July 20, 2004

On Thursday, July 15th, the U.S. Treasury Bureau of Public Debt issued a notice that it is recalling thirty year bonds issued from 1974 to 1979 that have been paying more than 10 percent annual interest. Investors holding these bonds are not required to turn them in, but the Treasury will cease paying any interest at all after November fifteenth.

This is a good thing. It's really a matter of refinancing a small part of the national debt because new bonds will be sold to replace these at much lower interest rates. The amount involved is a little more than four billion dollars. An amount equal to what the Bush administration has been borrowing every two days.

The only serious question is why the Bureau waited so long. Interest rates have been at a historic low for more than a year and the Federal Reserve just increased them a quarter percent. People in the general public had the common sense to restructure their personal debt a long time ago.

As I've predicted, and I might as well start claiming credit for research that predicts, the U.S. Treasury is going to do everything it can to keep from reaching the government's own self-imposed debt limit of $7.384 trillion in August or anytime before elections. Such an occurrence would give the democrats an historic accusation against the Bush administration. This recall is merely the first small and tardy step.

Hitting the debt limit at any time will mean that Bush has borrowed more than a trillion dollars since May 24th of last year. That's a phenomenal and unprecedented plunge in debt load and makes World War II look like a bargain basement deal from Wal-Mart.

The crucial thing for you to know and remember is that last year the Treasury was able to go 92 days, more than three months, without borrowing an additional cent. We hit the debt ceiling on February 22nd and for three months no one mentioned it except me.

The media and so-called watchdogs of the free and biased press were either asleep, in league with the government, or too dumb to notice we had hit the debt limit when, at other times, they would have been yelling and screaming about possible government shut downs.

This does not mean that the Treasury stops issuing securities for sale. It merely shows that they can and have been able to stop adding new debt for an extended period. The hodgepodge of Treasury flavors, maturing at the rate of billions per day, are replaced by selling new issues before the pay-off checks can even be cashed. That action alone simply keeps the debt frozen.

Once the crisis has passed, in this case the elections of November 2nd, the government will sock-it-to-you by making up for lost time with enormous and continued borrowing.

This sort of borrowing cannot go on forever, especially with a dollar falling in value against the Euro, a balance of trade deficit of more than a half-trillion, the manufacturing that made this country great being "outsourced" overseas, and the real purchasing power of the average citizen against inflation resulting in a declining tax base.

How long do you think it will be before countries like China, that has loaned us more than $300 billion, will invest elsewhere?

Let's not forget that the only thing making U.S. Treasury securities "the safest investment in the world" is the fact that they are backed by every tax paying citizen in the United States. And don't forget that it's only taxpayers who back this, not today's children unless they're Hollywood stars, or the elderly retired.

In other words, every citizen is not a taxpayer so don't believe the crap that says 280 million people are responsible for this debt and it only amounts to about $25 thousand per person. When you realize that the debt falls entirely on the shoulders of a much smaller base of taxpayers only, then your share is well over $50 thousand apiece. Can you come up with that kind of cash tomorrow?

A few years back, when he was considered a possible presidential candidate, Donald Trump came up with the idea of a one-time tax against the rich to pay off the national debt. As I remember it, the plan was to tax everyone with an income over ten million a substantial portion of their gross income, no deductions allowed. He was pooh-poohed by the establishment media since most of the oligarchy's talking heads are in this category, but the idea would have worked. How do you think the government was financed before the 1913 personal income tax?

On another and much more pertinent level, the national debt could be cut overnight by almost half if the federal government were suddenly to become honest and stop lying to us about almost everything.

The entire "Intragovernmental Holdings" portion of the national debt, currently standing at $3.1 trillion, is fraudulent and nothing more than a scam to double tax citizens.

As such, it's the greatest economic scam that a government has ever pulled on its citizens and makes Enron, WorldCom, Arthur Andersen, and even Martha Stewart look like angels playing in the same sandbox.

You can't expect anything corrective from Bush and his gang who have led us into a crusade to increase the empire, but you can't expect anything from John Kerry either. The subject is taboo in the den of thieves.

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