecution of our 7 million or so homeless, it is worthwhile noting that many UN Covenants which the US Government has signed forbid treating people the way we are treating our homeless.
The push me pull you effect caused by interest on the National Debt has thus become a moral problem. The first part of that problem involves a very serious scenario, where the government has known from a study in 1983 on the debt, the exponential curve shown in figure 2. My curve I drew up independently. In the 1993 US Budget is a similar curve, called the "hockey-stick," which was drawn up in the 1983 study. Since that study, then, everyone in Congress and the Presidency has known what would be the effect of the debt, that each year interest to serve the debt would consume a higher percentage of our income. Today, for example, interest on our debt equals the entire amount we were spending on defense in 1992. Our defense expenditures employed people in administrative, manufacturing, and many other sectors of our economy. In the Middle Ages, when a castle was raised in a region, a market and then a town grew up around it. Then, during wars, the destruction of a castle often destroyed the towns and the means of subsistence. Wars thus produced poverty and masses of homeless peasants. Today, the closure of a military base or a factory (which is moved to avoid local taxes), has the same effect as if the town were pillaged, burned, and razed by hoards of vandals.
page 7
In order to service the debt, down-sizing of our government has been necessary. Our tax dollars must increase to service the debt, and at the same time our public services must also decrease. This down-sizing in the government has a ripple effect upon governments in local communities, because government funds sent to states and communities must also be reduced, causing those agencies to also down-size and/or raise taxes. Raising taxes causes factories and major employers to move to lower tax base areas. When they move the town figuratively burns. A National Real Estate association study a few years ago discovered that most of the major companies (the average size being 10,000 people) intended to move their operations to another location, either offshore or to another site in the US. The study discovered that they did not intend to take their employees with them, but hire less expensive employees in their new location. The study also discovered, in interviewing community governments on their perspective of the effects, that when a house or building goes into receivership it is as if that house burned down. Thus, when major employers vacate a town, it is as if the town were burned to the ground. This behavior, along with the down-sizing, is a consequence of our National Debt. Again, what appears to be an economic problem, involves immoral decisions. A factory abandoning a town is simply immoral. There are other ways to compete in a market place than razing factories and towns. An examination of the debacle introduced by Reagan will show that the immoral alternative was chosen in most situations when employers adapted to the changing economic environment. Many of them simply closed their businesses and moved their capital either overseas or into the stock and bond market. A factory realizing 15% profits per year, in the good years, but during the collapse 7% profits, for instance, could do much better in the financial and stock market where 15-17% gains can be found. The Dow Jones average, in fact, shows these effects.
Performance of the Stock Market is inversely proportional
to the performance of our economy
page 8
Based upon past performance of our economy, we can establish a rule which should prevail until new policies are founded. The rule is this: the economy runs inversely proportional to the stock market. The government has been, like a pilot in an airplane about to crash, feathering the controls, and in doing this it has been protecting the stock market foremost among the sectors of our economy. When bureaucrats speak of inflation being under control the government is addressing the stock market specifically, saying that the market need not fear an increase in interest rates. The people most concerned about an interest rate hike are those engaged in the Stock Market.
Note that our projection of a high in the stock market of 4,700 was obviously far off, from the actual, even though the market rise from around 4,200 in January 1996 to 4,700 seemed to be a conservative estimate. The actual for 1996 turned out to be 6,448.27!
In many ways our peoples' futures are being manipulated [many destroyed] so to service an interest payment on the US Debt. Recently, in January 1997, Congress has been proposing an increase in Social Security taxes because of the inadequate funding in the Social Security account. What Congress has not been telling you is that they have been robbing the once sound Social Security fund to make the interest (lower the deficit) on the debt. This deception includes an intention to increase taxes to make the interest payment in a way which the people would not protest. The people would protest an increase in income taxes (to make an interest payment) but are more vulnerable and more likely to go along with an increase in Social Security taxes to make the Social Security fund again sound. What will happen? After the tax, Congress will continue raiding the fund to pay off the guys in black cloaks, with curled mustaches, who are collecting the only for sure recurring obligation in our outlays: interest on the debt. As Congress does not intend to pay off the debt and the debt will continue to climb, our future is to continue to serve a new tax collector: not the government but the people who own our National Debt. That tax collector is kinda like the Sheriff of Nottingham, and there may be a fair comparison here too with our corrupt Congress and Presidency and the despicable King John who was forced to sign the Magna Carta. It all comes down to one issue: the government continues to protect the stock market at the expense of our economy [ed. update 1/8/97].
Who benefit the most from our debt pay the least taxes!
There are many books on the subject of our debt, but it appears that few people-including the news media- actually understand what the books are saying. Is this fact too foreboding for our press to explain? Who collects the bulk of interest on our National Debt are less than 1% of our population, and those who are corporations pay only 10% of our Federal tax income (see back pages of 1995 1040A instructions)! The greatest single outlay (interest) in our Federal Budget goes to those who pay the least in Income Taxes! Who financially support the government the least receive the greatest benefit! The consequences of this favoritism are seen in lost jobs and homes as the government and its state and local dependent organizations continue to down-size to service our National Debt. Those unemployed because of down-sizing, in any case, are taxed to give the 1% their dues.
page 9
The 1% who own our debt
Our $5 Trillion National Debt is financed by the printing of Bonds which upon maturity are redeemed by the bondholders: who own the debt are predominately 1% of our population and the G-7 central banks. In order for the government to redeem the bonds owned by the 1%, suggestions of cutting welfare and down-sizing the government have been implemented, with new cuts proposed. But cutting expenditures has a nonrecurring effect: the 1% to whom we owe interest on our debt recur with their demands year after year. And they are first in line for payment among the US creditors.
"The Big scam: cutting welfare
will allow us to balance the budget"
To balance the budget we
must amortize our debt!
Table 1:
Debt Amortization Schedule
Summary:
|
Loan Amount: $5,000,000,000,000 |
|
Loan Amount: $5,000,000,000,000 |
page 10
Debt amortizatin Schedule
Note: all numbers are billions: i.e. read 5,000,000.00 as 5 trillion; 350,000.00 as 350 billion:
compared to interest on the debt |
The total cost of welfare--apart from Social Security--has been estimated at $40 Billion per year, which equates to about 40 days worth of interest. Once the unwed mothers and their children, seniors, etc. are thrown out, onto the streets, the government will have to find other services to cut, to raise another $40 Billion here and another $40 Billion there, to service our debt. Interest on the National Debt, being always with us however, and possibly the largest single expense in the US Budget, cannot be cut. During the Reagan years interest on the National Debt averaged 7%.
page 11
The Peculiar tug-of-war to reduce the debt
For a scale of comparison on the impact of our debt, we note that in 1992 Interest expense was about equal to the Defense expense. In 1995 the Clinton Administration obtained an interest rate reduction on the National Debt by reducing interest rates. This was a nonrecurring solution, for in order to sell more bonds to the 1% who can afford our bonds, the government must, when flooding the market with bonds, increase interest rates. An increase in interest rates causes jitters in the stock market (fears of inflation). In order to ease stock market anxieties, the government must then feather the controls on interest rates (prepare for a soft landing as it were), until the time comes to raise rates so to attract clients again. As long as the $5 Trillion debt exists, the government will be torn between trying to lower interest rates so to stimulate the economy and raise interest rates to feed the 1% their dues. Catch-22.
Knowing the difference between the debt and the deficit.
The deficit on the US Debt has been essentially the interest to service the National Debt plus some spare change for Congressional coffers (see Figure 1). In spite of representations of balancing the US Budget in 7 years, the Government cannot truly balance the Budget without scheduling a principal and interest payment plan against the National debt (as in a mortgage).
Mortgaging the debt
page 12
Of all the expenditures guaranteed to increase year to year, there is the cost of servicing the National Debt, estimated to be about $1 Billion per day in January 1995. No principal payments have been made nor have been scheduled against the National Debt! See the Amortization Schedule, Table 1, for the effect if we were to work on an amortization plan over 40 years. Were we to adopt the debt amortization plan, one will note that after 20 years we will have paid off $1 Trillion in principal (against the $5 Trillion debt) and $6 Trillion in interest. Compare this to a study a few years ago which concluded that all of the man-made structures in the US, if plowed into the sea, starting from the Atlantic ocean to the Pacific, would result in about $9 Trillion in damages.
Recurring borrowing on the principal and interest on the debt created the exponential effects shown in Figure 2. A chart similar to figure 2 was placed in the Federal Budget of President Bush in 1993. The Budget described Figure 2 herein as a hockey-stick; and the government's version of the chart was published in a study by Congress in 1983. Back then Congress knew that by 1996 the National Debt will turn the curve, as it were, reaching a point where there is no possibility of recovery. In spite of this common knowledge, Congress avoided addressing the National Debt, avoiding payments against any principal on the National Debt. This policy seems to be continuing, though at least a "down-payment"--dropping unwed mothers off the welfare roles--is being demanded by the 1%. However, any attempt to service interest without borrowing--and without an increase in taxes--is incomprehensible. Interest on the debt is now about equal to the entire National Debt of 1970 (see Figure 2).
Analysis of the debt is haunted by the specter of inaccurate data, of commingling of accounts and smoke and mirror tricks. We need an audit. The source data used is from US Government reports, and The World Almanac .
page 13
The stalemate in Congress--recently called a train wreck--, of course, defers to the fact that there are not enough expenses left to cut to satisfy the 1% their dues, and Congress argues over a few billion here and a few billion there when they need to raise each year at the least $375 Billion to obtain a zero deficit. The $40 Billion in unwed mothers and their dependents is a paltry sum compared to the amount the Government must raise to pay the 1% their dues.
M
7/25/96
Launched for
Tisha B'Av
Closing note:
A three page version (page 1 and the latter two pages) of this was sent to many major newspapers in February 27, 1996, with no reply. A greater presentation of the problem was issued as part of a 1,000 page book recording a conversation, lasting 2 1/2 years until May 1995, between myself and William F. Buckley Jr. (National Review; Firing Line). I began the conversation, seeing that we are on a ship about to sink, wondering whether someone of Mr. Buckley's stature might warn the passengers. I pulled in many teachings from most of the great sages in history to back up my argument that what is happening is immoral and must be stopped. I opined to Mr. Buckley that when the people learn how the government has been deliberately keeping the economy in a controlled economic collapse to satisfy Wall Street's purulent interests they will be greatly offended.
Recently Senator Dole, in a short sound bite just before he resigned from the Senate, referring to our government, issued this complaint, saying, "those guys are protecting Wall Street at our nation's expense!" In any event, the end of the conversation with Mr. Buckley, (an encyclopedia calls him, the patron saint of the Conservatives), anointed me with the responsibility of warning the passengers, though I argued with Mr. Buckley that I am a poor man and the public will be more inclined to listen to him than they would listen to me (Mr. Buckley's position with regard to the argument we do not imply here). In any event, warning the people seemed to be a futile exercise, since they certainly have not heard the other warnings, published in many books of far greater experts on the economy than myself.
In general the public have no idea what the difference between the national debt and the deficit is, and they certainly have no idea that interest on the debt is consuming our income, and those who collect the interest on our debt pay the least in taxes; neither do they know that the deficit cannot be eradicated without some kind of home mortgage plan. Those who understand mortgages and have seen their income fall below their ability to meet their mortgage payment will understand where we are at the present moment as a nation. We cannot meet our mortgage, which has been evident in the recent defaults and delays in passing the budget.
page 14
By the way – for those interested in correcting those who falsify and sign bogus Balance Sheets on US Budgets –, you might check out the 1993 US Budget submitted to Congress by President Bush. There is about a $100 Billion omission from the bottom line of the Balance Sheet which has to do with the Savings and Loan losses. I found the missing $100 Billion buried and scattered midst a variety of schedules relating to the RTC; and these did not appear to be carried forward from the schedules to the bottom line. People who sign similar balance sheets in corporations end up in jail over such falsifications.
m
7/4/96
Beam me up to Maravot's Homepage
The matter of Saving_the_Pope.html
The lie which has been responsible for anti-Semitism and offenses against followers of the Koran.
About Duty_and_Profit.html
About Immoral_Coercion.html
Something lighter,What_Price_Justice.html.
About the Light of the Gentile, The_Light_of_the_Gentile's_day.html
Copyright © 1996-2006 Mel West all rights reserved.
Copyright © 1996-2006 Maravot all rights reserved.