Homestead mailing list

[Clansgian AT wmconnect.com]

Gene forwards:


> There, as the cameras roll, he announces that 
> the bonds, backed by the full faith and credit of the United States, are, 
> in fact, worthless i.o.u.'s. ....

>  He posed next to a 
> file cabinet that holds the $1.7 trillion in Treasury securities that make 
> up the Social Security trust fund. .... the bonds were not "real assets." 
........

> he said: "There is no trust fund. Just i.o.u.'s that I saw 
> firsthand."
> 

Nothing that is reported here as quotes of Bush (real or postulated) is 
untrue.  Tresury bonds are NOT real assets and thus they more closely 
resemble 
IOU's than what, outside of Government-Speak, any responsible financial 
person 
would call an asset.  It's like so many issues discussed now of days ...  
tell 
the truth and if that runs amuck of someone's fantasy, then it's "bashing."


>  They carry the same legal and political 
> obligations as all other forms of Treasury debt, every penny of which has 
> always been paid in full and on time.

I know scores of people, and I'd wager everyone on the list knows a few, who 
operated their finances by using debt (rather than pay-as-you-go) for years 
and years and always paid in full and on time.  Until that time they didn't, 
couldn't.  I know a number of people who are sweating bullets because they 
bought 
a very expensive (and ridiculous) house and financed it with an ARM.  For a 
couple of years, the payments were calculated on the rate of 3.2% but when 
the 
loan comes for its annual adjustment, they find the the rate is about to 
adjust to 5.5% more than doubling (and in one case nearly tripling) the 
monthly 
payment.  And this at a time when the value of the house is slipping just 
enough 
to make them slighly upside-down in the loan.  Up until that point they'd 
always paid all their loans on time and in full.  For them, just as for the 
US, 
that's no guarantee that you can keep borrowing more and more money and still 
do 
it.

But when I read that statement this time, juxtaposed with Bush just telling 
the simple truth about all treasury instruments issued by governments and the 
billions upon billions held by foreign countries alone, tea got sprayed on 
the 
computer screen it was so ridiculous.  Of course the US has always paid its 
promises on time and in full,  that's because anytime it lacked cash (or real 
assets) it simply creates more money by issuing more debt to cover what it 
already owes.  Individuals try this trick too and it can make them look 
solvent for 
a short while.

$712 billion dollars in debt to Japan ALONE.  If we were to pay off just the 
principal today, every man woman and child in the US would have to cough up 
$2500 to send to Japan.  Are there, perhaps, five people in you family??  To 
finance it's schemes, especially the Geezer Lottery, your family owes $12,500 
 to 
Japan ALONE.  The $2 trillion  in debt to foreign countries comes to nearly 
$7000 of debt per person.  That's just to foreign countries, not counting all 
the staggering amount of debt owed to holders of treasury securities in this 
country.  And the interest meter is running all the time on that debt.

All those tens of thousands of dollars that your family owes comes from 
nowhere but from your pocket.   If corporations are taxed, you pay.  You pay 
in the 
higher cost of goods and services when the tax is embeded in their cost.

Do you (let's say again, family of five) have an extra $35K to pay your part 
of that foreign debt when it comes due?   That's what "full trust and faith 
of 
the US government" really means ... and it means nothing more.  It's your 
ability to come up with an extra $35K just to pay your share of the foreign 
debt 
(and again, that's just the foreign part of it).  If you can't come up with 
it, it means de facto the US government can't come up with it either.

James



> 
> In his speech, Mr. Bush went on to acknowledge that future generations 
> would have to make good on the debt. But the intended meaning of the 
> photo-op was clear. In the hope of persuading people to privatize Social 
> Security - a move that would only add to the growing debt burden for future 
> generations - Mr. Bush wants Americans to believe that the trust fund is a 
> joke. But if the trust fund is a joke, so is the full faith and credit of 
> the United States.
> 
> Fortunately, the governments, institutions and individuals who hold United 
> States debt can tell a publicity stunt from a policy statement. Still, 
> casting aspersions on a basic obligation of the United States government is 
> insulting and irresponsible.