The Great Depression Online

Great Depression Online Archive Issue:

Promises Upon Empty Promises

Great Depression Online
Long Beach, CA
March 16, 2010

Inside This Issue You Will Discover…

*** A New Record
*** The Money Has Already Been Spent
*** Promises Upon Empty Promises
*** And More

A New Record

Last week we got word of a new financial record.  In February, admitted the Treasury, the U.S. Government ran its largest monthly deficit ever – $221 billion.

How did it manage such a magnificent feat?

It’s really quite simple…

It spent $328.43 billion yet only collected $107.42 billion from taxpayers.  The difference -- $221.01 billion – was made up with debt.

That’s right.  For every $3 dollars the government spent, over $2 dollars was borrowed from the future.  Thus making the future less prosperous and more insolvent.

Bad as that may be, the numbers could have actually been worse.  Remember, February only had 28 days.  Take the $7.89 billion per day of borrowed money the government spent and tack on another 2 or 3 days to get to the length of most months, and the record monthly deficit would have jumped to $236.79 billion or even $244.68 billion.

~~~~~~How Safe is Your Bank, Really?~~~~~~

So far in 2010, the number of US bank failures has reached 25, a rate of two per week.  This compares to 25 total bank failures for all of 2008, and three for 2007.  Yet -- no matter how grave the data gets, few people imagine the corporate banking crisis trickling down to average Joe or Jane and their lollipop-dispensing drive-through bank tellers.  Read more.


Obviously, $7.89 billion per day of new debt is not how nations grow prosperous; rather it’s how they decline, degenerate, and degrade.  When you break it down, it comes to $328.7 million per hour…$5.5 million per minute…and $91,300 per second of new – enduring – debt.

If that doesn’t make you doubt the integrity of your leaders in Washington then, we suspect, nothing will.   

The Money Has Already Been Spent

Still we’re not here to bash the buffoons in Washington.  We present the facts and let you form your own opinions.  In a democracy, of course, the government is a reflection of the populace as a whole…an expression of the will of the people. 

Take Representative Barney Frank, for example.  The man’s a domineering clown.  Most wouldn’t welcome him to their living room…yet he’s been reelected 15 times.  What’s more, he’s now chairman of the House Financial Services Committee.

Is it any surprise the people, like their leaders, are having a tough time with their finances too.

The Employee Benefit Research Institute just gave word that 43 percent of workers have less than $10,000 is savings.  Moreover, 27 percent of workers have less than $1,000…virtually nothing.  If they’re counting entirely on Social Security to fund their golden years, they’re in for a rude awakening.  The money, you see, has already been spent.

“For more than two decades,” reports AP, “Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.

“Not anymore.  This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.

“Sounds like a good time to start tapping the nest egg.  Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors.  In return, the Treasury Department issued a stack of IOUs — in the form of Treasury bonds….

“Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn’t be worse.  The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.”

Promises Upon Empty Promises

History has shown those who save and invest grow and prosper; those who don’t fade and disintegrate.

The notion that people can become wealthy by spending lots of money they don’t have has always been and will always be a disaster.  Once the savings are drained the debt propagates until it crumbles under its own crushing weight.

“Government is at best but an expedient,” said Thoreau.  “But most governments are usually, and all governments are sometimes, inexpedient.”

Here’s what Thoreau may have had in mind…

The retirement of millions of Americans who put their full faith and trust in their government must now be funded by foreigners.  When it comes down to it, foreign extension of credit amounts to purchases of promises upon empty promises.  Eventually they’ll come to their senses and cut off the Treasuries tab.

When the U.S. debt auction goes no bid, the Federal Reserve will be waiting at the wings – ready to make the purchases with their phony money.

What comes after that is largely unthinkable.


M.N. Gordon
Great Depression Online

P.S.  Where then is a bank I can trust?  Here, the Club EWI report provides a list of the Top 100 highest-rated banks in America by state based on third-quarter 2009 data.  The publication also reveals the global jurisdictions that “provide wealth preservation service as opposed to interest income and daily transaction conveniences.”

Learn more.


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