The reality is quite different. Budgets decisions are made from year to year, and no Congress or President today can dictate the actions of a Congress or President in the future. The only thing we can count on is that this year’s budget will increase our national debt by at least $1.1 trillion.

Such reckless spending may be in itself the precursor to the economic collapse of the US, according to Niall Ferguson, the Laurence A. Tisch Professor of History at Harvard University, resident faculty member of the Minda de Gunzburg Center for European Studies, Senior Research Fellow of Jesus College, Oxford University, and Senior Fellow of the Hoover Institution, Stanford University:

Throughout history the rise and fall of empires isn’t slow or cyclical, as we like to think, but arrhythmic…it mostly happens very, very suddenly. America is a superpower on the edge of chaos. U.S. debt levels and its unwillingness to address the problem, has put it in the same category as other great empires which have collapsed throughout the ages.

What, Me Worry?

WASHINGTON: Today Moody’s warned the US of an impending credit downgrade due to the country’s worsening debt situation.

Moody’s Investors Service warned that lack of U.S. government action on the budget deficit increases the likelihood of a negative outlook on the country’s top AAA credit rating.

The Moody’s report, which came hours after a downgrade of Japan by Standard & Poor’s and an IMF warning on growing budget deficits in both countries, reiterated previous comments made by the agency late last year.

Moody’s had said in December that the extension of Bush-era tax cuts would add to the likelihood of a negative outlook on the U.S. rating in the next two years.

Lower debt ratings typically push up a country’s borrowing costs. A negative outlook makes a rating downgrade more likely in the next 12 to 18 months. MoneyNews.com

The NIP has written multiple times regarding previous warnings from Moody’s. The US Ignoring Moody’s is similar to a homeowner ignoring calls from their mortgage banker. Eventually credit ratings our downgraded, interest rates go up and penalties are instituted.

We are seeing the result already. During Chinese President Hu Jintao’s visit to the US Obama hosted an unprecedented state dinner for the president of a country that has one of the worst human rights abuse record. How long until the Chinese demand higher interest rates to cover our increasingly worthless dollar?

This is just the beginning of the pain that awaits as our Congress and President blithely spend us into oblivion.

The U.S. Treasury website today reported that as of last Friday, the last day of 2010, the National Debt stood at $14,025,215,218,708.52.

It took just 7 months for the National Debt to increase from $13 trillion on June 1, 2010 to $14 trillion on Dec. 31. It also means the debt is fast approaching the statutory ceiling $14.294 trillion set by Congress and signed into law by President Obama last February.

The NIP has written multiple times regarding previous warnings from Moody’s. It appears that this administration is all to happy to push our economy into economic collapse. If you think this doesn’t matter to you, you are sorely mistaken.

What, Me Worry?

WASHINGTON: The Treasury Department stated that the US Debt reached $13 trillion for the first time in history on June 1st. Just six months ago the debt topped $12 trillion for the first time. The increase in just 6 months was 8%.

At this rate our debt will reach $14 trillion by the end of the year, increasing the national debt by 16% in one year. The US GDP was only $14 trillion in 2009, our debt soon will exceed the entire economy of this once great nation and the rate of increase is accelerating.

You or I could never dig ourselves out of this kind of debt, only the government can, and they will do it by inflating the currency. Back in November the NIP has warned about the dire consequences that await us if we pursue this course. This should give concern to every American. Our elected representatives need to be sent packing. Faced with our massive deficit, this Congress apparently subscribes to the Alfred E. Neuman school of philosophy, “What, Me Worry?” At the NIP we too are beginning to see Mr. Neuman as a viable candidate. His campaign slogan of 1956 still rings true today, “You could do worse… and you always have!”

Weren't you listening before? Now you're joining my band. Hope you can play guitar.

LONDON: The UK Pound declined against the dollar today after the market digested Moody’s warning about a possible downgrade of the country’s credit rating. “Britain and the U.S. had ‘resilient’ Aaa ratings, as opposed to the ‘resistant’ top ratings on Canada, Germany and France, Moody’s said in a report today,” according to Bloomberg.

Credit-rating agency Moody’s Investor Services on Tuesday warned that the United States and Great Britain may test the limits of their AAA sovereign ratings due to deteriorating public finances.

“These are the AAA countries whose public finances are deteriorating considerably and may therefore test the Aaa boundaries,” wrote Pierre Cailleteau, managing director of Moody’s sovereign risk group…

Britain’s deficit is expected to top 12% of gross domestic product this year, while the U.S. budget gap is forecast to touch 10%.

Britain’s gross debt to GDP ratio is forecast to rise to 69% at the end of 2009 from 47% in 2007. The ratio of U.S. debt to GDP rose to 53.5% from 40.2% a year earlier, Moody’s noted. William L Watts, Marketwatch

This is the second time the NIP has brought this to our readers’ attention, the first was on October 23rd. Moody’s this time is even more specific regarding the conditions that are now pressuring the possible credit downgrade:

Moody’s Investors Service says the U.S. and U.K. must prove they can whittle down their ballooning deficits to avoid threats to their triple-A credit ratings…

Under the most pessimistic scenario put forward by Moody’s, the U.S. would lose its top rating in 2013 if economic growth proves anemic, interest rates rise and the government fails to dent the deficit or recover most of its assistance to the financial sector.

Unlike several years ago, “now the question of a potential downgrade of the U.S. is not inconceivable,” says Pierre Cailleteau, chief international economist at Moody’s. Joanna Slater, Wall Street Journal

Other developments in credit markets today:

• Moody’s downgrades Illinois debt ratings
• Moody’s downgrades Dubai companies
• Swedish banks risk further downgrades
• Greece Rating Cut, Yen Extends Gains, Dubai Loss Deters Risk
• Mexico’s peso suffers biggest tumble in 2 months

Banks, states, and countries are all in danger of having their credit ratings downgraded, some for the second or third time. What has put the US in unprecedented danger? “Ballooning deficits.”

How has Congress and the President responded? Today President Obama announced his intention to expand the debt even further. Harry Reid is pressuring the Senate to pass the most massive spending increase in the country’s history. No sane leaders would pursue such a course unless they had ulterior motives.

The NIP’s position remains that this course of action has two primary drivers. First it is payback to George Soros who stands to make a fortune on the impending collapse of the dollar. More importantly, the resulting destruction of our economy will initiate a crisis which will enable the left to seize permanent control and subvert the constitutional basis upon which this country is founded. This is all about redistribution of wealth. Barack Hussein Obama is doing exactly what he promised: radically transforming America. Congress is helping him, are you?

So President Obama today revealed his new jobs policy. Guess what? We as nation must continue to “spend our way out of this recession.” So what didn’t work before we will now do more of. Whatever happened to Einstein’s famous quotations:

Insanity is doing the same thing over and over again and expecting different results.

Problems cannot be solved by the same level of thinking that created them.

The same morons who engineered the collapse of Fannie Mae and Freddie Mac are now putting their magic to work with GM, Chrysler, AIG, Citibank, and a host of other formerly private companies. With Andy Stern of the SEIU being the most frequent visitor to the White House, and with him playing a major role in the “jobs summit,” can we expect anything better? Of course if you had spent $27 million getting your man elected you too would want to eat lunch with the President at least once a week.

We were told we had to pass the last stimulus package or unemployment would top 8%. Well, it’s 10% nationally with many regions closer to 20%. So what is the answer? It didn’t work before, so now we’re told we have to do it all over again. It’s like watching bad golfers duffing the ball over and over again. Are we supposed to let these guys keep teeing it up?

We get it. They’re Einsteins, and we’re Charlie Browns. And just like Lucy they expect us to tee up the football for them one more time.

WASHINGTON

For example, let’s say you are running a household burdened by credit card debt, and that your monthly income is not adequate to pay your bills. Your next course of action? Bankruptcy. Same thing with countries, only it is called default. We saw that just last week in Dubai:

Dubai shook investor confidence across the Persian Gulf after its proposal to delay debt payments risked triggering the biggest sovereign default since Argentina in 2001. November 26, 2009. Bloomberg News

How can that happen to a country? By not having sufficient reserves to cover its short term obligations.

Alan Greenspan established a policy of managing debt load by limiting short term debt to the amount of liquid reserves. The thought is that a government should have enough cash on hand to meet short term obligations (less than 12 months) in case foreign creditors should demand payment. This policy is known as the Guidotti-Greenspan rule. It appears that rules are meant to be broken, as far as the current Fed is concerned:

Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that’s not counting any additional deficit spending, which is estimated to be around $1.5 trillion.

Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That’s an amount equal to nearly 30% of our entire GDP. And we’re the world’s biggest economy. Where will the money come from? Porter Stansberry, DailyWealth.com

Where will the money come from? The Federal Reserve’s answer is to borrow more money. Try that next time you get behind on a credit card. Just pay it off with another credit card. How long do you think you can keep that up? Can it work any better for a country?

The rising US national debt is the result of many years of congress’s obfuscation and prevarication. Congress uses its checkbook to buy votes, without concern of the underlying damage they are causing our country by increasing our ponderous debt burden.

The Fed borrows money by selling US Treasuries, but appetite for those treasuries is becoming satiated. Several treasury auctions this year have required the Fed to buy its own debt to prop up the price of its securities. When they can no longer borrow money they will just print it. In fact they are already printing dollars like they are going out of style. (They ARE going out of style.)

Moody’s has warned that the US is in danger of losing its AAA rating. When that happens foreign governments will begin dumping dollars, devaluing our currency and causing economic ruin.

Who's Pulling the Strings?

A run on the dollar is not such a bad thing, just ask the biggest financier of this administration, George Soros. Soros made one billion dollars in one day shorting the British pound on September 6, 1992. This trade was the single most profitable trade in the history of the world. Never mind destroying the British pound and the savings of an entire country– George Soros amounted to a modern day Reverse Robin Hood.

With a man like this backing Obama, and with this administration committing financial harikari, you have to wonder. It looks like it will soon be payback time for George Soros. Is he trying this time to make one trillion dollars in one day, someday in our future? Then what is he going to do with that money?

Zimbawe 100 Trillion Dollar Note

WASHINGTON: The US Debt has just topped 12 trillion dollars and is still climbing. If anything, the rate of acceleration is increasing, so we can look for more rampant spending to come. Our counter in the right column shows a running total so you don’t miss a minute of the action. USDebtClock.org gives a great snapshot of the whole picture. The US Department of the Treasury updates their website once per day, found here.

$12 trillion in debt cannot be paid off without draconian measures. Our federal reserve is printing currency like it is going out of style. (It IS going out of style.) This policy devalues our currency and will ultimately lead to runaway inflation. History has shown over and over again the fallacy of this approach. Countries like Zimbawe who try it end up destroying their currency,  their economy, and their country. In January 2009 the Zimbawe 100 trillion dollar note on the left was worth about $300. It quickly fell to zero. Our creditors know the danger the US is in. That is why Moody’s has warned the US about an impending credit downgrade.

The problem with the number trillion is that the general public has no clue what one trillion means. Most think that it is similar to billion. After all, they rhyme. In other words, one million, then a billion is bigger, then a trillion is bigger yet. Such a naive understanding makes the public easy fodder for a Congress hungry to feed on citizens’ ignorance.

Here is one way to think of our debt:

If you were born when Christ was born and you went to your dad and wanted an allowance. He says, ”Son, I need you to have some decent spending money. I have a feeling you are going to live a long time. So here is $12 million. Spend it today, then come back tomorrow, and I will give you another $12 million. And I will do it every single day as long as you live.” And you spend $12 million every day from the time of Christ until now. You still wouldn’t have spent $12 trillion.

Or how about the picture below. We contacted Tim Geithner to borrow some currency for our photo studio but he declined our call. So we borrowed an image of one trillion dollars in $100 bills, which was computer generated by the folks at Gizmodo.com Then we stacked it 12 times.

A trillion here, a trillion there, pretty soon you're talking about real money.

How about a video, from a few months ago when we only owed $10 Trillion:

Do you get it yet? We’re in big trouble, and it is getting worse by the second (look at our clock at the right). Don’t feel bad if you don’t understand it. You’ll have plenty of time to get used to it. By then Congress will be spending quadrillions. Of course our currency will be completely worthless. We’ll also probably be speaking Zimbawe-ese. Or more likely, Mandarin.

Sometime later on Friday the “revised” numbers were posted. That was when we needed the oxygen. Not in our wildest dreams did we think the WH would “revise” the claim upwards to 640,000, dropping the percentage of bogus jobs from 16.7% to .8%. Pretty audacious.

Now we now why Gibbs downplayed the 5000 margin of error, he knew last week how they were going to discredit it– just inflate the denominator. Let’s forget questions about their original numbers and lets use some common sense and look at their new “numbers.”

640,329 jobs “created/saved” according to the latest reporting, at a cost of $159 billion, equalling $248,309 per job (using their numbers). And this they are proud of?

Already news outlets are digging into these numbers and finding all sorts of phony data. Fact is that there is no way to quantify “saved” jobs. And the jobs being created are government temporary jobs, at taxpayer expense. Not private sector employment. How about some real numbers from today’s report from the US Department of Labor instead? (We have archived the report here.)

At least we can be grateful for HR 3220. Free home oxygen has arrived in the nick of time.