The Mathematics Of Austerity: Proving Austerity Never Was Even Intended To Work

For some time I have said the following of debt based money systems as practiced by the Federal Reserve and the Bank of England:

It has never worked. It cannot work. It will never work. And it was never even intended to work. What is was intended to do is to take all the money from those of us who labor for a living and those who own small businesses and farms or work in professions. And give every last dollar, pound and euro from our savings, our pensions and our paychecks to the bankers who took unto themselves the privilege to print our money.

Substitute the word Austerity for debt based money system in the above and every last word will still ring true. The bankers know the Austerity programs they are advocating for Europe and America will not work and cannot work. What they will do is to transfer all of our remaining wealth to billionaire bankers. We are headed to The Second Great Depression which will be far worse than 1929-1939 and could be called The Greatest Starvation.

Let me explain why Austerity budgets will never work in such simple terms that even a Presidential candidate will understand.

Let us begin with the definition of Gross National Product or GNP. It measures the total value of goods and services consumed in a nation. America’s GNP is a little over 16 trillion dollars. The total US public bond debt limit has been raised to just over 14 trillion dollars. If you add the government guaranteed bonds of Fannie Mae, Freddie Mac and the like, the total is 21 trillion dollars in round numbers.

First year economic students like some of those American Presidential candidates were taught that the GNP equals the total of Consumption plus Investment plus Government spending or GNP = C + I + G. By the rules of mathematics, if I subtract the same amount from both sides of the equation both sides will still equal each other. Enter the US Congress or your favorite European parliament and their Austerity measures.

The US deficit is always higher than the projected figure. I remember Obama proudly saying that the US deficit was only 1.4 trillion dollars for the previous year. But the total of bonds sold was more than 1.8 trillion dollars. Let’s be generous and assume Obama’s 2011-2012 budget deficit including a few hundred billion in Off Budget items is a mere 1.7 trillion dollars despite declining revenues, an insane stimulus program and looming Bailouts for the bankers. To balance the budget all we have to do is to cut 1.7 trillion dollars from both sides the above equation. Let’s see what happens:

GNP suddenly equals 12.4 trillion dollars. The G of C plus I plus G is cut 1.7 trillion dollars. What have we done? The gross interest on the debt is a little over 500 billion dollars. A quick glance at Wikipedia tells us that the total non-defense discretionary spending was 660 billion dollars. So let’s subtract 660 from 1,700. This means our Austerity fiends only have another one trillion and forty billion to cut. We must pay the interest on the debt. So what is left? They can cut Medicare and Medicaid ($793B) by 500 billion and Social Security ($701B) by 500 billion.

Gee. You say that sounds a bit rough. Food Stamps would have to be eliminated for 48 million recipients as part of the 660 billion in discretionary spending. Food Stamps cost 65 billion dollars last year and food prices have gone up at least 39% over the past few years. But our Austerity budget must cut out the whole 65 billion despite the rapid increase in unemployment. If we use the real definition of unemployment Ronald Reagan had when he took office in 1981, the true unemployment rate is 23% for America and over 30% for California.

Let us proceed to the Social Security budget. 500 billion needs to be cut from 701 billion leaving us with a stupendous sum of 201 billion dollars. We can estimate all we need to do is to cut 5 of every 7 dollars from the average recipient’s check. Suppose a woman is receiving a check for $1,050 a month. If we cut her check by 5/7ths, she will now have a munificent sum of $300 a month. There will be no subsidized housing as that was eliminated along with Food Stamps. And utility bills are rising because Obama is a Globalist and wants to cut back on energy usage by raising fees. Of course those fees are funneled into the hands of bankers. She and most of the other 59,000,000 plus other Social Security recipients will have to move out into the streets. They will probably hang out at the library or the local McDonalds to keep warm.

Of course the fly in the ointment is the cancellation of Food Stamps and extended unemployment insurance. That will set off permanent riots from more than 50 million younger people with nothing to eat. But in America state and local police are funded by local taxpayers so the riots will not increase the federal budget outside of Washington D.C.

Now let us proceed to even bigger Austerity cuts. Chinese people have been saying they might as well just load all their exports to America into containers and dump them in the sea. It would save them on fuel and avoid the problem of trying to get rid of those Federal Reserve Notes or Bernanke Bucks. The US has bought 8 trillion dollars from overseas without giving fair value in trade or exchange since 1975.

Our next equation starts with the definition of GDP or Gross Domestic Product. You remember GNP is the total of goods and services consumed. If we subtract Imports M and add Exports X, we get GDP or Gross Domestic Product which tells us how much we are actually producing rather than consuming. That is written as GDP = GNP + X – M.

Enter Dr Michael Hudson, an economist, who is staunchly anti-war and anti-Wall Street. (Aren’t they the same?) Hudson wanted to accuse Obama of the worst thing imaginable so he called him a Republican. He also said Obama’s solution to the unemployment problem (23%) and our trade deficit (373 billion dollars so far in 2011) is to cut wages 30%. This will most likely be done by raising prices of imported goods like oil, clothes, food and consumer goods.

Let us see what happens to the average American worker. The median hourly wage for an American is $16.27. The median is defined as the 51st man in a group of 101 ranked by income. This gives us a better idea of what real people are earning than would the average income. Suppose you included a Goldman Sachs employee whose average pay is $750,000 a year in that group of 101 people. The resulting average income figure would not tell us what challenges the other 100 were facing.

Our average man’s after tax wage discounted for inflation has been declining steadily since 1970. Depending on his age, his parents or certainly his grandparents have been kicked out into the streets from the Social Security cuts. He might have a sister who is divorced, has two children and used to receive Food Stamps. Now they are all at his house asking for help with shelter, utility bills, food and medicine. Remember that medical care to the poor and to the elderly was savagely cut. Now prices are raised sufficiently to cut his gross $16.27 hourly rate down to $11.39 without cutting the total amount of taxes withheld from his check. His paycheck will in the common American parlance really suck. Now that Globalist plan to double his utility bill does not sound so good. And the increase in prices for food, energy and clothing combined with cuts to medical care has even further exacerbated his situation with poor relatives who will quite literally soon be dying of starvation.

And do not forget his sister whose pay was also cut 30% while simultaneously losing maybe $400 a month in Food Stamps. That is why I deliberately chose the words The Great Starvation to better describe The Second Great Depression. Needless to say, any business selling anything including food to Americans will fail. Corner grocery stores will be robbed blind by more than a hundred million hungry Americans. Americans must have at least 300,000,000 guns and way more than 10 billion bullets so the policy of having the police shoot the poor won’t last long.

We have not reached the end of our Austerity cut woes. Enter Steve Keen, the Australian economist, who has something really important to say about debts and Austerity cuts. Keen points out the obvious fact that if you stack debts into one pile and incomes into another pile, cutting wages will only make the burden on the average tax payer-worker relatively bigger so we will never pay off our debts. I might add that in the previous step when Obama’s banker buddies successfully cut your wages by at least 30%, they did that by devaluing the dollar. When they devalued the dollar, they will have to offer US Treasury bondholders substantially higher interest rates. That means the 500 billion dollars a year in gross interest payments of the federal debt will easily go to a trillion and then within 2 years to 2 trillion dollars or more. I do not think you will like the second and more savage round of tax increases and Austerity cuts on top of the above. An additional two trillion dollars in cuts and tax increases will destroy what was left of western civilization.

Congratulations. You are now ready for the final step. You must conclude that these debts were created to reduce us all to slavery. Let that fact sink in. There is no combination of tax increases and Austerity cuts that will solve our problems. Now you are ready accept this:

The Fundamental Fact of Your Existence as a modern man or woman is that the bankers of New York and London want to reduce you to debt slavery.

Accept that fact and move on to the solution.

You should ponder the fact that I have said we could call this Second Great Depression the Great Starvation. I have previously said that the bankers have a solution to the problems of mass starvation, grinding poverty, daily food riots and rebellions by the poor. They plan to release a series of plagues that will kill billions of people. Any rioters seeking vengeance on those bankers in Manhattan, the City of London or elsewhere will flee from the sight of other people as soon as they see tens of thousands of people falling over dead from some new kind of fatal flu.

I might also repeat my warning that they can use DNA to target specific races who cause too many problems or have natural resources like oil, water, gold, silver, food and other commodities they would want to take away from you.

You live in a land ruled by bankers. You must learn to think like a banker to understand what is really happening. Bankers see assets and liabilities where you see your friends, your family and your neighbors.

Do not despair. There are solutions. You need to understand the world as it is before you have sufficient motivation and understanding to change things for the better.

I will write of the solutions in my next essay which I will post in a couple of days.

Related Articles of Interest

Nine Myths And Misconceptions About Money That Can Literally Kill You

25 Reasons To Absolutely Despise Bankers And Their Minions

I Categorically Reject The Occupying Power’s Right To Lie To Me

LOL!! I Stole 3.5 Trillion Dollars From You. I Dare You To Do Something.

Arrogance Of A Banker

David DeGraw In 2 Minutes

The Counterfeiters

Stealing Money By the Trillions.

What Has An Affect Through Me Has An Affect On Me

Is An American Military Coup The World’s Last, Best And Only Hope?

The Bankers Want America To Lose World War III


About horse237

I have decided to share two of the visions I had as a child. When I was eight, I had a vision of a future war that killed 99.5% of the world's population. When I was 16 and living in the projects, I had a vision of my future. I was to live in complete obscurity until it came time to stop WW III. When I was about ten, I had read a bio of Nikita Khrushchev which said he survived Stalin by playing the bumbling fool an old Russian peasant trick. I decided to do the same as I had already learned that we did not live in a democracy. The other vision I had when I was in third grade was of the Mind of God and how it interacted in the creation of the world we see. I believe you and I were born at this time precisely so we would have an opportunity to stop this war. As for my personal info, I grew up on military bases and in housing projects. My legs atrophied from starvation as a child. My second step-father died in prison. I used to have to rub my skin to simulate human contact. They did not feed me when I was a child. I do not fight in their wars as an adult.
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47 Responses to The Mathematics Of Austerity: Proving Austerity Never Was Even Intended To Work

  1. Pingback: Economy in DEATH spiral - Page 1142 - Stormfront

  2. Jason Calley says:

    I would remind us also that the theoretical GNP of 14 Trillion dollars is a bit of a stretch; best estimate is that at least 5 Trillion of that is due to the trade back and forth of financial instruments. In other words, 5 trillion of that is not actually goods and services, but is due to bankers and traders swapping pieces of paper. There is a joke about two shipwrecked economists. After a year, they still do not have a hut, a boat or a garden, but they have both become millionaires from trading their hats back and forth.

    Our GNP includes 5 Trillion dollars of hat trading.

    • horse237 says:

      I saw those comments from China when they released their estimate of America’s GDP. You might lop a few hundred billion off of the Defense budget and medical care spending as being fluff and fraud.

      But those assets can be deployed to more useful ends after we reform things..

  3. m_astera says:

    @Sure but…..

    Assuming you are sincere and simply naive, why would the parasites who own the banks care if the system collapsed leaving them with most of the gold and title to most of the property? So a few million of their bank-affiliated underlings went down with the masses, so what?

    As I see it, the goal is to depopulate and control whatever is left after the plebes are done away with, a garden planet that they own, with whatever humans are left to survive being slaves to the parasites.

    In the long run, it isn’t going to happen that way, but all the evidence points to that being the plan.

  4. Bonnie says:

    “Chinese have been saying they might as well dump their produce into the water”!!!!

    Hell! We, THE People don’t ow the Chinese ANYTHING!

    Everyone of the production they have is from the U.S. The only thing they were good at is, silk maerial and carvings. Everything the Chinese have is from us! From the can openers to elecgtrical wiring.

    Yet, even these they con’t have the know-how, everything from China is JUNK, esp. the shoes.

    Not only this, but everything they ship to us is POISON.
    -Pet food
    – dyes
    -children’s metal jewelry
    -milk and dairy products – what’s the Chinese doing with dairy products, when they dont like it,
    and can’t even consume it?
    -dry walls

    And who knows what else?

    If we don’t keel over immediately from these products, what it does, is weaken the user = rob them over the long run, of stamina and vitality.

    NO! We, do NOT owe one red cent to China!

  5. Sure, but........ says:

    one question – why can’t the government just print money now? It could – it doesn’t need sell bonds, which create a liability. It can just spend the money itself…..without issuing bonds.

    What is the legal situation regarding financing of US debt? Why can’t the government simply, say, employ 1m people on infrastructure projects etc? The government can just pay them with a transfer of funds. What are the legal impediments, if any? If there’s none, then it’s simply an impediment of political and economic orthodoxy.

  6. horse237 says:

    The Federal Reserve Act was written in 1910 at a secret meeting of the bankers. Their first day of the meetings was held on November 22, 1910. JFK was killed on the anniversary of that day as a lesson to you that reforming banking laws is a leading cause of death in politicians.

    The bankers have killed over 300 million people in the wars and revolutions they financed and promoted over the past 100 years.

    Bankers are insane. Do not expect them to behave like sane people.

    As for deficits being rolled over, I would repeat what I said previously.

    Monetary Illusion is over. It takes 6 trillion dollars and more to get a trillion dollar increase in GDP.

    We are at the point where inflation increases faster than the money supply so printing money actually lowers your standard of living.

    I would remind people of the law of compound interest. In the long run it will kill you.
    I will post my solutions on Wednesday.

  7. horse237 says:

    If you have trouble understanding the basics of loans creating money from loans, go to the list of articles at the end of this article. Read the Counterfeiters and read any others that appear of interest.

  8. Pingback: The Economy | The Aussie Digger : Home of all Australian Veterans ex Service and Serving members

  9. m_astera says:

    @Sure but—

    You are new to this, aren’t you? Again I’m giving you the benefit of the doubt of not just being a shill. However, if you are that ignorant of the history of the Fed you have no business commenting on this thread as you only make yourself appear, well, fill in the blank but it’s not complimentary.

    If your point is that talking about a conspiracy undermines the strength of the essay, you really are uninformed and have no business here without some education.

    Why doesn’t the gov’t just print its own money instead of borrowing it at interest from the Fed? Answer your own question. There are thousands of pages online explaining why, including the links above.

  10. Sure, but........ says:

    oh, so now you’re censoring comments? You’re no better than those you criticise, only you have no power and even less responsibility.

    • horse237 says:

      I told you to read the essay The Counterfeiters I listed in the Related Articles at the end of the above essay. You posted many comments that exhibited basic ignorance. I gave you an article to read.

      I normally only trash comments that use abusive language or suggest violence.

      In your case I trashed those comments because they were flooding the space provided for discussing relevant and critical societal problems with a lot of gibberish.

      I do not want this site to descend into a YouTube flame fest where a bunch of ignorant people demonstrate their basic disregard for civilization and waste our time.

  11. Pingback: Latest News | The Aussie Digger : Home of all Australian Veterans ex Service and Serving members

  12. Carl Herman says:

    Great post, horse237!

    Thank you for your work, love, and vision (literal and figurative in this case). My colleagues/friends include Michael Hudson, Ellen Brown, Fred Burks (, David Swanson, and the author of Washington’s Blog. Here’s my solution; I look forward to reading yours:

  13. Lydia says:

    the difference in material/monetary value of “Toilet paper and our Debt=money fiat currency” is simple:
    Toilet paper is softer to wipe your ass with, and the other will leave an ink stain on thy ass.

  14. Pingback: My News Summary – 13 Sep 2011 « Short Posts by Barrie

  15. Sure, but........ says:

    I thought perhaps this bloh had something to say. Clearly it doesn’t, it’s no better than those it seeks to criticise.

    You prefer sycophants and the usual nodding dogs spouting their ignorant junk. Good for you.


    • horse237 says:

      I have left a few of your comments on this page.

      Your ignorance was crowding out discussions.

      I gave you a reference to an article to read. You did not bother to read it.

      You can come back and post after you read it. The article is The Counterfeiters and is in the list of related works above.

      I do not get paid for this blog. I do not get paid for my other volunteer work either. I do not have time to waste answering ignorant questions from someone who refuses to do the assigned reading.
      It should take you less than ten minutes to read.
      I already spent far too much time answering your many questions. I have better things to do with my life.

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  17. beppe says:

    Hi vid rebel,

    it seems that today there are rumors that china will be buying up italian debt.. will tis save Europe?? could this save Italy?? I had not thought about this factor.. here’s the article in italian

    what’s your take on this??


    • horse237 says:

      That was an unfounded rumor. Maybe someone needed the rumor to circulate long enough to unload his stock. I would get all money out of the stock market.

      The Chinese bought Greek bonds and did not save them. They demanded part of a port. They fired Greeks and immigrants at half the normal wages. They will likely demand a free port without Italian customs and tax inspections so they can engage in illegal weapons sales, espionage and other illegal activities.

      You will be switching back to lira from the euro.

      • beppe says:

        Vid reb,

        there seems to be NO sign whatsoever from our politicians of any impending fall of italy or any thing of this nature.. The below article from the mainstream news says that berlusconi is happy with the upcoming austerity measures.. surely no one seems to be pointing towards return to the lira..could this really happen??

      • horse237 says:

        The key words in your statement are from the mainstream news.

        Why listen to them? They are talking about China and Russia rescuing Europe. Any money you get from them will be with strings attached like I cited about the Chinese and the Greeks.

        The media lies. They want you to stay in the lira. Greek bank deposits are declining but they still have too much money in euros. If I were a Greek, I would have been out of the euro long ago.

        Please do not waste my time with these questions about the lira. I can only warn you so many times.

        Listen to Bob Chapman’s radio interviews here:

        You will be using lira again with a 30% to 50% combination of devaluation and inflation within a year or less.

  18. beppe says:

    vid reb,

    seems to have been a bluff that china will buy debt :-). can you explain why in effect something like this is likely not to happen??


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  22. horse237 says:

    To give their names and addresses could be construed as promoting a personal attack which is illegal.

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  24. “Let us begin with the definition of Gross National Product or GNP. It measures the total value of goods and services consumed in a nation. America’s GNP is a little over 14 trillion dollars. The total US public bond debt limit has been raised to just over 15 trillion dollars. If you add the government guaranteed bonds of Fannie Mae, Freddie Mac and the like, the total is 20 trillion dollars in round numbers.”
    Take it from me, this is where you have lost everybody.

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