The “U.S. National Debt Clock” (http://www.brilling.com/debt_clock) reports that as of today (June 12th) the “Outstanding Public Debt” was about $11.4 trillion. When divided by the U.S. population, this works out to $37,000 for every American man, woman, and child. Given that the U.S. per capita income is about $39,000 per year, the previous national debt number is intimidating, but not completely unreasonable or overwhelming. If the federal gov-co only owes $11.4 trillion, we can probably work our way out of this debt over the next generation—provided the federales don’t borrow any “money”.
But there are a couple of problems:
First, the $11.4 trillion figure is provided by gov-co;
Second, that $11.4 trillion figure is almost certainly fabricated, false and hugely understated. In fact, John Williams (shadowstats.com), an April, 2008 edition of USA Today, and former U.S. Comptroller David Walker have all warned that the real national debt is roughly $55 trillion—about 5 times the politically-correct sum reported by gov-co. And,
Third, our government’s appetite for borrowing is growing rather than restrained. According to one source, gov-co has borrowed as much in the first six months of the Obama administration as it has over the previous 30 years.
If we accept the $55 (rather than $11) trillion national debt figure as accurate, and then add in another $20 trillion in debt for state and local gov-co’s and private debt (mortgages, cars and credit cards) and the total American debt is now at least $75 trillion (about $250,000 for every U.S. man, woman and child). If you have a family of four, your family’s “fair share” of the total debt is about $1 million. Do you have it? I don’t. How many families do you know that have it? Very few. Therefore, how are we going to repay that enormous debt?
Answer? Exactly as the Chinese explained when they recently laughed at our Secretary of the Treasury—We’re not. Not ever. As a nation we are bankrupt.
But it’s one thing to be “reasonably” bankrupt and another thing to be “irrationally” (even, “fantastically”) bankrupt. For example, it might be “reasonable” for me to file for bankruptcy if I were in debt for $500,000. But if I were filing for bankruptcy because I was allegedly in debt for $100 billion, you (and I) might reasonably ask “What th’ hell is goin’ on here?! How th’ hell could Adask be $100 billon in debt?! That number is unreasonable, irrational, fantastic and impossible.
Similarly, how did we, as a nation, run up a total debt that’s not merely enormous but virtually unimaginable? $75 trillion?! That number isn’t just hard to understand, it’s hard to believe.
But our American debt not the only “fantastic” number in our brave, new economy.
For example, in February, the head of the Dallas Federal Reserve Bank warned that the federal gov-co’s unfunded pension and health-care liabilities are now “over $99 trillion”.
$99 trillion?! Again, how is that even possible? The U.S. annual U.S. GDP is now approaching $14 trillion. In order to fund a $99 trillion shortfall in pensions and health care, Americans would have to surrender every dime of their incomes for seven years. If we first paid our normal taxes, mortgages and car loans, we couldn’t hope to fund the pension and health care liabilities in less than 30 years—and that assumes gov-co didn’t borrow another dime.
But we all know that government is a credit addict. Gov-co appears determined to borrow, borrow, borrow us into oblivion. If it’s true that the Obama administration has borrowed more money in its first six months than was borrowed by gov-co over the past 30 years, how can we ever repay that debt? We can’t pay the debt we have; how are we going to repay such enormous additional debt?
Numbers associated with the global economy are just as fantastic as those of the U.S. economy. For example, according to the Daily Reckoning, there are an estimated $1.6 quadrillion worth of derivatives (debt instruments) in the world. The global population is about 6.8 billion. So if we divide the $1.6 quadrillion global derivatives by the global population, we learn that there are $235,000 in derivatives (debt instruments) for every man, woman and child on the planet. How the hell is that possible? And that $235,000 is in addition to the $250,000 “fair share” of the total American debt owed by every American.
How are such fantastic economic numbers possible?
Well, they’re not possible—at least not in the real, tangible world. There is no freakin’ way that the average man across the entire globe is in debt for $235,000 (and that’s just for derivatives). But people in positions of enormous power (the world’s central bankers) have created an alternative reality that is not composed of tangible wealth, but rather a wealth based on illusion—primarily accounting entries stored as electrons on some hard drive. In their resulting brave, new world of accounts, there is no rational limit on the amount of debt that can be created.
The idea that the banking “elite” have created an “alternative reality” may seem absurd, but let me show you the primary tool used to create that “alternative reality”: legal tender—paper and digital currencies such as modern dollars, euros, pesos and yuan. When the world abandoned gold and silver as its currency, the world’s people entered into the illusory economy of legal tender. As I’ll explain shortly, instead of having a monetary system that was measured in “units of value,” we adopted a monetary system measured in “units of account”.
Result? In today’s economy, we have virtually no tangible wealth. Instead we have mere accounts and bookkeeping entries.
Historically, if your wealth consisted of ten ounces of gold, you could not double your wealth with the stroke of a pen or an accounting entry. If you wanted twenty ounces of gold/wealth, you had to actually work to find another ten physical ounces.
Today, when wealth is measure in “units of account” (rather than units of value), enormous wealth can be created or destroyed with the stroke of a pen or the keystroke of a data entry clerk. And that’s why we can have $1.6 quadrillion dollars in derivatives, and a total American debt of $75 trillion. We can have such fantastic and seemingly impossible economic numbers because the numbers do not represent anything of substance—they are only accounting entries. Our current measures of wealth are no more real than an obligation to pay $1,000 for landing your “top hat” icon on Boardwalk. Our current measures of wealth are no more real than the number of space aliens you killed in a video game.
What is the weight of “100,000”? What is the length of “26”?
In fact, the terms “100,000,” “1,000,000” and even “100 quadrillion” are meaningless unless we first ask “100,000 what?” 100,000 dollars? 100,000 light bulbs? 100,000 grains of sand? Without some noun of substance to which “100,000” refers, the “100,000” has no specific meaning other than as an expression of numerical relationships where “100,000” is ten times “10,000” and one-tenth of “1,000,000”. Without reference to some specific subject (dollars, light bulbs, grains of sand, etc.), the number “100,000” expresses nothing more than a mathematical relationship. All relationships are legal fictions.
Modern economics is all about numbers. In order to understand economics, you have to understand what the numbers represent. Although some economic numbers (unemployment and interest) represent rates, the fundamental economic number represents dollars. The Gross National Product, the National Debt, your weekly or annual income are all measured in “dollars”.
But what’s a “dollar”? When we say “100,000 dollars,” what exactly do we mean?
At first, that question seems stupid. Everyone knows what a “dollar” is—right?
Wrong. The truth is that almost no one knows that a modern “dollar” really is. We more or less understand dollar’s function (we can take it to the store and trade it for some food or beer), but not one American in 100,000 understands the dollar’s nature.
To learn what today’s “dollar” is, we must first go back in time to see what it used to be. For example, the 3rd edition of Black’s Law Dictionary (A.D. 1933) reported that according to the case of Thompson v State, 90 Tex.Cr.R. 125, 234 S.W. 406, 408, a “dollar” was defined as:
“The unit employed in the United States in calculating money values. It is coined both in gold and silver, and is of the value of one hundred cents.” [Emphasis added.]
If you looked up the word “cents” you’d find,
“A coin of the United States, the least in value of those now minted. It is the hundredth part of a dollar. Its weight is 48 gr., and it is composed of ninety-five per centum of copper and of five per centum of tin and zinc in such proportions as shall be determined by the Director of the Mint. Act of Feb. 12, 1873, § 16. See Rev. Stat. § 3515 (31 USCA § 317).” [Emphasis added.]
Black’s 4th Edition (A.D. 1957) expressly defined the “dollar” as a “unit of value”.
Thus, the lawful money required at Article 1 Section 10 Clause 1 (“No State shall make any Thing but gold and silver Coin a Tender in Payment of Debts”) of our national Constitution was a “unit of value” expressed in a certain physical mass of various metals.
However, today, in Black’s 8th Edition (A.D. 2004), the word “dollar” is no longer defined. And everyone knows that the modern “dollar” is not redeemable in any fixed mass of gold, silver or copper. The modern “dollar” has no value. So what, exactly, is a “dollar” without fixed value?
If you want to discover what today’s dollar is, go to the Uniform Commercial Code (UCC) at section 1-201 (general definitions) and see #24 which reads
“‘Money’ means a medium of exchange currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries.” [Emphasis added.]
Even the UCC doesn’t define “money”. They don’t say what modern money “is” they merely say what the modern term “means”. There’s a difference.
But the UCC does tell us that modern “money” means a “unit of account”—not a unit of value (gold & silver coin). Modern “money” is merely a bookkeeping entry on an account. It’s a number like “100,000” or “10” or “1,543,221”. It has no tangible reality (value expressed in a fixed weight of gold, silver or copper) but merely a statement of relationship.
Because the modern dollar is no longer defined, the only thing we know about “$100,000” is that it’s ten times bigger than “$10,000” and one-tenth the magnitude of “$1,000,000.” We all presume that having $100,000 is better than having $10,000—but so long as we don’t know what a dollar is, we can’t really know what we have. In the end, so long as the dollar is undefined, “100,000 dollars” merely means “100,000”. It’s merely an abstract number and an expression of a relationship on an account between a debtor and a creditor.
More, while the definition for “Tender” in the national Constitution (gold and silver coin) was established by We the People—according to the UCC, the “meaning” of modern “money” is “authorized or adopted by a domestic or foreign government . . . intergovernmental organization or by agreement between two or more countries.” The constitutional gold and silver dollars were established by the People and are the “people’s money”. However, our modern paper and digital “dollars” are units of account authorized by governments, organizations and treaties between countries.
Modern “dollars” aren’t the “people’s money”; they’re the gov-co’s money—and there’s a huge difference. Without a fixed weight of gold or silver to back them, modern dollars have no tangible reality (value). And that’s exactly why we can have national and global debts that are so fantastically huge as to be irrational, impossible and seemingly insane. Because our modern “dollars” have no tangible reality, the total debt is as unlimited as the human imagination. Americans could be in debt for $75 billion, $75 trillion or $75 quadrillion—so long as the “dollar” has no fixed value, it has no real meaning, so there’s no real difference between any of those sums other than a couple of zero’s and coma’s.
Compare a $100 bill to a $1 bill. Both pieces of paper cost about four cents to make, but one is worth 100 times as much as the other. Why? How? If one piece of paper that cost four cents can be worth one “dollar” and another piece of paper that cost four cents is worth one hundred “dollars,” it’s obvious that the “dollar” has no tangible reality. It’s a chameleon, an illusion, a myth. If it’s a “dollar” at all, it’s a counterfeit dollar.
What’s this all mean?
I don’t know.
The whole idea that modern “dollar” has no value, definition or fixed meaning is so bizarre, that it truly boggles the mind. If the “dollar” has no tangible reality, then it’s as fantastic as a yardstick that has no fixed length. How can you measure the length of a mile or how tall your 8-year old son has grown with a yardstick that has no fixed length?
And how do you measure your personal income, your net worth, or our national debt with a dollar that is only a “unit of account” but not a “unit of value”? Without some fixed “value,” the modern dollar and everything it measures has no fixed meaning. What is the difference between a national debt of $11 trillion and $55 trillion if the “$” (“dollar”) has no fixed meaning?
And this is no game. People are going to jail on income tax violations for failing to pay “20,000,” “10,000,” or maybe “12,345,678”. But “20,000” what? What, exactly, is it that they haven’t paid? So long as the dollar is undefined, the alleged crimes of income tax evasion and even bank robbery are based on what? It can’t be actual theft, because nothing real was stolen. Those crimes must be based on a breach of some account-relationship or fiduciary relationship that is measured in pure numbers without substance. We aren’t going to jail for violating the common law; we’re being jailed for violations of the law of mathematics—and more probably, violation of the law of statistics. You can be jailed for stepping too far out from mean under the bell curve. You won’t be jailed for doing something wrong, you’ll be jailed for doing something statistically uncommon.
We pay economists millions of dollars a year to tell us what’s happening in our “economy”. But what can economists tell us if their fundamental “unit of account” has no tangible value? It’s like measuring the length of an elephant’s trunk with a rubber band—and maybe even an imaginary rubber band. Those who make the measurements can reach any conclusion they want. The same elephant’s trunk can be reported to be six inches, six feet, or six yards long. It all depends on how much the “official measurer” stretches or compresses the rubber band.
If you find the rubber band analogy improbable, consider most comparisons of income or costs which are calculated in “1983 dollars” or “1995 dollars”. The dollar is admitted to have a different “value” every year (and in truth, every moment). If you earned $20,000 a year in A.D. 1963, you were a fairly prosperous man. If you earn $20,000 in A.D. 2009, you’re a few steps above homeless. The dollar is a “rubber band”.
And the “dismal science” (economics) does not confine the use of “rubber bands” to our currency. Recently, when one of the major automobile manufacturers and one of the major financial institutions declared bankruptcy and the price of their stocks sank to pennies, their stocks were removed from the Dow Jones Average and replaced by the stocks of two solvent corporations. Result? The Dow (a major “economic indicator”) got rid of some “dead weight” and received an instant boost from the addition of two solvent stocks.
The point is that Dow Jones Industrial Average has no fixed value. It is a “rubber band” economic indicator that is intentionally manipulated to “ac-cent-u-ate the pos-i-tive; e-lim-i-nate the neg-a-tive” in order to maintain or increase public confidence. If we were to calculate the DJIA today, based on the same stocks that were being measured 20 years ago, the DJIA would probably fall 15%-20% because 10% of more of the stocks of 20 years ago have gone out of business and become worthless. The DJIA is a “rubber band” economic indicator.
John Williams (shadowstats.com) has made a career out of reporting how gov-co is constantly changing the definitions of economic indicators to maintain an illusion of economic stability or prosperity. Inflation and unemployment rates are constantly being “fudged” by gov-co in order to present economic news that is nothing but lies.
When it comes to economics, the whole damn system is run with “rubber bands”.
But on what basis can economists steer an economy if the fundamental unit of measurement (dollar) is a “rubber band” that has no tangible value? It’s like trying to drive a car at a legal speed without a speedometer. How can you know if you’re driving too fast, too slow or “just right” if you don’t have a speedometer that correctly measures time and distance and accurately calculates your speed?
Similarly, what is the only “reality” in an economy based on “units of account” (rather than “units of value”)? The “reality” is not dollars; it’s the lies that instill public confidence in the “dollar-relationship”. It’s the credibility of the people who claim the power to measure our “money”.
So long as the people “believe” in the intangible, literally non-existent “dollar,” the economy in our “alternative reality” can continue just like a Monopoly game between four 8-year-olds. But what happens when mom calls the kids to eat dinner and the kids stop believing in the game? The boy who was winning and had millions of dollars and houses on Boardwalk is suddenly stripped of the illusion of victory and reduced back to another penniless child. Similarly, what’ll happen when Americans realize that modern “dollars” are illusions, just bookkeeping entries—mere numbers that can be almost any magnitude that suits our fearless leaders? What happens when the people understand that the fundamental realities of our modern economy, society and political system are an illusion and the lies required to support that illusion?
I doubt that anyone can seriously ask “What is a dollar?” without feeling a twinge of uncertainty, anxiety and even terror. Figure out what a “dollar” is, and you’ll realize the whole economy and even society are some kind of illusion that has little or no tangible value or reality. Once you sense that possibility, you’ll have to ask “How long can this illusion be sustained?” and “What happens when the illusion fails?”
Those questions might not scare you, but they scare me. I believe that sooner or later the fiction of modern “money” will be exposed and recognized by the majority of the people. When and if that happens, I believe there’ll be an economic, social and political catastrophe.
For most Americans, the coming realization that “The dollar is dead” will be every bit as shocking as Frederick Nietzsche’s declaration that “God is dead.” Our “dollar” has become our “god”—and it’s every bit as mythical as Zeus or Poseidon. When our “dollar-god” fails, there will be hell to pay.
So what do you do if you want to distance yourself from the “alternative reality” of illusory “units of account” and return to the “real world” of tangible wealth (“units of value”)?
A: Acquire every speck of gold and silver you can lay hands on. That’s not a perfect solution, but if you do so, sooner or later, you’ll be glad you did.
Until next time, I remain at arm’s length and within The United States of America,
blog at: https://adask.wordpress.com