We owe more money than exists

[sgreger1]

Just a reminder: We are in trouble.

I have argued that the real national debt is about $130 trillion. Let’s say I’m being pessimistic. Forbes, in a 2008 article, came up with a lower number: $70 trillion. Let’s say the sunny optimists at Forbes got it right and I got it wrong.

For perspective: At the time that 2008 article was written, the entire supply of money in the world (“broad money,” i.e., global M3, meaning cash, consumer-account deposits, checkable accounts, CDs, long-term deposits, travelers’ checks, money-market funds, the whole enchilada) was estimated to be just under $60 trillion. Which is to say: The optimistic view is that our outstanding obligations amount to more than all of the money in the world.

Global GDP in 2008? Also about $60 trillion. Meaning that the optimistic view is that our federal obligations outpace the entire annual economic output of human civilization.

So, John Boehner wants to roll spending back to where it was in the last year of the Bush administration. Okay, great. Nice start.

Now, what else have you got?


http://www.nationalreview.com/excheq...ll-money-world

[ratcheer]

I have been saying this for at least two years. The real, bottom line reason for the economic crisis is that the total paper debt far exceeds any and all real money that could ever be used to pay it back.

When I say "paper debt", let me give a concrete example. A little old house in California that cost maybe $25,000 in 1960 has been sold and resold many times and now, someone has "bought" it using, say, a $700,000 mortgage. By no stretch of the imagination is that house "worth" $700,000, but that is what the mortgage papers deem it is worth and that is what somebody now owes for it. It is all just paper debt that has inflated over a few decades to an unrealistic level. Each successive owner has assumed a larger and larger mortgage.

Multiply that scenario millions of times and that is where we are. It is not just mortgages, but basically everything financial. It is a house of cards or, if you will, a giant bubble that has to burst. Because, in the long run, it can never be paid back.

Tim

[sgreger1]

Yah, money is really just a system of trust and goodwill. "You have to beliiieve in it charley!"

It will all work out if we can get back on top. All that debt can't and won't be called back all at once, but still we need to get a hold of things. I wouldn't mind them raising taxes to pay back our obligations to get things back on track, but I refuse to support tax raises because Obama will just go blow it on another crappy mandate or some sort. I swear the guy just sits down infront of his computer each day playing Sim City (the orriginal one, where running a city looks easy) and just makes his decisions based on that.

"I'll just zone more residential property, add a few parks, and raise the industrial tax. That will make my simolians happy!"

(Notice there is no welfare option available in sim city. Because your city would run out of money and you could never win)