A reality check for people in the US / Europe (well...actually, Greece is already quite aware of it): You know the old rule of thumb about laws– The more high-sounding the legislation, the more destructive its consequences. Case in point, HR 3293– the recently introduced Debt Limit Reform Act. Sounds great, right? After all, reforming the debt seems like a terrific idea. Except that’s not what the bill really does. They’re not reforming anything. HR 3293′s real purpose is to authorize the government to simply stop counting a massive portion of the US national debt. You see, one of the biggest chunks of the debt is money owed to ‘intragovernmental agencies’. For example, Medicare and Social Security hold their massive trust funds in US Treasuries. This is the money that’s owed to retirees. In fact, nearly $5 trillion of the $17 trillion debt (almost 30%) is owed to intragovernmental agencies like Social Security and Medicare. So now they basically want to stop counting this debt. Poof. Overnight, they’ll make $5 trillion disappear from the debt. On paper, this looks great. But in reality, they’re setting the stage to default on Social Security beneficiaries without causing a single ripple in the financial system. Remember, when governments get this deep in debt, someone is going to get screwed. They may default on their obligations to their creditors, causing a crisis across the entire financial system. Or perhaps to the central bank, causing a currency crisis. But most likely, and first, they will default on their obligations to their citizens. Whatever promises they made, including Social Security, will be abandoned. And if you read between the lines, this new bill says it all. To read more: sovereignman/trends/congress-to-eliminate-the-debt-by-not-counting-it-anymore-12951/
Posted on: Tue, 29 Oct 2013 05:27:54 +0000
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