33 votes

Mathematically impossible... 16 tril in GDP, 9 tril in local, state and federal spending with 150 million workers.

This should wake anyone who is in doubt that we are totally screwed.

Almost 9 trillion in total local, state and federal spending
Almost 16 trillion in total GDP
Somewhere around 150 million working adults

Total government spending including deficit spending accounts for 56% of GDP, and pure deficit spending alone is almost 25% of GDP.

Doing the math, assuming the above numbers, it comes out to about $59,900 in PURE taxes for every working person in America just to pay for the total local, state and federal spending. This is ~5,000 dollars more then America's median income in PURE TAXES.

$59,900 with a 260 day work year (5 days a week). This comes out to around $230 per working day per worker just to pay for the spending, not including paying off the debt principle or personal living expenses and debt.

So my question... how the hell are we going to pay for this with a declining work force and higher liability loads?

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3 ways

First, the Fed will continue printing $82 billion per month until our currency goes into heightened inflation, maybe hyperinflation.

Second, the gov't will attempt to start a war with countries that are our lenders so they can claim all bets are off and nullify the debt they have to pay off.

Third, they'll tax Americans into oblivion.

More QE?

The US already doesnt pay for what it owes
Even if you taxed every working person 100pct you couldnt pay all the bills
And them you would have no economy any way or any recognizable free society

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My take

First, where do we get figures on the debt? I'm sure it is worse than we know about - hell, we have no idea how much the military spends. They've given up trying to audit them.

Second, I sometimes wonder if the debt figures are some measure of how much has or will be robbed from us through money printing. As Greenspan pointed out, we can always print money to pay debt.

So how much has been taken from us? How do we know? Apparently it is more than we realize. So if average household salary is $55,000, how do we know we all wouldn't be making 5 times that if we weren't being robbed. It is the difference between what we are making, and what we could potentially make - that is what is going to pay for debt.

Fortunately for the big money interests, few people understand how they're being robbed, or to what extent. Most people don't care, as long as a few crumbs are left for them.

here is a link to the debt clock


does not include unfunded libilities

Don't you get it? The more we

Don't you get it? The more we go into debt, the better we are able to pay our debt. I mean, that is why we don't have an insurmountable debt load right now. Oh wait...

Let's not forget

the $233.9 TRILLION notional derivative exposure of the top 25 banks of which 93% (approximately $217.5 Trillion) is held by JP Morgan, Citi, Goldman Sachs, and Bank of America in that order. That number exceeds the GDP of the entire global economy! Can someone tell me how that plays into the equation?


Sure....it's right there in the link you provided

Notional derivatives increased $2.2 trillion, or 1%, to $233.9 trillion. Notionals have increased in only three of the past eight quarters. Derivative contracts remain concentrated in interest rate products, which comprise 81% of total derivative notional amounts. The notional amount of a derivative contract is a reference amount from which contractual PAYMENTS WILL BE DERIVED, but it is generally not an amount at risk.

Credit risk in derivatives differs from credit risk in loans due to the more uncertain nature of the potential credit exposure. With a funded loan, the amount at risk is the amount advanced to the borrower. The credit risk is unilateral; the bank faces the credit exposure of the borrower. However, in most derivatives transactions, such as swaps (which make up the bulk of bank derivatives contracts), the credit exposure is bilateral. Each party to the contract may (and, if the contract has a long enough tenor, probably will) have a current credit exposure to the other party at various points in time over the contract’s life. Moreover, because the credit exposure is a function of movements in market factors, banks do not know, and can only estimate, how much the value of the derivative contract might be at various points of time in the future.

The first step to measuring credit exposure in derivative contracts involves identifying those contracts where a bank would lose value if the counterparty to a contract defaulted today. The total of all contracts with positive value (i.e., derivatives receivables) to the bank is the gross positive fair value (GPFV) and represents an initial measurement of credit exposure. The total of all contracts with negative value (i.e., derivatives payables) to the bank is the gross negative fair value (GNFV) and represents a measurement of the exposure the bank poses to its counterparties.

A legally enforceable netting agreement creates a single legal obligation for all transactions (called a “netting set”) under the agreement, including if a counterparty fails or otherwise defaults under the agreement. Therefore, when banks have such agreements with their counterparties, contracts with negative values (an amount a bank would pay to its counterparty), may be used to offset contracts with positive values (an amount owed by the counterparty to the bank), leaving a “net” current credit exposure (NCCE) in the amount that a bank’s positive values exceed its negative.

Page 7 chart
Net Current Credit Exposure (NCCE) 339 billion
Potential Future Exposure (PFE) 698 billion
Total Credit Exposure (TCE) 1,036 billion

Potential Future Exposure which is more complicated then we need to talk about… Collateral coverage,capitalization ratio…..you can read it for yourself.

So a trillion dollar risk isn’t nearly a ominous as the headlines sounds… however.a trillion dollars is a lot on money!
This is not something I care to have on my rader screen…..our external debt position is a much bigger problem at a net 11 trillion.

I disagree with one of the claims...

I am not disagreeing with the post, I just noticed that he said the average income is $55k, but I believe that is the average HOUSEHOLD income, not per person. This includes all incomes in a house.

If that is true, it is even more ridiculous.

ChristianAnarchist's picture

You must use "new math"....

You must use "new math".... that will fix your numbers for you...

Beware the cult of "government"...

Ok, now what are the categories involved here?

For example, it was said below that much of this money is owed to us (SSN, Medicare, etc.). So, what if we really did solve healthcare and retirement in ways that didn't involve the government? I'm not picking a time frame, just the end result.

What if we nationalized the FED. The function of the FED is, after all, constitutionally a government function so it should still be a national asset, not a private function. If we did so (and not even took all the assets of those member banks), that money owed would balance that new asset just acquired. Net-zero.

If we took derivatives out of the picture (can we all finally agree that they are nothing but legalized crime?), then our GDP would drop to 1/3rd current and our stock market would be limited to productive investments. If so, wouldn't we see a boom in productivity (since that investment is the only place to grow money)?

If we eliminated fractional banking by steadily increasing the reserve requirement, that would cut most of the inflation and replace it with a strong demand for lending, increasing interest rates and re-balancing the markets.

If we had real number reported by the GAO for unemployment, money supply, CPI and a few others, we'd have pigs flying all around the beltway!

There seems to be some confusion

Or at least y’all….you and the OP are confusing me. You’re mixing cash accounting and accrual accounting together and that doesn’t work. The OP I think was talking about out yearly budget and revenue problems. I will be just address you point one by one.

SS/Healthcare ……SS is a pay as you go account and current taking in more than it spending, so on a current year basis we are ok. Future unfunded liabilities are the problem. There is no longer a trust fund. There was at one time. When it started the first 5 years they collected premiums and paid out nothing. That money grew throughout one of the some good economic times. But in 1968 they saw all that money sitting there and couldn’t wait to get their hands on it; they called it “Unified Budget”. Since then it's pay as you go. The only way out is to privatize it and get the government out of the retirement business…….never going to happen….sinking ship.

Healthcare…..being nationalized as we speak…..boondoggle for whoever wrote that bill….we are getting royally screwed. The only way out is to privatize it and get the government out of the healthcare business…….never going to happen….sinking ship

Fed was effectually nationalized back in the 60’s. When member banks in the region their HQ resides started receiving a statutory dividend of 6% based on member banks' capital reserve position.
The U.S. Government receives all of the system's annual profits after the dividend payments. If you are saying the USG should get in to the money issuing business because “constitutionally a government function” you couldn’t have come up with a worse idea then the one we currently have. We need to head towards “Free Banking” and get the government out of the currency business.

The derivatives are not as much of a threat as you might think, check out my response to John D above.

Your reserve requirement proposal would do nothing to fix the real problem. That would be like putting a Band-Aid on a gut shot. Right now according to what the M3 money chart is signaling the reserve money multiplier remains relatively muted because of the Fed paying 25 basis points on excess reserves. If that program was to end (btw they have never done this so they don’t have any information on how to undo this) it would be a real tight rope act on controlling it. This could create a serious money supply contraction. Wouldn’t it be better to build a market system for money creation slowly while closing the fed. I am advocate of these kinds of policies because I would rather closed the Fed and have a two year process and a return to a gold standard, private banks notes( competing currencies) and Free Banking with a Real Bills doctrine for lending. The USG should not be in the money creation,lending or controlling business…the free market is the best way to determine the prices and amounts of money.

And the only real source of economic data is shadowstats.com

It's not confused, it's interrelated

As you know, both the cash flow and the long term debt affect each other. Solve the debt and you solve the cash flow. My suggestions were generalized and leading towards solving the long term.

Yes, SSN is pay as you go and a sinking ship but that doesn't mean that a genuinely good solution couldn't come along and be used. Just like when people stopped using Netscape because another browser was better, if some solution could be created where people could save/earn for their retirement in a magnitude that dwarfed SSN, would people really fight so hard to keep it? I think not. If you look at the fundamentals of the process, they just want to earn a fair return on their savings. Right? So, why can't that happen today? I say it's because the banks and mega-corporation are all getting the 1000:1 returns while the people are getting common shares with returns that don't even beat real inflation. Stop that and let the people invest directly in companies for the 20% or higher returns that are real. Give it a little time so the savings rate can rise and the debt rate can fall and you'll see earlier retirement which will reduce unemployment.

Healthcare is so F'd up now it's not worth keeping. Doctors and hospitals are more paper pushers than medical care professionals. Drop ALL the paperwork, create a private, secure software program for medical records to be shared by the patient and doctor only, make it quick to use and let them focus on preventative care more. This will drop the costs by more than half. Then allow private group pool insurances to cross state lines and you'll see costs plummet. (I'm convinced group pools aren't viable because they need >10 million people to cover unscheduled expenses by the pool but no state will have that many people joining one pool. = Pools effectively killed.)

Are you trying to say the Fed doesn't profit more than 6% from the money creation process? They have insider knowledge that goes way beyond that measly number. They have control powers that can sway global markets. I could go on but the powers they have are essentially immeasurable. That's just wrong. Money creation should not be gamed at all. I don't care if it's a government function, bitcoins or private competing currencies as long as the rules are followed with no chance of gaming. Those rules should be that there is a stone hard limit on its creation with very predictable trends, along with the other attributes of divisibility, portability, etc. Most of all, it should not be loaned into existence either at the government or commercial bank level. That's nothing short of giving the 'lending' authority future ownership of all assets.

Personally, I think Bitcoin could very nicely take over all global currency (not withstanding the technical bugs it still has, of course.) I love the idea of private, instant, global, free transactions with guaranteed predictable future supply numbers.

I couldn't disagree more that derivatives aren't a problem. I think they are the height of "lending out something that isn't yours". All forms of this type of lending (including fractional reserve banking, leveraged deals, naked shorts, future options, mortgage securities and even CDS swaps and other forms of insurance in the game)... they're all criminal. I can't sell you my neighbor's truck and later go buy him a replacement without going to jail so why should it be legal in other transactions? I can't insure my neighbor's truck and profit when it blows up. I can't profit from bets with other people's money (and not pay taxes on it). All these activities are zero productive in the population's real world. They don't do one bit to help build a car, a bike or make a loaf of bread. In fact, they all rack up the expenses on those that do build things. They're a parasite on society and the sooner they're gone, the sooner real producers will take their proper place in society. Until then, the unrest will grow. I'd hate to be a rich trader that got outed after TSHTF.

Side question: Just who are you saying will ultimately pay off the $200+ Trillion in derivatives when there isn't enough moolah in existence? For someone to earn it, someone else has to pay for it. As it stands now, it's being robbed from corporation profits and the stock market. Hopefully you can understand how this is a hidden tax in a way similar to inflation being a hidden tax.

Would increasing the reserve requirement not reduce fractional banking? Say a new law was passed that says the requirement is 10% and increases by 5% per year until full. In 18 years, no bank will be insolvent - is that slow enough? They will be forced to lend hard money from hard deposits. Why shouldn't this happen? Just because the current charts show little to no inflation from the QE's doesn't mean it won't hit at some point in the future. And why would a 'serious money supply contraction' be such a problem? It's only the gamers that lose. Those with assets and profitable businesses would be fine. If you run your life on leverage, you deserve the risk you took, period.

Agreed on shadowstats. I just would like a private org like a CBO to also do some drill-down investigations like applying "I Pencil" to inflation and unemployment stats. I'm convinced that many of these type of market problems include positive feedbacks that are self propagating.

I realize you're of the stock trading mindset but I'm trying to look at all this from the standpoint of the 1890's or so. Before corporations were formed for every company. Before investments became institutionalized. Before inflation became the government's main paycheck. Back to a world where people invested locally (extend that via the internet but keep accountability), saved hard value and only paid for genuine needs. If we can see how that world would have played out through the industrial, the information and now the communication revolutions, I think we'd see massive savings in every pot, not a chicken. And as a result, I think most of the world's evils couldn't not have manifested in the first place.

I didn’t say cash flow I said

I didn’t say cash flow I said cash accounting vs accrual accounting.
The cash method and the accrual method (sometimes called cash basis and accrual basis) are the two principal methods of keeping track of a business's income and expenses. In a nutshell, these methods differ only in the timing of when transactions, including sales and purchases, are credited or debited to your accounts.


You must adopt one method and one method only. But the USG with their infinite wisdom and power think they can use both.

But to be clear we don’t have a cash flow problem as far as closing the budget deficit each year. Because like you said we borrow it. The crux of our problem is spending vs revenue. When we solve that problem we stop creating yearly budget deficits therefore reducing the need to meet our cash flow problem by borrowing which obviously reduced the debt.

SS, The liabilities are accruing but the revenue is being siphoned off to support a different portion of the venture( they are stealing our retirement funds) and not invested to take care of the growing liabilities. Oh they say they are investing in government bonds, but these are inter-government bonds and not marketable. So the only source of funding them is to return them to the government. Well when the revenue goes cash flow negative (when all revenue is expended on benefits, the siphoned will reverse and revenue will be drawn from income taxes to fund the shortfall). The best answer I have seen is to privatize SS. Here is a link that might help.


BTW Netscape was bought by AOL in 1998. Banks net profit margins are between 11%- 20%.

Grain of salt….not a vetted source, but they quoting yahoo finance.

I want to skip to your final point so all I will say about your rebuttal on the Fed is, The profits go back to the US Treasury except for the 6% dividend.

I agree with you final point somewhat…. I am a capitalist but the problem is in corporate governance not that they are evil corporates. The stock market has been turned into a casino. With the advent of the mutual fund the board of directors has become nothing more than honorary positions and means nothing. Back in the day the board consisted of the people that owned the most shares in the company and they took their duties very seriously because it was mostly their money. When the mutual funds became the largest shares holders there was a power shift from the board to the CEO. Investing use to be about dividends now it the greater fool…..I can buy it today if I find a greater fool to buy it tomorrow. I am not defending this position because of my station in life. I used to be a broker and left because of what the USG was doing to the dollar. I walked out on a 6 figure salary plus bounces because I would never be able to live with myself knowing I was recommending investment in assets based in dollars…..I trade for myself, but only options. I would prefer if the market would return to the old days, I would be able to truly take advantage of my god given talent of research and provide a valuable service to my community…..but I refuse to be a charlatan, But with that said and please do not take offense to this but your comments are laced with the language of the conspiracy theorist dialog.


The people of Iceland decided they didn't owe the money either...so they did this: http://www.youtube.com/watch?v=rGIY5Vyj4YM
You're right...we can't "pay it off" and that's the plan! It's always been the plan...congratulations, you're a slave (just like the rest of us!). At some point the USD will collapse and be replaced, as other currencies have done countless times. Some of us are going to get caught with our pants down and lose everything...some are going to do quite well in the end. This is, as another poster put it, the devolution of America.

Silence isn't always golden....sometimes it's yellow.

"The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them." - Patrick Henry

Well, to be fair, you're

Well, to be fair, you're assuming all the money would need to be paid in one year.

The average worker works for 40-45 years (18-63). so 60k/45 is $111 a month, not the $230 per day you are claiming.

Of course, since the rich pay more, the poor pay little, and the vast majority of the middle class pays the same, these numbers may be off by a little.

Yes of course the debt is out of hand and we need to get a handle on it, but stop making it sound worse than it is.

If we were responsible for $230 a day in taxes, no one would have a paycheck.

they spend 6.3 trillion alone per year including deficit

They spend 6.3 trillion alone per year including deficits, officially.

With intergovernmental deficit spending(not included in most debt reporting) its closer to 9 trillion a year in PURE spending.

This means to break even on JUST the spending(not the debt) they spend close to $230 per day per worker.

Obviously it can't be paid.

Tools of war are not always obvious. The worst weapon is an idea planted in the mind of man. Prejudices can kill, suspicion can destroy, and a thoughtless, frightened search for a scapegoat has an everlasting fallout all of its own.

you really are off on your

you really are off on your numbers. i'd double check the difference between deficit and debt.

im not sure what you are saying...

This is not about the debt or paying it back...

This is about actual spending and a hypothetical of what it would take to just break even on the total annual spending... as to illustrate a point.

Tools of war are not always obvious. The worst weapon is an idea planted in the mind of man. Prejudices can kill, suspicion can destroy, and a thoughtless, frightened search for a scapegoat has an everlasting fallout all of its own.

Not to interrupt....

I understand where you're coming from but perhaps you could consider another perspective. I've followed your thinking for a while now and I think you'll get it pretty clear. Instead of fighting the spending, why not fight the incentive for people to allow (want) the spending. See my comments below for more.

The solution is simple

Allow 300 to 500 million immigrants into the county and give them citizenship. These new immigrants will support the government. All of these immigrants will have multiple citizenships and passports. Americans will still be left paying the bills, but this action will buy more time for the Zionists who control the Federal Reserve. The devolution of the American Empire is self evident.


Yep. Definitely a part of the plan. They'll have a relatively allegiant underclass to manipulate, too, with gifts of redistribution, promises of education, opportunity, etc. This underclass is meant to be a permanent underclass (but won't realize it--Ha! Like a lot of us, for that matter....), and it will serve its purpose well.

What would the Founders do?


I can talk until I am blue in the face about loss of personal freedom when one allows government control of one's life. We must learn to survive without government "help". Liberty is beautiful.

Correction: it is 6.4

Correction: it is 6.4 trillion in total spending...about 2 million of which is the government directly handing a check to someone and letting them do whatever they want with it.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

money IS debt

money IS debt

Are you sure?

The problem with the current system is that our money is “debt based,” entering the economy as a debt owed to a bank. You prefer a system in which money is created “debt free” – i.e., printed by the government and spent directly into the economy, rather than lent into existence via loans by the banks, or how else does it enter the economy….just give it away.

Even if “debt-free” money were the solution, the best producer of such money is the free market, not Nancy Pelosi or John McCain.

People dissatisfied with the awkward and ineffective system of barter perceive that if they can acquire a more widely desired and more marketable good than the one they currently possess, they are more likely to find someone willing to exchange with them. That more marketable good will tend to have certain characteristics: durability, divisibility, and relatively high value per unit weight. And the more that good begins to be used as a common medium of exchange, the more people who have no particular desire for it in and of itself will be eager to acquire it anyway, because they know other people will accept it in exchange for goods. In that way, gold and silver (or whatever the money happens to be) evolve into full-fledged media of exchange, and eventually into money (which is defined as the most widely accepted medium of exchange).
Money, therefore, emerges spontaneously as a useful commodity on the market. The fact that people desire it for the services it directly provides contributes to its marketability, which leads people to use it in exchange, which in turn makes it still more marketable, because now it can be used both for direct use as well as indirectly as a medium of exchange.
And make no mistake: money has to emerge the way we have described it. It cannot emerge for the first time as government-issued fiat paper.


We are NOT the government

The debt belongs to the government. Not you or me (assuming you are not a lawmaker).

Actually, we don't owe most

Actually, we don't owe most of this money. Most of this money is OWED to us. The biggest portion of the debt is social security liabilities. i.e. the government owes it to us.

Indeed, Repudiate the Debt

We must use the well-established legal maxim of repudiating national debt, when said debt directly benefits a regime at the expense of the People.

You Are Correct Previous Commenter

They can't pay off the debt - here's the proof.

Go to Demonocracy.info - it's nothing to do with the occult.
Its the best visualization of US, European and Banking debt:

Home Page & US Debt Video

US Current & Future Debt

Bank Derivatives:

FDIC Illusion:

European PIIGS Debt:

Global Debt:

The solution is to ready yourself as best as possible.

"If you listen to fools... the mob rules!
Ronnie James Dio/Black Sabbath

You already know the answer

You already know the answer to your question; WE WILL NEVER BE ABLE TO PAY FOR IT.

In 1900 the total cost of all gov from local to federal was less than 4% of GDP, today it's officually 40% and unofficially closer to 60% as alluded to by the OP. This is simply the nature of government, but it's really made possible by the overlord Federal Leviathan.

The Constitution isn't the answer, as Tom Woods said today on Lew Rockwell, no one's ever survived a Constitution. So don't get caught up in that religion when the reality is The Constitution was the greatest centralization of power in our nations history, financed by bankers to gain centralized currency control, and historically guaranteed to eventually take ever restraint listed there-in and pervert those words to grant unlimited power to the gov itself. After all, who interprets what those words really mean? The government! LOL

No, don't fall for that scam folks. The government that government least governs best and if there must be any government at all it should be small, local, and directly answerable to those it government with the people being able to easily confront their local politician with their grievances and if they don't have the grievances satisfied the citizen then has the choice of a number of close by local governments willing to offer a better service in true free-market competitive fashion.

That's the only answer folks, not trying to fix a system guaranteed to eventually be the sword instead of the armor it started out as. The only path is to end the financing through ending the evils of fiat money and the rest takes care of itself. When the gov has to directly pay for what it wants to do and that will require actually seizing citizens assets through force instead of inflation confiscation, the people will quickly rise up and kill off the slavemasters.

"In reality, the Constitution itself is incapable of achieving what we would like in limiting government power, no matter how well written."

~ Ron Paul, End the Fed