Maggie's Farm

If you owe yourself money, can you call the IOU an asset on your personal balance sheet?

If you pay yourself back do you have more money afterward? Of course not! On a cash basis, this is just left pocket, right pocket.

The SEC and FASB prohibts such practices as fraudulent. If present with the situation, any rational analyst would subtract such a fictitious asset from both assets and net worth. But this is what the government does.

The US government is the largest holder of UST bonds at $4.2 trillion. When you strip away the smoke and mirrors, the real national debt is $10.5 trillion or 73% of GDP and not $6.3 trillion or 40% of GDP.

What this means is that all of those trust funds such as Social Security and Medicare are already essentially bankrupt on a cash basis. Medicare is cash flow negative today and Social Security will be cash flow negative by 2016. The treasury will have to issue even more debt to get the funds to pay those maturing obligations.

This is a house of cards. Anyone who did this in the private sector would go to jail and justifiably so.

For all of the talk about "de-leveraging", there is no true de-leveraging in my estimation.

All that is happening is a shift in debt from the private sector to the public sector - from the backs of irresponsible to the backs of everyone (in particular the responsible).

It is the only way the government can get its claws into the responsible.

We have found a way to take the greatest nation on earth with the greatest form of government governed by the greatest single document on government (the Constitution) ever written and found a way to let the lowest common denominator destroy it all.

I fear that the level of human suffering in the future will be greater than anyone can imagine as government becomes much less benign.

Marianne,

I think I may have chosen my words poorly. The original construct of the Consitution gave the federal government very limited powers and delegated most of the power of government to the states.

I was thinking of that model and the way America originally functioned as a more "benign" government. Of course, this is juxtaposed with a more aggressive or malignant government, or put more kindly, a less benign government.

This is the process I see unfolding if nothing is done about it.

First, the government will use any and all manner of excuses to erode and confiscate the assets and wealth of the repsonsible. Of course, the responsible are the only true opposition.

Second and concurrent, the government will use its legislative power and, to the degree possible, the courts to make it harder for citizens to defend themselves. Take any of the gun control measures currently in Congress as examples. (Of course, making it more difficult to purchase ammunition via regulation or taxes is another way of exacting gun control.)

Third, weaken the rule of law whenever possible. The rule of law is the thin line in the sand that protects us from tyranny. The government is presently undermining contract law (which also helps accomplish my first point).

The history of unchecked governmental power is full of bad stories for the citizenry of those countries.

As always, I enjoy your thoughtful comments.