|Reset the debt clock to zero
AFP File image
Donald Trump tells a story about the Savings and Loan crash in the late 1980s. He was complaining to his young daughter at the time about how devastating the real estate plunge was for them. She didn’t understand why he was crying poor when they lived such a lavish lifestyle. The Donald pointed to a bum on the park bench and said, “You see that guy over there? He is billions of dollars wealthier than we are.”
He was referring to the debt he owed to banks. On paper he was worse than broke, so he was actually poor compared to the penniless squatter in the park. But, in reality, he was still fabulously wealthy, as the debt was just an arbitrary number, and he still slept in a penthouse within a building he owned, not a park bench. And, of course, the banks had to work with Trump because he was too big to let fail.
This story is relevant to the current debt “crisis” facing the United States. Although many believe the national debt to be real, it is also simply a number in a ledger. First, consider that about 12%, or $1.7 trillion, of the overall debt is owed directly to the Federal Reserve. Another $2.6 trillion is owed to Social Security. Furthermore, other large private banks, including foreign banks, own a huge chunk of debt as well, most of it bought with the $16 trillion created from nothing and given to banks as bailouts. The amount owed to China pales in comparison. The scheme guarantees an income stream for the banks who got virtually free money backed by the U.S. taxpayer to invest in higher-interest bonds backed by the U.S. taxpayer.
Next, the money never existed in the first place until it was created in the ledger. It was lent into existence in the moment of need. It started off as fiction and remains fiction. Since the banks never had the money it lent in the first place, they’re either collecting interest or seizing assets due to default from funny money. It’s not difficult to see how the banks will end up owning everything if this scheme keeps up for much longer.
Finally, the American people don’t owe this money, just like the people of Iceland or Greece don’t owe their nations’ debts to a shadowy banking cartel. They did not sign a contract to borrow the money. They did not mismanage the funds, or borrow more money to paper over private banking losses. They did not demand wars with any of the victims of the government’s imperial conquest. They did not demand the PATRIOT Act and resulting behemoth surveillance-industrial complex. The taxpayer is not responsible for this debt as Stefan Molyneux explains below:
Yet, the politicians tell the same story Trump told: we’re worse than broke. It’s a crisis, economic Armadebton. America’s credit rating is at stake. Soldiers and seniors won’t get paid if we don’t extract more taxes and cut benefits. All while they go to bed in the penthouse.
The real wealth of America has nothing to do with a phony number on the ledger. Some great wealth lies in the infrastructure — water systems, roads, electric grids, universities, buildings, farms etc. Some wealth lies in our capacity to make war. But America’s greatest riches are its innovative people; each brought up to believe they can accomplish anything they put their mind to. This is precisely the reason Trump was not actually broke no matter what he owed to banks — because he had the ability to be creative, and the capacity to accomplish big things.
If America defaulted and all debt was reset to zero, it would still be the wealthiest nation on Earth for the reasons above. The bankers argue that if the U.S. defaulted or lost its credit rating, no one would lend it money. That’s laughable. The entire world depends on the ebb and flow of American business, and it always will. Starting over at zero would likely cause a surge of new capital.
Therefore, I propose to the banks a complete write-off of the national debt in exchange for your survival. In other words, the American people will probably forgive your crimes and the bailouts, if the banks forgive the debt — even-steven. Should the banks not accept this deal, they and their political cohorts will eventually meet their demise and lose everything. And unlike the American people, they have not been able to prove that they can create anything of true worth.