MAY 9, 2016
GREAT DEBT THEFT
Debt steals income from the future to pay for spending in the present.
Loans made now create new money to spend and new debt to repay.
As long as income increases (creating more money to repay debts) old borrowings will be repaid and new loans will be extended.
When income stops increasing, then stagnates, and finally begins to fall, then applications for new loans are no longer approved and old loans go to the collection agency or are written off through bankruptcy.
Bankers and other credit creators are engaged in the greatest "confidence game" that ever existed.
Their messages:
First, you deserve more and better. Why? You are superior.
Second, an improved and much better future is waiting for you just around the corner.
And finally, don't worry about debts. Your talents will be recognized. You will be vastly better rewarded in the future than you are now. Then your debt payments will be insignificant and will soon be paid in full.
The sad conclusion is this:
Many Americans have been hoodwinked into believing that debt is good for them.
Some readers are now irritated and thinking:
"I have no debt!"
Really?
Do you have a mortgage?
Does your landlord have a mortgage?
Are you an American citizen?
If you have no mortgage or a mortgage with a fixed interest rate and your future income keeps up with the rate of inflation, you may be okay.
If you are an American citizen with taxable income or the recipient of social security, medicare, or other benefits that may be cut, you may have cause for concern.
On April 14, 2016, Time Magazine published an article by James Grant, editor of Grant's Interest Rate Observer, titled "The United States of Insolvency". On the cover of that issue is printed this message:
Dear Reader
You owe
$42,998.12
That's what every American man,
woman and child would need to pay
to erase the $13.9 trillion US debt
The bill is $85.996 for a household of two, $171,992 for a household of four.
One difficult rub is this:
The US Census projects that in 2020 the total US population will be 333.9 Million. Of that total 76.2 Million will be under 18 and 55.9 Million will be 65 or over. The vast majority of the individuals in those groups will be contributing nothing toward the Federal debt. If the current debt neither increased nor decreased between now and 2020, then the amount owed by each person between 18 and 64 in a position to pay in 2020 would be $68,880.
The 2020 bill is $137,760 for a household of two, $275,520 for a household of four.
Without paying interest to pay that debt off in twenty years (240 months) the required monthly cost would be:
— $ 574 for a household of two
— $ 1,148 for a household of four
At an interest rate of 5% those monthly payments would be increased to:
— $ 909 for a household of two
— $ 1,818 for a household of four
No member of the US Senate or House of Representatives may hope to be re-elected if he or she votes to impose such a monthly expense on every household in America for the next twenty years.
But what is the alternative?
To carry on as we have over the last thirty-six years since Ronald Reagan was first elected President?
At the final curtain the debtor has only a few choices:
1) Cut expenses to the bone and pay debts out of current income and from prior savings;
2) Sell assets and use proceeds to pay off debts;
3) A combination of (1) and (2); or,
4) Default and go into bankruptcy.
What is one to do?
The choice is ours.
