Thursday, October 14, 2010
Who exactly do we owe money to?
Who exactly do WE owe money to? We keep hearing this…that WE Americans are deeply in debt and that every person in America now owes $43,000 or whatever the figure is.
This is what the politicians and Deficit Terrorists (that’s what I call them) say, day in and day out.
But what does that mean? Have you ever thought about that??
Does that mean we, as citizens, each and every one of us, have borrowed $43 grand from the government??
If so, then it’s an asset for the government. That’s right, those loans are an asset; just like the loans on the books of a bank. And given that the product of the nation (our national income = $14.5 trillion) exceeds the amount we supposedly owe, we’re technically good for the money. So when you look at it that way, the government is rich, not broke: it has a very strong asset on its books.
But of course that's not what's going on. In fact, it's the opposite.
When people talk about America’s debt what they’re really talking about is the government’s debt. But that’s the same thing as I just explained above, only in reverse! The government’s "debt" is OUR asset. (Remember, for every debt there is a credit, for every liability there is an asset.)
We OWN these assets in the form of Treasuries, higher financial balances, etc. So in short, WE THE PEOPLE owe nothing...WE OWN!
And here’s the best part about it: when we get these assets they come without any corresponding liability. So, by definition, our wealth (assets – liabilities) increases!
Okay, what about the Chinese and other foreigners you may ask? Is that a liability of the government? Perhaps you can look at it that way, however, what the Chinese and other foreigners have is simply a claim on some quantity of dollars, which our government issues freely and without constraint.
The whole thing is really very simple.
They hysteria created by this is the same kind of hysteria that drove people to think ships would fall off the end of the earth back in 1491, but Christopher Columbus took care of that nonsense.