THE $50,000 CHALLENGE: “Federal Government Debt is Pure “Bubble””

In the spirit of education, I will award a $50,000 (escalating to $500,000, assuming no successful contests) qualifying scholarship or charity contribution in the name of the first person that submits a successful challenge to the logic contained within the article below. The successful contestant may either credibly debunk the logic via similar argument(s), or generate a case that empirically demonstrates the presence of a real increase in wealth to the world from what otherwise would be, as the result of a U.S. Federal Government Bond Issuance. Note: Exceptions and further qualifications are listed at the end of this article. Contest offer will end December 31st, 2010.

Considering the Federal Bond illusion technique, the island inhabitants would again similarly be left with bonds representing the PERCEPTION of wealth, when in fact no one on the island again is committed to repay them, if later a bond owner attempts redemption. Sam’s message to all inhabitants is that on the one hand his Federal Bonds are a safe investment representing real future wealth to the holders when redeemed, then on the other hand, the concomitant island government obligation to pay them is a mysterious “black hole” of future limitless taxing authority that is always assumed to satisfy these obligations without any individual committed to that fulfillment task.

This is where it falls apart. Uncle Sam has the ability to use force in order to get the others to produce the labor to repay the bonds. Uncle Sam can garnish wages, or forcible take the goods and services that the other three produce, while putting a "Seized" sign up on their doorposts.

The laborers are committed (through debt slavery) to repay the bonds. Uncle Sam will see to it.

P.S. : The author is confused about the relationship between labor and money.

The only way that the islanders could buy the bonds is if they had money with which to buy the bonds. This brings up the question: what is money?

Money can either be based on stored completed labor, or it can be based on claims upon future labor (debt - like our economy).

The islanders are wanting to buy debt, so why would they promise more debt to buy it? Assuming their monetary system is based on a store of completed labor then that won't work either. The example the author gives has the population consuming everything they produce each year. There is no storage of completed labor (capital) with which to purchase the bonds (debt).

The islanders could work overtime in order to produce more than they consume - then use that capital (storage of completed labor) to purchase the debt (claims on future labor), but the author doesn't go there.

Good article. Thanks for posting. All derivatives can all be superceded by a new currency, a one-world currency. All games restate/restart on a more grandiose scale.

Neo-totalitarianism

The supremacy of finance capital over all other forms of capital means the predominance of the rentier and of the financial oligarchy; it means that a small number of financially “powerful” states stand out among all the rest. The extent to which this process is going on may be judged from the statistics on emissions, i.e., the issue of all kinds of securities. - Vladimir Ilyich Lenin

It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder. - Frederic Bastiat

Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion--when you see that in order to produce, you need to obtain permission from men who produce nothing--when you see that money is flowing to those who deal, not in goods, but in favors--when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you--when you see corruption being rewarded and honesty becoming a self-sacrifice--you may know that your society is doomed. - Ayn Rand

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