Former US Treasury Official - Expect Frightening Black Swan
October 25, 2013
kingworldnews.com
Dr. Roberts: “A lot of people think of ‘entitlements’ as welfare, but (these) ‘entitlements,’ strictly speaking, are welfare and medicare, and both are funded by the payroll tax. They are not unfunded, and they are not welfare. The current payroll tax is 15% of welfare and that goes to fund these programs. These programs are not the problem. For the last 30 years, the federal government has been collecting far more social security revenues than they have paid out in social security benefits -- the difference is about $2 trillion.
So, what happened to this $2 trillion? Is it safely in the bank for social security? No. The Treasury took it and spent it, and stuck in its place non-marketable I.O.U’s. So, what’s in the Social Security Trust Fund is $2 trillion of non-marketable Treasury I.O.U.’s....
“The only way they can be made good would be either for the tax revenues to go up by $2 trillion, which is not conceivable, or the Treasury has to sell $2 trillion more bonds and use the proceeds to put the money into the Social Security Trust Fund.
Now, supposedly, when they concocted this scheme the money would be accumulated to cover far-distant years, when it was projected that the payroll tax, at the current rate, would not suffice to pay all of the social security benefits. The real purpose of the scheme, which was cooked up by Alan Greenspan and David Stockman, was to reduce the current budget deficit in order to reassure Wall Street about their bond and stock portfolios.
Everyone acts like we have all of these ‘freeloaders’ living off of the public. Well, in fact, many aspects (of the United States government), including the federal government’s wars, have been living off of these surplus social security revenues.”
Eric King: “Where does that leave us going forward, Dr. Roberts?”
Dr. Roberts: “It leaves you with almost insurmountable problems. We have experts that have estimated the cost of these wars is $6 trillion. Well, that’s most of the debt increase. But they don’t talk about that because the Military Industrial Complex is just too strong.
But when you shrink aggregate demand, the economy goes down, and the deficit gets bigger. So, they are trapped. I don’t think they can get out of this. And I think the foolishness (in Washington) is going to lead to more removal from the use of the dollar. They (foreigners) are just going to stop using it. We already see it happening.
This shows a fantastic erosion in American financial influence. You see the BRIC’s settling their trade differences without using the dollar. You even see our puppet state, Australia, is now settling its trade balance with China in their own currencies, aborting the dollar. This means there are decreased demand for dollars which means a lower price (for the dollar). The Fed can print money all day to keep the price of bonds high, but they can’t print foreign currencies to buy dollars.
So, that’s the real black swan that’s waiting to happen -- when does the dollar plummet? When can the Fed not get enough loans of foreign currencies to buy back the dollars? When that happens, then it’s all over -- they lose control. The interest rates skyrocket, bonds collapse, stocks collapse, real estate collapses (in real terms), and the deficit becomes huge. I mean really huge. So the whole situation is headed to hell in a hand basket.”
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