Mark McHugh

Elmo Tries to Explain The National Debt (Again)

In Humor, National Debt on Tuesday, April 17, 2012 at 9:41 pm

Update: This is one of those pieces that’s traveled far and wide.  Thanks to everyone who helped make that happen: Zerohedge, Wall Street examiner, The Daily Crux, Financial Survival Network,  Monty Perelin, Azizonomics,  Playing the Ponzi, and everyone else.

My original content (99% of what’s here) is free to anyone.   Take it in good health.

Muppets have received a lot of bad press since Greg Smith realized that he is not, in fact, a one-percenter.  Fortunately Elmo’s back to reclaim his rightful place in the financial world:  Making the seemingly incomprehensible  comprehensible while politely pointing out what should be obvious to everyone not in diapers.  That’s not so easy when the economic views espoused by everyone from central bankers to TV talking heads can only be accurately described as infantile.

It’s hard to get the right answer when you’re counting the wrong stuff, and maybe that’s why Wall Street’s minions never discuss income per capita.  It’s a meaningful measure of economic strength that ordinary Americans can relate to.  Well, that and it exposes “pro-growth” policies for what they actually are:  An excuse to loot the country in broad daylight by focusing on GDP, where government money, no matter how horribly misspent, shows up in the “win” column.  Strip away that illusion and it becomes crystal clear that their path to prosperity is our highway to hell.

In case you haven’t noticed, incomes (not GDP) pay mortgages and support small businesses.  Increasing the National Debt by a can you say “parabolic?” 54% in the last 42 months hasn’t budged income per capita in nominal terms.  If you adjusted for inflation, you’d find that Americans are actually about 12% poorer today than they were in 2006.   We’re not “growing” our way out of this, we’re just going deeper and deeper into hock, courtesy of a government with about as much fiscal discipline as crack-whores with a stolen credit card.  Here’s the thing: It’s your credit card, so maybe you should understand how much they’re spending:

Just to be clear, we’re talking about $400 per citizen per month in new charges alone, month after month after month.  Here’s what me and Elmo can’t figure out: Why would attempting to break this spiral be labeled Class Warfare?  Of course you don’t have to believe  us, there’s far more distinguished schools of thought out there:

Fun facts:

    • From 1947 to 1974 US income per capita grew more than National debt per capita 25 times.
    • In the last 30 years, National debt per capita has grown more than income per capita 24 times.
    • The last time income per capita grew more than national debt per capita was 2001.
    • Ben Bernanke arrived at the Federal Reserve in 2002.


I’m going to ask Elmo to leave before this gets ugly…



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  13. What else can one expect from the Bankster’s Bankster?

    When he dies, his epitaph will read: I never met a bubble I didn’t like, and I still have an economic record unblemished with success.

  14. Nice..

    Thanks, Kevin

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  16. I like your thought provoking ideas, but blaming Bernanke for all this is short-sided to say the least. The reason the debt exploded at the beginning of this century is simple: President Bush spent hundreds of billions in two wars while cutting taxes. Ben Bernanke did not set the US budget, the president and Congress did.

    I am sure Elmo will remember Aesop’s Fable, “The Ant and the Grasshopper,” in which a grasshopper spends all summer eating and living it up while the ant continues to work and prepare for the winter. The US failed to plan for the winter and Bernanke has nothing to do with it. Now it’s time to pay the rather large bill…

  17. Thanks for the comment, Ivan

    I must respectfully disagree with the sentiment however. The Fed has been the great enabler of wanton US government spending. Prove yourself to be fiscally irresponsible anywhere else in the world and you are punished by increasing interest rates, right? When you do the same in Washington, you are rewarded with ever-lower interest rates and a completely inexplicable, insatiable demand for your debt. Why?

    Because the Fed (not the treasury) manages the tracking of US debt. I challenge you to find a statement by a Chinese official verifying that they in fact hold $1.2 Trillion in US debt. It is only through the active and never-ending intervention by the Fed that the US government can borrow for ten years at 1.5%. If rates reflected the reality of our situation, we’d be borrowing at 15%, and that would fix things real fast (including Social Security).

    Take a good look at the Treasury’s bulletin:

    The Fed runs the fraud that keeps this broke, blood-thirsty government flush with cash. The Fed helps perpetuate the notion of “growing out of” the debt hole, while digging it deeper.

    Hope this makes sense.



  18. Only a moron would say that Bush LOWERED taxes this century.

    According to the Treasury department (which operates the Internal Revenue Service), income tax collections INCREASED after 2003. In fact, for the year 2005, they already passed by the highest single-year amount collected during Clinton’s terms as president! Check with the Treasury’s own data for yourself (I don’t know how to link it to this response); they publish this data every year. Only after 2008 did tax collections abate, and this was not due to Bush’s “tax cuts,” which did not happen; it was due to the bursting of the housing bubble. And since you seem to enjoy placing blame on people, I’ll give you two names to hang the blame on: Barney Frank and Chris Dodd, the authors of Frankendoodie (or as the Democrat sycophants will call it, Dodd-Frank). In fact, Bill Clinton could be connected easier to this problem than could GWBush; it was his Attorney General, under his direction, that prosecuted banks for NOT making defective loans!

    Any other assertions you want me to correct your opinions on, Ivan?

  19. A great example of how people can no longer debate any issue in this country without calling each other names!

  20. The insults were uncalled for, Kevin.

    It shouldn’t surprise anyone that tax revenues can increase when deficit spending explodes. Some of the borrowed money trickles back into the governments coffers. Some, but not much.

    An idea that people need to get comfortable with is that the term “tax cut” actually means “deficit increase,” becuase any cut that is not offset with a spending cut, is undeniably a deficit increase. We should be asking our politicians, “Do you favor keeping the Bush deficit increases?” or “Who asked Obama to increase the Social Security deficit?” Neither party has any desire to decrease the deficit. Deficit spending gives them the power to hand out money to whomever they wish without actually collecting it from the people they want to pay.

    Thomas Jefferson (my favorite founding father) wrote:
    I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government; I mean an additional article taking from the Federal Government the power of borrowing. I now deny their power of making paper money or anything else a legal tender. I know that to pay all proper expenses within the year would, in case of war, be hard on us. But not so hard as ten wars instead of one.

    I’m with Jeff on this. I’m sick of people telling me that what they want is so goddamn important that they should be allowed to put others in hock for it. I don’t care if its for battling terrorists, money for education, money to support the housing market, money to bail out wreckless, greedy bankers, money for clean energy, money to rebuild infrastructure, money for a space program etc. etc. etc. If it so important, figure out who’s paying TODAY, and if you can’t do that congressman, guess what? YOU don’t get paid and we take away all your other stuff to boot.

    It bums me out that there’s still so many people who think there’s a “good” party and a “bad” party. It’s pick your poison, that’s all.

  21. Mark: Looking back, I agree that the insults were unnecessary. I was too passionate about making a point, and this may have obfuscated the issue.

    I retract the name-calling, but I still stand by my point with Ivan: If the revenue coming in to the Treasury increases, then there is no cut involved. Instead, it’s just another way of clouding the debate. People are sensitive to the terms of “increase” and “cut,” but they don’t look behind the curtain.

    My last post was getting off the main point of the post: That Ben Bernanke was more responsible for the deficit spending that occurred than even he is willing to admit. And that over the last 100 years, the Federal Reserve has been an enabler of this problem and at the same time not willing to confess to its sins.

  22. That’s much better, Kev.

    I myself am amazed at how little blame Bernanke gets. He’s boldly gone where even Greenspan wouldn’t, yet most people seem to give him a pass because there’s someone else they want to demonize more.

  23. Is this using ‘Net’ debt, i.e. minus a few Trillion of financial ‘assets’ the govt now owns? Also, Debt held by the public or including intra-govt ious.

    btw, loved the gold is a barbeque relish piece.

  24. The data used in the chart is from Treasury’s “debt to the penny” site. Total public debt outstanding.

  25. I’m new to your blog Mark but the couple of articles I’ve read are dynamite. When a critical mass of Americans wake-up and realize that the elite robber barons, Rockefeller, Rothschild, Federal Reserve Bank, International Zionist Jews, NWO, et al are the ones behind the decline in our wealth and freedom, NOT the Left-Right political paradigm that has divided our Nation for far too long, then shall we be able to rise up and throw these tyrants off! I

  26. Thank you Rumplemeister, but I really don’t ascribe to the idea that the groups you mention have a handle on anything. They’ve killed the goose that laid the golden egg (the workforce). That is where any power they ever had actually came from and in ten years they simple won’t control it anymore. Imagine you run a widget factory. You start outsourcing to make more money for yourself. Eventually your unbridled greed gets you to outsource everything. It’s now only a matter of time until the new workforce realizes it doesn’t need you. They have the technology and the organized workforce, what do they need you for? The peasants you controlled can’t afford to consume anymore (you screwed them, remember?).

    You’re the king of Nowhere Land, so take your secret handshake and shove it up your ass. That sort of thing.

    I guess what I’m saying is I don’t believe in groups having over-arching agendas, but I do believe in greedy fuckers who have no loyalty to anyone (including each other). They’re only as powerful as the weapons they control and the armies that will fight for them.

    They’re in for a rude awakening too…..

    (I’m probably not explaining this right. Try this:)

    Tyrants who don’t make sure their armies are fed, ain’t gonna be tyrants much longer.

    I think talk of Zionists plots fuels anti-semitism and that’s extremely unfair. My family’s Northern Irish Catholic and came here to escape oppression, not to install the Pope as America’s secret ruler (I swear!), yet there are plenty of people who still believe we’re up no good. Israel’s in decline too and just to ask the question, how long do you think Israel will last when the US is no longer the world’s super-power?

  27. I have a good bottom line for this thread….to date.

    It does not matter now so much, at all, “who” did “what” or “when” they did it.
    The shit that has hit the fan is soon to be blown back all over the wall.
    As for any “recovery”, yes we will eventually recover, once we crawl back out of the stone age. That my friends is the only place the current situation will, in due time, put the ENTIRE PLANET. So in the words of Robert Duvall .. ” suck it”

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