Chilling Exchange

Saturday, March 24, 2012
By Paul Martin

The Grandich Letter
Mar 23 2012

I originally saw this Washington exchange and said to myself I wish everybody I speak to could have witnessed this. Then I read the below commentary in Bill Murphy’s daily commentary about the exchange:

How Much Treasury Debt?

If this doesn’t scare the shit out of you – and scare you out of paper dollars and into real assets like gold and silver – then you are either brain dead or you just don’t care anymore.

Tim Geithner (along with Bernanke) was testifying before the House Committee on Government Oversight and Reform yesterday. Congressman Trey Gowdy (R-SC) – in a display of forcing Geithner to answer a question directly that Ron Paul should take notes on – asked Geithner if he had only ONE more debt increase request that could possibly be made, how big would it be.

After trying to shuffle – very awkwardly, I might add – around answering the question, Geithner responded with, “It would be a lot – it would make you uncomfortable.” Here’s the exchange, which I found spine-chilling:

Geithner: “That I’d have to get to you in writing, I can’t do it in my head though.” (note: in the background someone says “he can’t put that in writing.”)
Gowdy: “How about a round number?”
Geithner: “No idea….
Gowdy: “$20 trillion?”
Geithner: “I just can’t do it in my head.”
Gowdy: “$50 trillion?”
Geithner: “I don’t know…”
Gowdy: “A lot? Can we agree it would be a lot?”
Geithner: “It would be a lot. It would make you uncomfortable.”

Let that sink in for a moment. Please note that Geithner did not try to dispute the $20/$50 trillion number that Congressman Gowdy threw out. Here’s the 3 minute video of the exchange, which I sourced from Ed Steer’s Gold and Silver Daily:

Let me be very clear about one thing. This is not a joke and this not some sort of absurd exaggeration. This is where we are right now with the finances of our country. The fact that the Government-reported economic numbers are fraudulent is finally getting acknowledgement in the mainstream media is one thing. But you can’t find any mention of the real spending and real debt numbers. You have to dig for the Truth on that and it requires understanding – in general – how Government accounting works and where the numbers are buried.

The REAL direct Treasury/Taxpayer guaranteed debt number right now is at LEAST $25 trillion. This includes the $16.2 Trillion current limit PLUS the $7 Trillion in FNM/FRE Goverment guaranteed debt PLUS the Treasury bonds sitting in the Social Security Trust ($2.5 trillion last time looked). I have not included a lot of other small off-balance-sheet guarantees like GMAC (now called Ally) debt, Fed assets which are direct off-balance-sheet liabilities of the Treasury/Taxpayer and some other stuff. I would bet real money that the REAL number is closer to $30 Trillion.

This does not include the GAAP accounting for the all of the future entitlement and welfare obligations. The net present value of this – i.e. if the Government had to account for its numbers like a corporation does – is more like $100 Trillion. That is not my estimate. That is a number that comes from David Walker, the former chief of the Congressional Budget Office. On a yearly GAAP accounting basis, the Government spending deficit is more like $5 trillion (see John Williams’ The $100 trillion is how a corporation would have to account on its balance sheet for its future obligations given what is known about future spending escalations and future estimated funding of that spending. That would be the number on the balance sheet reported in a corporation’s 10Q/10K.

This is reality people. What is so completely horrifying about Geithner’s statements – and complete kudos to Congressman Gowdy for pressing Geithner the way he did – is that Geithner, who is not known to be politically adept, was so flustered by the thought of getting caught in a lie that he really had no way to cover-up the truth. The truth is not in what he said, the truth is in his lack of ability to refute the $20/$50 trillion number thrown at him by Gowdy. The best he could come up with is that the number is so big “it would make you uncomfortable.” We know $16 trillion plus whatever is requested this fall is not big enough to make Congress or Obama “uncomfortable.”

This country is broke, it’s insolvent and it’s collapsing. This is why the elitists – i.e. those who are in a position to steal everything not nailed down – are openly grabbing what they can. THAT is what the MF Global felony was all about. Obama knows a collapse is near. This is why the war rhetoric is escalating, this is why Obama signed legislation authorizing the Government to seize all national resources for the purposes of military defense in the event of an “emergency.”

Do not be scared off by the current correction going on in the precious metals. By the time most of the people in this country understand why gold and silver are superior currencies to paper fiat dollars, the exchange price of dollars to bullion will make that exchange nearly impossible in any meaningful way for most. The current correction is somewhat mild compared to the correction experienced in 2008. At some point, probably sooner than most are willing to believe, the price of gold and silver will shoot up very quickly. By then it will be too late for most people watching to afford the true flight safety of owning gold and silver rather than paper assets and money sitting in potentially Government controlled accounts.

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