Google Now Has More Cash Than The U.S Government

In the year 1517, one of the most important innovations in financial history was invented in Amsterdam: the government bond.

It was a pretty revolutionary concept.

Governments had been borrowing money for thousands of years… quite often at the point of a sword.

Italian city-states like Venice and Florence had been famously demanding “forced loans” from their wealthy citizens for centuries.

But the Dutch figured out how to turn government loans into an “investment”.

It caught on slowly. But eventually government bonds became an extremely popular asset class.

Secondary markets developed where people who owned bonds could sell them to other investors.

Even simple coffee shops turned into financial exchanges where investors and traders would buy and sell bonds.

In time, the government realized that its creditworthiness was paramount, and the Dutch developed a reputation as being a rock-solid bet.

This practice caught on across the world. International markets developed.

English investors bought French bonds. French investors bought Dutch bonds. Dutch investors bought American bonds.

(By 1803, Dutch investors owned a full 25% of US federal debt. By comparison, the Chinese own about 5.5% of US debt today.)

Throughout it all, debt levels kept rising.

The Dutch government used government bonds to live beyond its means, borrowing money to fund everything imaginable– wars, infrastructure, and ballooning deficits.

But people kept buying the bonds, convinced that the Dutch government will never default.

Everyone was brainwashed; the mere suggestion that the Dutch government would default was tantamount to blasphemy.

It didn’t matter that the debt level was so high that by the early 1800s the Dutch government was spending 68% of tax revenue just to service the debt.

Well, in 1814 the impossible happened: the Dutch government defaulted.

And the effects were devastating.

In their excellent book The First Modern Economy, financial historians Jan De Vries and Ad Van der Woude estimate that the Dutch government default wiped out between 1/3 and 1/2 of the country’s wealth.

That, of course, is just one example.

History is full of events that people thought were impossible. And yet they happened.

Looking back, they always seem so obvious.

Duh. The Dutch were spending 68% of their tax revenue just to service the debt. Of course they were going to default.

But at the time, there was always some prevailing social influence… some wisdom from the “experts” that made otherwise rational people believe in ridiculous fantasies.

Today is no different; we have our own experts who peddle ridiculous (and dangerous) fantasies.

Case in point: this week, yet another debt ceiling debacle will unfold in the Land of the Free.

You may recall the major debt ceiling crisis in 2011; the US federal government almost shut down when the debt ceiling was nearly breached.

Then it happened again in 2013, at which point the government actually DID shut down.

Then it happened again in 2015, when Congress and President Obama agreed to temporarily suspend the debt ceiling, which at the time was $18.1 trillion.

That suspension ends this week, at which point a debt ceiling of $20.1 trillion will kick in.

There’s just one problem: the US government is already about to breach that new debt limit.

The national debt in the Land of the Free now stands at just a hair under $20 trillion.

In fact the government has been extremely careful to keep the debt below $20 trillion in anticipation of another debt ceiling fiasco.

One way they’ve done that is by burning through cash.

At the start of this calendar year in January, the federal government’s cash balance was nearly $400 billion.

On the day of Donald Trump’s inauguration, the government’s cash balance was $384 billion.

Today the US government’s cash balance is just $34.0 billion.

(Google has twice as much money, with cash reserves exceeding $75 billion.)

This isn’t about Trump. Or even Obama. Or any other individual.

It’s about the inevitability that goes hand in hand with decades of bad choices that have taken place within the institution of government itself.

Public spending is now so indulgent that the government’s net loss exceeded $1 trillion in fiscal year 2016, according to the Treasury Department’s own numbers.

That’s extraordinary, especially considering that there was no major war, recession, financial crisis, or even substantial infrastructure project.

Basically, business as usual means that the government will lose $1 trillion annually.

Moreover, the national debt increased by 8.2% in fiscal year 2016 ($1.4 trillion), while the US economy expanded by just 1.6%, according to the US Department of Commerce.

Now they have plans to borrow even more money to fund multi-trillion dollar infrastructure projects.

Then there’s the multi-trillion dollar bailouts of the various Social Security and Medicare trust funds.

And none of this takes into consideration the possibility of a recession, trade war, shooting war, or any other contingency.

This isn’t a political problem. It’s an arithmetic problem. And the math just doesn’t add up.

The only question is whether the government outright defaults on its creditors, defaults on promises to its citizens, or defaults on the solemn obligation to maintain a stable currency.

But of course, just like two centuries ago with the Dutch, the mere suggestion that the US government may default is tantamount to blasphemy.

Our modern “experts” tell us that the US government will always pay and that a debt default is impossible.

Well, we’re living in a world where the “impossible” keeps happening.

So it’s hard to imagine anyone will be worse off seeking a modicum of sanity… and safety.

Photo: dog97209 Obama’s Home Washington DC via photopin (license)

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About the Author: Sovereign Man

  • JohnDille

    YEAH… REPUBLICANS HAVE MADE A MAJOR POWER GRAB THANKS TO THAT SUPREME COURT RULING! AND THE WONDERFUL THING ABOUT IT IS… MOST OF THE BILLIONS THEY ARE NOW SPENDING IS SO WELL HIDDEN THAT NO ONE KNOWS WHERE THE MONEY THAT REPUBLICANS ARE SPENDING EVEN COMES FROM… OR WHERE MOST OF IT GOES!!! REPUBLICANS HAVE MADE IT POSSIBLE FOR THE COMMUNIST CHINESE AND MEXICAN DRUG CARTELS AND VLADIMIR PUTIN TO CONTROL THE UNITED STATES… AND NO DOUBT, THOSE CRIMINALS DO CONTROL MUCH OF WHAT IS HAPPENING!!! HOW ELSE CAN ANY RATIONAL PERSON EXPLAIN THE RISE OF DONALD TRUMP??? OR THE RISE OF AND THE POWER OF THE NRA, FOR THAT MATTER!!! THE DRUG CARTELS LOVE THE EASY ACCESS TO GUNS THAT THE NRA HAS GIVEN TO THEM!!! AS DO GANGSTERS AND MOBSTERS ALL OVER THE USA!!!

  • JohnDille

    YEAH… THAT REPUBLIC STUFF WORKED PRETTY WELL FOR THE ROMANS, DIDN’T IT!!! GIVING ALL THE REAL POWER IN A NATION TO A HANDFUL OF GREEDY RICH AHOLES WAS… AND WOULD BE… SUCH A CHRISTIAN THING TO DO!!! AND IT ALL DEVOLVED INTO VICIOUS TYRANNY AND ENDLESS AND BLOODY INFIGHTING, BECAUSE ALL THOSE RICH AHOLES KEPT FIGHTING EACH OTHER… AND IGNORING THE REAL NEEDS OF THE NATION AND THE VAST MAJORITY OF ITS PEOPLE!!! JUST LIKE THE RICH REPUBLICANS OF OUR DAY INSIST ON DOING!!!

  • JohnDille

    ANY COMPANY WITH MORE THAN ABOUT 10 TO 20 WORKERS IS NOT A SMALL BUSINESS!!! TO SUPPORT THAT MANY WORKERS, A COMPANY WOULD HAVE TO HAVE GROSS REVENUES OF AT LEAST 5 MILLION DOLLARS… WHICH WOULD PUT THAT BUSINESS SOLIDLY IN THE TOP 10% OF ALL BUSINESSES, RANKED BY REVENUES! BY THAT MEASURE… SMALL BUSINESSES ACOUNT FOR NO MORE THAN 5 TO 10% OF ALL EMPLOYMENT… AND MOSTLY… THOSE EMPLOYEES ARE THE BUSINESS OWNER HIM OR HERSELF… PLUS MAYBE A FAMILY MEMBER OR TWO!!! MOST SMALL BUSINESSES ARE JUST PEOPLE WHO ARE TOO LAZY TO WORK FOR A LIVING, AND WHO EFFECTIVELY GET MOST OF THEIR INCOME FROM TAX WRITE OFFS!!! FEDERAL TAXES COMING FROM SMALL BUSINESSES ARE TRIVIAL, MOSTLY… AND DO NOT SHOW UP IN BUSINESS STATISTICS, AT ALL… BECAUSE THOSE DATA ARE FILED WITH THE INDIVIDUAL TAX RETURNS OF THOSE WHO OWN THE BUSINESSES!!! OF THE 35 MILLION OR SO BUSINESSES IN THE USA… THE MEDIAN IS A LITTLE OVER 100,000 IN GROSS REVENUES… AND NET INCOME FOR THE OWNER OF LESS THAN 10,000!!! WHICH MEANS THAT… MOST TRULY SMALL BUSINESS OWNERS WOULD BE BETTER TO GET A PART TIME JOB AT MCDONALDS… AND TO HAVE A HOBBY TO MAKE USE OF THEIR FREE TIME!!! THOSE NUMBERS ARE FROM THE IRS… WHICH HAS FAR FAR FAR MORE AND MUCH BETTER DATA ON BUSINESS THAN THE CENSUS BUREAU DOES… AND THE IRS GETS ITS DATA DIRECTLY FROM THE BUSINESS PEOPLE THEMSELVES… WHILE THE CENSUS BUREAU RELIES ON SAMPLED DATA… MOST OF WHICH COMES FROM THE IRS TO BEGIN WITH!!! EXCLUDING THE DATA DERIVED FROM THE BUSINESS CENSUS TAKEN EVERY 5 YEARS, OF COURSE!!!

  • cars1971

    Everything went down the toilet when they removed the limitations of PAC contributions.

  • cars1971

    Most businesses are SMALL and will greatly benefit from lower taxes.

    American Business is Overwhelmingly Small Business
    In 2012, according to U.S. Census Bureau data, there were 5.73 million employer firms in the U.S. Firms with fewer than 500 workers accounted for 99.7 percent of those businesses, and businesses with less than 20 workers made up 89.6 percent. Add in the number of nonemployer businesses – there were 23.0 million in 2013 – then the share of U.S. businesses with less than 20 workers increases to 97.9 percent.

  • Dr. Michael Cesar

    I agree with you. We were established as a republic, which is superior to a democracy. But the ‘wolves’ in sheep’s clothing (greedy Democrat politicians, media, and government run schools) have slowly transformed us into a functional democracy. Therein lies the problem. And we are likely never to return to our constitutional republican foundation before the Lord’s return.

  • JohnDille

    NEW STUDY: THE 35 PERCENT CORPORATE TAX RATE IS A MYTH FOR MANY PROFITABLE FORTUNE 500 COMPANIES

    258 Fortune 500 Companies Were Consistently Profitable Over an 8-Year Period and Paid a 21.2 Percent Average Effective Tax Rate

    “This study is a long-term, unprecedented examination of corporation taxes paid—or not paid—by the nation’s biggest, most profitable firms,” said Matthew Gardner, an ITEP senior fellow and lead author of the report. “It reveals that many of the big corporations that are lobbying for a lower corporate tax rate to be more ‘competitive’ already pay substantially less than the 35 percent statutory rate.”

    The study examines eight years of data on federal income taxes paid by Fortune 500 firms that provided sufficient, reliable information in their financial reports to allow calculation of their effective U.S. and foreign tax rates. It excludes companies that had a loss in any year between 2008 and 2015. Two-hundred and fifty-eight companies were profitable in every year of the study. Although the statutory corporate tax rate is 35 percent, collectively, these companies paid an average effective rate of 21.2 percent.

    Among the report’s key findings:

    • 100 companies enjoyed at least one year in which their federal income tax was zero or less

    • 24 companies paid zero taxes in four out of eight years

    • 18 companies (including General Electric, International Paper, Priceline and PG&E) paid no federal income tax over the eight-year period.

    • Collectively, the 258 corporations enjoyed $513 billion in tax breaks over the last eight years. More than half of those tax breaks, $277 billion, went to just 25 of the most profitable corporations.

  • cars1971

    The USA is a Republic not a democracy.

    A distinct set of definitions for the word republic evolved in the United States. In common parlance, a republic is a state that does not practice direct democracy but rather has a government indirectly controlled by the people.

  • JohnDille

    SO… BACK IN 1801… WHEN THE WORLD ECONOMIC SYSTEMS WERE A SMALL FRACTION OF 1% OF WHAT THEY ARE TODAY… AND WHEN THE WORLD POPULATION WAS NO MORE THAN 10 OR SO PERCENT OF WHAT IT IS TODAY…. AND WHEN THE BEST TECHNOLOGIES OF THAT ERA HAVE ALL BEEN OBSOLETE FOR AT LEAST 100 YEARS AND MORE… AND IN AN ERA WHEN NOT EVEN ONE SIGNIFICANT LIBERAL DEMOCRACY EXISTED OR HAD EVER EXISTED IN ALL OF HUMAN HISTORY… WHAT HAS THAT ALEXANDER TYLER FELLOW TO TEACH US??? MORE RIGHT WING CONSERVATIVE SELF SERVING LIES AND BALONEY AND NONSENSE??? YEP!!! AND NOTHING MORE THAN THAT!!! AS FOR THE BIBLE… WHAT HAS A BOOK THAT WAS WRITTEN 2 TO 3,000 YEARS AGO HAVE TO SAY ABOUT MUCH OF ANYTHING THAT IS RELEVANT IN OUR DAY??? LET’S SEE NOW… IN VERSE??? THE BOOK OF??? IT TALKS ABOUT NUCLEAR ENERGY… AND NUCLEAR WEAPONS!!! IN VERSE???? IN THE BOOK OF ????, IT TALKS ABOUT DEMOCRACY!!! IN THE VERSE???, IN THE BOOK OF??? IT TALKS ABOUT MODERN SCIENCE!!! AND MOST RELEVANT HERE, IN VERSE??? OF BOOK????, IT TALKS ABOUT HOW A MIODERN ECONOMIC SYSTEM SHOULD OPERATE!!! IN OTHER WORDS, THE BIBLE IS MOSTLY JUST INTERESTING LITERATURE… AND NOT A WHOLE LOT MORE!!! I MYSELF GREATLY PREFER THE WRITINGS OF MARK TWAIN!!! THAT GUY WAS FAR MORE INSIGHTFUL AND WISE AND COMPASSIONATE THAN MOST OF WHAT IS TO BE FOUND IN THE BIBLE… AND TWAIN WAS A LIBERAL… FOR HIS DAY, ANYWAY… TO BOOT!!! MOSTLY, THE BIBLE IS JUST RIGHT WING CLAP TRAP, MIXED IN WITH A LOT OF SELF SERVING POLITICAL FICTION!!! EXCEPT FOR THE TEACHINGS OF JESUS, OF COURSE!! JESUS IS AND LONG WILL BE THE WORLDS MOST FAMOUS LIBERAL!!! WHICH SHOULD BE NO SURPRISE… BECAUSE THE SECULAR… SOCIAL GOSPEL… TEACHINGS OF JESUS ARE AMONG THE MOST IMPORTANT COMPONENTS OF THE ROCK SOLID FOUNDATIONS OF MODERN LIBERALISM!!! TOO BAD THAT THE PHONY SELF RIGHTEOUS CHRISTANS OF THE RELIGIOUS RIGHT ARE TOO IGNORANT OF THEIR OWN RELIGION TO EVEN KNOW THAT!!! I GUESS SATAN HAS MISLED THEM ALL… JUST AS HE HAS MISLED ALL CONSERVATIVES!!! SATAN WAS/IS A MASTER MANIPULATOR AND LIAR AND… THE PENULTIMATE CONSERVATIVE!!! THE REPUBLICANS OF TODAY HAVE SUCH AN AUGUST ROLE MODEL… SATAN HIMSELF!!!

  • JohnDille

    Well, in 1814 the impossible happened: the Dutch government defaulted. And the effects were devastating. In their excellent book The First Modern Economy, financial historians Jan De Vries and Ad Van der Woude estimate that the Dutch government default wiped out between 1/3 and 1/2 of the country’s wealth. SINCE THE TOP 5% OF ALL AMERICANS… ECONOMICALLY SPEAKING… OWN AROUND 75 TRILLION OF THE NATIONS 93 TRILLION IN NET WORTH…JUST THE TOP1% OWN MORE THAN HALF OF ALL THAT… AND OWN NEARLY ALL OF THE NATIONS FINANCIAL ASSETS… THEY WOULD LOSE ABOUT A QUARTER OF THEIR NET WORTH IF THE FEDERAL GOVERNMENT JUST WALKED AWAY FROM ITS DEBTS! ACTUALLY… QUITE A BIT LESS… BECAUSE A THIRD OF ALL FEDERAL DEBT IS MONEY THE GOVERNMENT OWES TO ITSELF… TO AGENCIES LIKE THE SOCIAL SECURITY TRUST FUND, ETC ETC ETC ETC! BUT… EVEN SO… IF THE RICH FOLKS AND GIANT CORPORATIONS THAT OWN MOST OF AMERICA’S DEBT WERE TO TAKE THAT BIG OF A HIT, IT WOULD PROBABLY THROW THE USA INTO A DEPRESSION… SO THAT MORE THAN HALF OF THEIR TOTAL NET WORTH WOULD JUST DISAPPEAR… AND EVEN THE RICHEST OF REPUBLICANS WOULD HAVE TO GO OUT AND GET ACTUAL REAL JOBS… AND DO ACTUAL REAL WORK… FOR A LIVING!!! HORRORS!!! MAYBE TRUMP AND FRIENDS OUGHT TO SHOCK THOSE RICH REPUBLICANS AWAKE… BY HAVING TRUMP SEEK TO …RE-NEGOTIATE… THE FEDERAL DEBT!!! ALL OF A SUDDEN, IT WOULD MAKE RICH REPUBLICANS REALIZE THAT WE NEED TO GO BACK TO THE OLD DAYS… WHEN DEMOCRATS RAN THINGS!!! DEMOCRATS TAXED AND TAXED… AND SPENT AND SPENT… IN THE CLASSIC WORDS OF RONALD REAGAN!!! BUT, FOR THE LAST 40 YEARS OR SO, WE HAVE FOLLOWED THE REPUBLICAN MODEL… THE GOVERNMENT BORROWS AND BORROWS AND BORROWS AND BORROWS… AND SPENDS MOST OF WHAT IT BORROWS… TO PAY INTEREST ON WHAT IT HAS BORROWED!!! REPUBLICANS LOVE THIS MODEL… WHICH IS WHY THEY HAVE INCREASED THE FEDERAL DEBT 20 FOLD… JUST SINCE REAGAN TOOK OFFICE…. BECAUSE IT ALLOWS RICH REPUBLICANS… MOSTLY…. TO KEEP A TRILLION DOLLARS A YEAR… OR THEREABOUT.. THANKS TO REAGANS AND BUSH JUNIORS TAX CUTS, MOSTLY FOR THE RICH… THEN LOAN THAT SAME MONEY BACK TO THE GOVERNMENT… TO REPLACE THE REVENUES LOST TO THOSE TAX CUTS… AND TO COLLECT RELENTLESSLY COMPOUNDING INTEREST ON THOSE LOANS!!! IF WE WERE DOING THINGS THE OLD DEMOCRATIC WAY… THE FEDERAL DEBT, TODAY… WOULD PROBABLY BE WELL UNDER 4 TRILLION…. AND THE MASSIVE SHIFT OF INCOME AND WEALTH FROM THE VAST MAJORITY OF US… TO THE RICH… WOULD NEVER HAVE HAPPENED!!! ALL OF WHICH REPUBLICANS ABSOLUTELY DO NOT WANT ANY OF US TO KNOW… OR FOR GUYS LIKE ME TO EVEN MENTION!!! AND WHAT REALLY GALLS REPUBLICANS IS… WHAT I HAVE JUST SAID… IS TOTALLY TRUE… AND FAIRLY EASY TO PROVE… IF YOU CAN DO EVEN 4TH GRADE MATH!!! WHICH… SADLY… WORKING CLASS PUPPET REPUBLICANS SEEM TO BE INCAPABLE OF DOING!!! HECK… EVEN RICH REPUBLICANS SEEM TO BE INCAPABLE OF DOING EVEN SIMPLE MATH, OR MAKING USE OF COMMON SENSE… BECAUSE IF THEY WERE SMART ENOUGH TO DO THAT… THEY WOULD NEVER IN A MILLION YEARS FOLLOW THE REPUBLICAN MODEL… BECAUSE THE REPUBLICAN MODEL CAN ONLY END IN DISASTER AND ECONOMIC, SOCIAL, AND POLITICAL COLLAPSE!!! AND IT IS NOW ALMOST TOO LATE TO GO BACK TO THE OLD DEMOCRATIC MODEL… SO WE ARE PROBABLY DOOMED!!!

  • Dr. Michael Cesar

    In 1801, an author named Alexander Fraser Tytler wrote in his book ‘Elements of General (world) History’ : “Democratic forms of government have a natural evolution from initial virtue toward eventual corruption and decline. The superior classes (i.e. elected government officials) maintain influence over their partisans (i.e. voters) by the most shameful corruption and bribery, of the which means were supplied alone by the plunder of the public money.” Other writers have affirmed this notion in the oft quoted maxim: “A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist until the time that voters discover that they can vote themselves generous gifts from the public treasury (e.g. “entitlements” like welfare, medicaid, utility subsidies, free cell phones…). From that moment on (i.e. FDR’s ‘new deal’ 1930’s), the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.” The Holy Bible predates these modern prophets and warns of endtime chaos. Thankfully, Isaiah promises : “The Lord shall set his hand the second time (i.e. His second coming) to recover the remnant of his people and the government shall be upon his shoulder and he will rule with judgment and justice for ever.” Amen. President Trump may try to help a little bit, but only the Lord Jesus Christ can fix this mess. Turn your hearts to the Saviour.