The Contrived Drama of the Debt Ceiling

Let the contrived drama of the debt ceiling begin for the American people.

We are within weeks of hitting the national debt ceiling (soon to be floor) of $14,294,000,000,000.00. There will be great political drama. The media will be breathlessly cover it. The American people chew their finger nails into nubs, waiting to hear their fate.  I hate to be the bearer of bad news, (actually it like it ) but the debt ceiling will be raised as we head off the cliff of hyper-inflationary depression.

Here is why it will happen, our monetary system must create more money every year in excess of the debt and interest accrued the previous year.

Let that sink in for a little bit.

For in our system, money is debt.

When debt is created, money is created.

When debt is paid off, money is destroyed.

In order to truly understand this, one must see how money is created. So let’s say the government needs a ridiculous amount of money, say a Trillion dollars, to cover the deficit this year. In order to get this Trillion dollars, the US Treasury goes to the privately owned central bank the Federal Reserve and asks for a Trillion dollars. The Open Market Committee of the Fed says “no problem”, they just want a Trillion dollars in US Treasury Bonds. The Treasury issues a Trillion dollars of debt at 5% for a year. The Fed creates a Trillion dollars out of thin air and credits the Treasury’s account the Trillion dollars. The Treasury spends the money into the economy paying for wars, social security, and groping TSA agents.

If one sees that at the very beginning of our system, before the very first dollar enters the economy, debt MUST be created. What is worse, only the principal is ever created. (In the scenario above, only the Trillion dollars.) But the 5% interest, the $50 billion, does not exist in the entire economy. The ONLY way that interest is paid for is for, more debt/money has to be created in excess of the principal and interest that was accrued the year before.This is why everyone and everything is in debt.

If we were to pay off that Trillion dollar debt, two very bad things would happen. 1. Because money is debt, when the debt is paid off, the money is destroyed. So there would not be a single freaking dollar circulating in the entire economy. 2. Because we paid off the Trillion dollar principal only, we are still in debt the interest on the loan of $50 Billion dollars. So now all we have accomplished is eliminate all the money in the country and we are still freaking in debt up to our eye balls.

If the debt is not created we enter into a deflationary death spiral that both bankers and politicians fear more than God. Bankers fear it because in deflation, debts get defaulted upon and they lose their money. Politicians fear it because less money equals less power. Inflation on the other hand is a blessing for both the banker and the politician. To the banker the more debt/money, the more profit. To the politician the more debt/money, the more power.

So how do I know for certain the debt ceiling is going to be raised? They passed the extension of the Bush Tax cuts. The only way for the government to continue this game is to print more money and that can only be done if they create more debt. The banker and politicians are in on this game. The Fed will act as the Lender of Last Resort and the Government will act as the Spender of Last Resort. This brutal marriage is a recipe for the mathematically inevitable hyper inflationary collapse of the dollar. The collapse will be the result of faster and faster creation of debt/money and the compounding interest will reach it’s hockey stick moment. Once big institutions and countries hear the music stop they will dump their dollars on the world market to get any tangible asset. From that point on you will get the chance to literally wipe your ass with $100 bills. (Mainly because you will not be able to afford toilet paper.)

What is the point of the “DEBT CEILING” if it is always moved?

The point is to fool Americans that there might be a limit to the amount of debt the government can rack up. Even more important than that, as this contrived drama will show, is to fool the American people that there is actual debate in Washington. The reality is that there is NO LIMIT to the amount of debt the government can and will rack up. And there is NO PARTY in Washington that is going to stop this gravy train. It is a false left/right paradigm of no real choice or freedom.

Both sides of the Democrats and Republicans are bought and paid for and they have sold Main St out for Wall St. (Watch Wall St Laughs at Main St.) The contrived drama of the debt ceiling between the Republicans and the Democrats is no different than a WWE wrestling match. Oh there will be smack downs, body slams, and a lot of good name calling but at the end of the day it is ALL FAKE. And the power behind the scenes calls all of the shots, so long as they fool the audience, the American people.

Let me suggest that they just eliminate the debt ceiling and cut to the chase. The collapse of the dollar is 100% mathematically inevitable. When the dollar collapses, it will be by far the single biggest event in the entire human history. Everything will change in every town across the globe. And yet most people have not even begun to think about it, much less prepare for it.

Those that did not see this coming, won’t know what to do when it gets here.

Fortunately for you reading this today, there is the Sons of Liberty Academy.

44 comments to The Contrived Drama of the Debt Ceiling

  • Great entry!

    Is it permissible to repost your articles on my site? I always post the full article unedited, with a link to the original article.

    Thanks in advance for your consideration and keep bashing the sheep in the head until they wake up.


    • admin

      “Men it is said go mad in herds and only come to their senses slowly and one by one.”
      Thank you for spreading the news.

  • cossack55

    The entire concept is so abstract that it is hard to absorb. Love the article. Must ponder it for a while, though my gut says “right on”. I just wish they would get to the end game before I have to replace aging body parts. I am not good at waiting.

  • rowdyroddyyates

    I agree that the ceiling will be raised but not because of your argument. Wasn’t the deficit eliminated and the debt started to be paid down just 10 years ago? Didn’t Andrew Jackson pay off the national debt during his presidency? Didn’t we pay down our debt after WWII and keep it there until the mid 70’s? Didn’t Canada pay down its debt and continues to do so even now?

    I see that we are in a debt spiral but it is just like a family that is living beyond its means. If they increase income and cut expenses they will recover. Again, I’m not saying anyone in DC will make the right choices because it means belt tightening, but it isn’t a matter of pure inevitable math.

    • admin

      You have made my day with this very well thought counter argument. You have proven to me that there are people who do put more thought into their world than the lame “They will never let that happen.” Thank you. Allow me to explain point by point why all those correct examples are not going to happen in this world.
      First, the deficit was reduced ten years ago. This was accomplished because a a myriad of factors that simply do not exist now.

      1. The 80 million Baby Boomers were “booming” the economy and more importantly creating tons of debt/money which provided no need for the Government to create the money. That period is also when they started to loot the Social Security fund and as a result we have $140 Trillion unfunded liabilities. Also more and more things went “off budget”.

      2.After WW2 the United States stood unscathed as Europe and Asia were in shambles. Our manufacturing was humming as the world rebuilt. Again a world wide consumer boom started and debt/money was created all over the world. We also made this debt in dollars as the dollar was now the world wide reserve currency. We are losing that status now. World War is a great way for countries to force debt on to others and seize real wealth. My prediction is that as it becomes very obvious that we cannot continue this game that we end up blaming China for all of our problems and go to war with them to try to shift power back to the west.

      3. Canada does not have the world’s reserve currency and does not even operate in the same reality our government does. The United States because of our super power status from World War 2. Our government can and does print unlimited money ad we essentially export our inflation overseas. Our world reserve currency status is because all oil is transacted in dollars. Japan, China, Germany, has to use dollars to buy their oil. So as the government creates more debt/money that effect is shifted overseas since there are more dollars overseas than there are in the US. Once we reach the mathematically inevitable tipping point those dollars will flood the commodity markets as countries dump their increasingly worth less dollars to buy real assets. This will add to the dollars in circulation in our economy and it is off to the races.

      4. Ah, Andrew Jackson my favorite president. This guy was a stud. And I pray that we have a politician that truly understands the banking power and how to destroy it by issues DEBT-FREE fiat money through the Treasury and not the Privately and Foreign Owned Federal Reserve. Andrew Jackson destroyed the second Privately and Foreign Owned Central Bank.

      “I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank. You tell me that if I take the deposits from the Bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out and, by the Eternal, (bringing his fist down on the table) I will rout you out.” – Andrew Jackson

      I would love to see a politician arise like this but I fear that we will have a hyperinflationary depression and World War before we see men like this come to the fore front.

      Again thank you for the reply and if you want to learn more go to

  • cossack55

    Solid cogent points, Admin. I agree that Jackson was a stud, I particularly liked his beating of fellow senators with his walking stick. Always thought it would help “fix” things by bringing back duelling.

  • Bruce C.

    A number of readers seem to think that the collapse of the dollar is NOT mathematically inevitable. I disagree. There are several things to consider. First of all, there is the automatic mandated annual budget increases on everything. The current annual budget is approximately $4T so if inflation is at 2% then the budget must increase by about $80B next year alone. Secondly, the budget also is increasing due to rising entitlement costs. Approx. 10,000 boomers reach retirement age each day now, which is about 3.6 M per year. If each receives $1,250/mo. in SS benefits then that is an additional $54 B per year. Medicare expenses will also increase for many reasons, the increase in additional recipients in particular. If MC pays approx. $5,000 per year on average to each patient then that would be an additional $18B for next year. ($5,000 x 3.6M new eligible boomers). Thirdly, the payroll tax deduction this year is expected to reduce income taxes by about $100B, which means that $100B must be borrowed instead of exhorted from wage earners. Fourthly, each year a portion of the $14T in debt must be refinanced as the Treasury bonds come due, and at steadily rising interest rates. Therefore, interest on our debt is expected to be about $100B higher this year than last year. If you add up all the increases you get about $350 B.

    Now, the new Republicans are proud to announce that they may have found about $60B in spending cuts that they plan to insist upon before agreeing to an increased debt ceiling. That simply means that the deficit will increase this year by only $290B (instead of $350B). However, those $60B in spending cuts will lower GDP and thus income taxes this year, so the deficit will likely increase by over $300B this year. That also means that in order to keep the deficit the same as in 2010, which was $1.25T, spending for next year has to decrease by at least $400B. That is literally 10% of the entire US debt level of $14T. Besides the fact that it is absolutely politically impossible to reduce spending by that amount this year (in my opinion), it would have to continue for at least 3 more years as well. That is way too much way too fast. It would destroy the entire US economy. Ain’t gonna happen. Instead, this train is going to keep on truckin’ until the financial markets put it out of its misery. In the meantime, position yourself accordingly.

  • Parts of of what I’m reading are over my head, though for the most part I concur; a lot of it resonates with stuff Ron Paul has been saying — who meanwhile has been appointed as overseer of the treasury, yes? What is the author’s opinion on that affair (if any)?

    As a second note: I read in a headline today (I didn’t have time to catch the full article; shame on me!) that Virgina is considering a backup plan for their local currency, with gold? I’m guessing it will just be, again, paper, and not gold. Any thoughts?


    • Silver Shield

      Having Ron Paul in charge of the sub committee is a huge development. But at the end of the day he will just be proving commentary of sanity as Rome burns. The rot is so bad that there is no reforming it and it will die an awful death. It will be up to those like Ron Paul and many other who saw this all coming to pick up the pieces. My fear is that the parasites that created this mess will use this further consolidate power and destroy the rest of the Constitution.

      I like the idea of the states asserting their constitutional rights and self interest. It is a great first step but we have a long way to go. Virginia should consider using their taxes and pensions to invest in gold AND silver. They should encourage their citizens to be buying them also. If this does not happen there will not be enough physical metal in Virginia to make the system work. Right now only the wealthy have any gold.

  • Absurdity

    While your thoughts seem to make logical sense there is a flaw. When the government wants money it sell bonds and when the bonds are bought the government gets the money. I don’t think the Fed is involved in the bond sales as far as I am aware they are done in the basement of the White House. So whatever those bonds bring on the open market is what the government gets so they are getting money from those that buy the bonds and as a result have to pay back the premium. So no money is created and no money is destroyed.

    But when the Fed buys back bonds then we don’t really know what is happening. We can presume that the Fed is giving the government money but is it truly at open market rates or ???. And when those bonds are paid back the interest would be technically given to the Fed which turns around and hands it back to the government via the Treasury as a profit from operations – so whatever they declare as profit is questionable as they could declare anything within some limits which would raise suspicion. So the government is technically paying themselves back so no loss, no gain. Similar to how it works when one borrows from their 401k; they pay back interest to themselves.

    It’s when the Fed turns on the printing presses the value of the dollars drops because you have more dollars for the same amount of production.

    When a private borrower goes to the bank then the bank creates the money on a ledger (they’ve created it out of thin air) and when it gets paid back by the borrower is when it is created. Where it becomes a problem is when the borrowers don’t pay back their loans and the depositors come looking for their money and as jobs fail to pay and people are laid off the banks get less back and start falling short on money for their depositors….so foreclosures ensue and when they don’t happen fast enough to keep up with the depositors demand they bank then resorts to their insurer which is the FDIC or NCUAA (I think for Credit Unions) when they run out of money then I’d imagine they go to the Fed and as a result increase insurance rates to help cover the cost of borrowing from the Fed (this would be when the Fed is creating money that is not inflationary or out of thin air) although they may just hand them freshly printed money we cannot be sure how they do it but either way it would not deflate the value of the dollar because you’re replacing what should have existed had everything gone as planned.

    The banks also invest their reserves into the market which is why they are in such bad shape. Not only did their loans go belly up but because those loans caused the market to collapse they got a double whammy thanks to Bill Clinton who allowed them to get involved in these investments which was what a happened back in the S&L crisis. How quickly we like to forget. And the reason the Credit Unions are not in as bad as shape is because they were limited in what they could invest in and so they didn’t fall as far as the banks and their proprietary trading.

  • contemporary

    What it really boils down to is the productivity of the population, which determines the output (GDP) per person. This ratio in turn determines the credit worthiness of our nation and thus the amount of interest the market is willing to pay for our bonds. As long as there is a balance between GDP per capita and the amount of new money created (M3) each year, there is a balance. The problem comes when GDP per capita grows very slowly, but the amount of new money created is large compared to historical values. It is no coincidence that the US central bank stopped reporting the size of the M3 in 2006, claiming “too much overhead cost” to calculate this statistic.

    • Silver Shield

      People cannot be productive when the exponential curve of debt and interest take their life’s energy and capital.
      The game is rigged and they are lying.

  • an ant

    I deeply appreciate the people & website here!
    Keeping our conscious perceptions to minimum has been contrived to keep us dumbed down. Time to “get smart quick.”

    “The game is rigged and they are lying….”

    “Everybody knows… the captain lied…”

    consciously or subconsciously. We KNOW.

    If more of us would just allow that knowing to come up for some needed sunlight & fresh air. Best to be aware, alert & able concerning our circumstances today.

    As Brian Gerrish (from Plymouth England, UK repeatedly says; Everyone can feel things aren’t working here in England anymore. I say, it’s like that here in states also. I see it in people’s eyes, and increasing nervousness. More bi-polar type thinking and behavior. This isn’t a bad dream, it’s our experience of living thru something we never have before. It’s best not getting stuck and loaded down w/that heavy, cloudy feeling for too long. Is why so many are on psychotic drugs. They’re fighting against being more conscious. They’re numbing subconscious downer feelings… and this does more harm than good. Drugs are not the solution. Facing reality with clear mindfulness is where, when & how solutions are found.

    God IS our liberty. We can only hear His repeatedly whispered message using our reclaimed & focused sober mindfulness: “Behind every problem lies a thousand solutions.”

    TPTB have must-need of us to believe the opposite. Look at all the plans over multiple generations they’ve contrived in order to convince us at this point in time– we have no choices, no solutions. BS! This ant says!

  • The Global Debt Crisis: How We Got in It and How to Get Out
    by: Ellen Brown, Truthout
    Monday 6 June 2011

  • Matt

    Hello silver shield, I know you and this site always recommend purchasing silver and gold. I have quite a few questions regarding this.
    Do you know of any reliable sites/locations to purchase gold/silver?
    What is the best way to make sure that what I am purchasing is actually gold/silver, basically what scientific tests could I personally do on the substance to make sure it is genuine?

  • Mario A. C.

    Andrew Jackson may have been good against the central bank, but he was a complete Ahole when it came to Native Americans and there forced removal from their lands. Besides that fact, Kennedy was a man who wished to do away with the power of the Feds by printing money (silver certificates) from the US Government, not the Fed Reserve. A little while later, while in Dallas, BAM!, with Johnson the evil whimp gaining Kennedy’s office! The Feds loved it. The Vietnam war was not ended when Kennedy wanted it ended in 1965, which Johnson made sure would continue on well after.

    Now we have Bernanke and Geitner playing patty cake, and all of congress pretending that we have a debt ceiling crisis. When will we wake up and take back our Nation from these shysters? Perhaps, after WW3, if there is anything left to salvage?

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    • Silver Shield

      @Free News
      People are in denial and fear what they do not understand,
      This information will be more popular than Lady Gaga after the collapse of the dollar.

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