KEYWORDS: dollars, year, interest, debt, banks, money

U.S. Deficit Budget, The

David Berg

11/87—And What It's Leading To! DO 2402

1. The U.S. Federal Government now has a yearly budget of nearly one trillion Dollars!—Over 900 billion Dollars! And of that, around 300–&–some billion goes into the Military, which is about a third of the 900-&-some billion. In other words, they're spending a third of their entire income pie on war preparation, & the sad part about it is, they're not getting that much income!

2. The U.S. has been going into debt as much as 200 billion Dollars more each year! That's the unbalanced budget, the deficit as it's called. I'm not talking about a trade imbalance or the trade deficit now, that's something else. But of that 900 billion Dollar budget, the U.S. is spending around 200 billion Dollars more than its income. In other words, its income each year in taxes etc., is only about 700 billion, but they're spending 900 billion—$200 billion more per year!

3. They have been talking recently about trying to trim down the budget deficit so that they're not spending so much beyond their income. They're fighting in Congress now, trying their best to cut down that extra 200 billion Dollars that they're going deeper in debt every year. Their total debt now is over three trillion Dollars, & it's stacking up at the rate of 200 billion more every year! In other words, if it was three trillion last year, it'll be three trillion, two hundred billion next year, three trillion four hundred billion the next year etc., etc. They keep adding to that huge debt that they owe the World‚ largely the Japanese & the Arabs, their two biggest creditors.—Going in debt 200 billion Dollars more every year!

4. So right now in Congress they're arguing about how to cut down the deficit, how much they can raise taxes & cut their spending in order to try to cut that 200 billion Dollars down to 180 billion Dollars. In other words, they're trying to lop off 20 billion Dollars of their deficit spending, & right now they're arguing & have not been able to agree on what to do or how to do it! They're trying to knock off a measly 10% of their growing debt.—Not of their total debt, but just of the amount that it's growing each year! They're trying to cut down about 10% of that debt's growth each year, & they're arguing right now about how to save 20 billion dollars, & the two sides are arguing mostly about two billion of that 20 billion Dollars. They're having a two billion Dollar disagreement!

5. It's a drop in the bucket compared to what they owe & how much more they're owing every year! If they cut that budget down only 10% each year, only 20 billion Dollars off of their present 200 billion Dollar yearly deficit, it would take them ten years to get down to where they have balanced the budget so that they're not spending any more than they're making.—And then all they would have to pay is the three trillion Dollars that they still owe!—Plus a Trillion more for the 10 years!

6. They want to save 20 billion Dollars a year. But remember, next year they'd still go in debt 180 billion Dollars, or 20 billion less than their current 200 billion deficit. Let's just forget the billions & take the figure, 180. They would only go in debt 180 billion dollars next year. Okay, 160 on the second year. 140 the following year. 120 the next year. 100 next year. 80 the next year. 60, 40 & 20 etc.

7. So by the end of the next ten years, having cut 20 billion Dollars off of their deficit each year, instead of being 3 trillion Dollars in debt, they'll be 3.9 trillion Dollars in debt! (Fam: Then how long would it take to pay that off at that rate?) Let's say that they kept on paying off 20 billion Dollars a year on the 3 trillion 900 billion. That's 3,900 billion, divided by 20 billion a year. It would only take another couple of hundred years to pay it off, 195 years to be exact!


8. Do you think the U.S. is ever going to get out of debt?—Of course not! It's already bankrupt! It will never be able to pay back those loans‚ not only the loans from the Japanese who can afford it‚ & the petro–Dollars of the Arabs who could afford it, but not quite so easily now. But there are billions more that they've borrowed from European banks & more & more billions from American banks that bought Treasury Bonds. A bond is simply a piece of paper you buy from the government by loaning the government so many thousand Dollars. Then ten years later you hope to cash the bond back in to the government & you expect to get back quite a good percentage more for your money. Of course‚ due to the rate of inflation, you won't get back more, but less than you originally loaned them!

9. The American government is going more & more in debt all the time & will never be able to pay off that astronomical three trillion Dollar debt! In fact‚ it's adding to it every year! By knocking off 20 billion Dollars a year it's going to take them 10 years to even get down to balancing the budget‚ without having made a dent in the three trillion Dollars debt!—In fact‚ they will have added another 900 billion Dollars to it by the time they've balanced the budget!—So it'll be about 4 Trillion!

10. So the U.S. government is never going to be able to pay its debts, no way! The U.S. government is already bankrupt & the only way they've been able to keep going is by having nice printing presses that print Dollars, & they can print them by the millions! They call it the "money supply". The government prints millions of Dollars in order to try to even pay the interest on its debts & to run its government.—Never the principal!


11. You talk about the Latin American countries being so poor, so bound by debts incurred by borrowing too much money from the rich banks of the U.S.A., you think they're in bad shape? Garcia of Peru is at least paying back 10% on the interest that he owes, that has nothing to do with the principal.

12. Do you know the difference between principal & interest? Principal is what the country borrows. Interest is what it pays for borrowing, how much extra, how much more! These Latin American countries have gotten so poor, they can't even pay the interest! Let's say they borrowed a million Dollars at 10% interest, that means they've got to pay $100,000 a year just for borrowing that money. And most of those countries are now unable to pay anything on the principal, the original sum they borrowed, they just try to pay the interest. If they can keep up the interest, then the banks will keep loaning them money.

13. The banks figure they're making money if they're collecting interest‚ so they show these loans on their books as assets, that they're still making money on these loans.—Even though the country will never be able to pay back the principal. So they don't count the loan as a loss, as long as the country can pay the interest. It's not counted as a loss until the country can't even pay them the interest, then according to U.S. law they have to record it as a loss, which reduces their assets.

14. In other words, if a country borrowed a million Dollars & is paying back $100,000 a year interest, the banks have got it down in their books that they still have this million Dollars as an asset. But if the country defaults on its interest payments, then according to U.S. laws the bank has to register the entire loan as a loss & a default.—And the Banks go down!


15. If all the Latin American countries got together & started telling them they couldn't pay any more interest, the banks would have to register all those loans as losses, not just a loss of the $100,000-a-year interest, but the million Dollars, the original loan, plus the interest they should have gotten on the loan!—Which means that most of the banks in the U.S.A. & Europe would go absolutely broke! They're counting the loans that they've made to those countries as assets because they're paying interest. But according to U.S. Law, if they stop paying interest, they've got to count the entire loan as a loss, in which case, those banks would all fall flat!

16. Some of those countries are advocating doing that even now, because the banks are so tough & hard & won't reduce or renegotiate the loans, they won't give them longer terms even on the interest payments, they won't adjust the interest rates, they won't lengthen the time of payment, they're just being tough & hard-hearted & hard–boiled about it. Of course, that all has something to do with U.S. banking laws‚ that they've got to pay so much & they've got to pay it within a certain time period, or again‚ the loan is considered in default. But the poor countries are trying to work out deals where they can pay less interest & stretch it out over a longer number of years. But the tough U.S. banking laws simply won't let a lot of them do that‚ even though they're negotiating for it.

17. So what's going to happen when these Latin American countries cannot renegotiate‚ or as they call it—all kinds of nice words—"reschedule" the loans? What happens then when those Latin American countries get together & say‚ "Well, they're going to get tough about it‚ we'll get tough about it! We can't afford to pay the interest so we're just not going to pay it!—Period!"

18. Those countries are going to get together & get tough & say no to the banks, "We cannot pay it, so you've got to renegotiate, you have got to reschedule, or we are going to default!"—Or there's another nice word for it, "declare a moratorium on the loan". That's just a nice way of saying, "We're not going to pay it, Buddy!" It really means that it's hopefully going to be only temporary, you're going to put off paying it for a few years until you're better able to.

19. This is what Roosevelt did with the banks during the Depression, he declared a moratorium on the banks. What he actually did was close up all the banks so they couldn't pay the people their money, & then he had U.S. government accountants & investigators audit the books of all those banks to see if they were solvent. "Solvent" means if they were operating properly & paying their debts & paying their creditors & collecting their interest & paying off their depositors etc. If they were in good shape he allowed them to re-open a few weeks later. I don't know exactly what the percentage was, but there were thousands of them that could not reopen because they were in such bad shape!

20. The bank in which my folks kept their $10,000—which would be just about like $100,000 Dollars today—the Bank of Bay Biscayne, never reopened. But the U.S. auditors went through & they liquidated the bank—that means they sold all its assets‚ they pooled all the money they could get out of whatever the bank had—so that they finally figured that they could pay back to all of their creditors & depositors etc. $15 on the hundred! The creditors & depositors would get back $15 for every hundred Dollars they'd put in to the bank. And it was paid back at the rate of only $15 a month. So how many months would it take to pay back $10,000? It would take 100 months to even pay 15 Dollars a month!

21. During the Depression, let me tell you, every time that $15 check came from that bank we were tickled pink! It was a lot of money then. That could keep the family going for a whole week when milk was only ten cents a quart, bread ten cents a loaf, gasoline ten cents a gallon, ice ten cents for 25 pounds. That could keep the family going for more than a week! We lived sometimes on ten Dollars a week!

22. What is probably going to happen, & what they're probably figuring out right now, is those debtor nations are going to default. They've got to, they can't pay! If the banks won't reschedule, renegotiate, then they just can't pay! So a number of them are now advocating that they default together, in unison, & that's what the bankers are scared of more than anything else, because they know it will bring down their entire system! What they may also know, or not know, is that it will probably bring in the Man!—The A.C.! Because when the System collapses, somebody has to save the World, & he will appear as the saviour! You know who I mean, don't you? I'm not talking about Jesus! So that's how close it is.


23. A lot of the peace prophets are trying to say, "Well, I don't think we're going to have a recession, no, no, no." I was just reading where car sales & housing sales are declining—these are the big items that people buy when they think they're going to have a good income & lots of money. House sales are declining almost 10% per month!

24. With car sales‚ I guess a lot of people decided they were going to go ahead & splurge for Christmas & buy a new car‚ but that's probably the last one. And they're going to go in debt for it with high payments that they're not going to be able to pay! So the car isn't going to be theirs for very long. Because as soon as they lose their job & still need to pay those payments, two month's payments missed & they come & take your car! All they need is the key. I know, it happened to us twice, once to my Mother & then later to me because the guy I sold it to & made a deal with failed to meet the payments. And my name was still on it so they grabbed the car & I had to bail it out or lose the whole thing!

25. Anyway, that's the shape the World is in! The only reason it keeps on going is just because people want to believe that it's still going, & the banks want to believe they can still collect the money, & the debtors want to believe that somehow they can still pay it off‚ & the governments want to believe that somehow, although they're going in debt deeper every year, that some day they'll be able to pay it, which they'll never be able to do!

26. Even if the World carried on another 200 years, at this rate‚ can you imagine what money would be worth?—It would be like pouring money down a rathole! The more they'd pay, the more they'd owe, just due to inflation alone! So it's an impossible situation. Something's gotta give‚ it's gotta collapse!

27. One guy estimated the final Crash would happen in '79. I said I didn't see how it could go longer than '88‚ & it's now started, & I believe it's going to go faster this time than it did before. People are wiser & smarter this time. They see what happened before & they're going to try to prevent it, they're going to try to keep themselves from going in debt any more & from buying those big things that they can't afford. They're going to have more self-control.

28. And when the people stop having the faith they're going to have the money to make their payments & to buy, & they stop buying because they want to save it, then the retailers stop selling! And if the retailers can't sell, they stop buying from the wholesalers, & the wholesalers can't sell! Then the wholesalers stop buying from the manufacturers‚ so that the manufacturers can't sell. So the manufacturers start cutting down on employees, laying off workers & cutting down salaries of those who are left.

29. —Or else they just go completely bankrupt like thousands of them did in the Great Depression! They can't keep on operating, they can't meet their payments, so the banks foreclose on them & take their property instead. They take the whole business or the whole factory & it goes completely out of business. And when a factory goes out of business, goes bankrupt, what can the bank do with it? It's got no more business, it's non-profitable, so it's just a piece of junk on their hands, it's worth virtually nothing!

30. Therefore the bank's actual assets become worth nothing, so the bank itself becomes worthless!—Down, down, down everything goes all the way to the bottom! That's a fact! That's just the way things are & that's the way the System is built! It is self-destructive, built-in for self–destruction!—And that's the way the Lord's going to let it happen, because that's what it deserves! Think of the rich countries compared to the poor countries!—Think of the millions of poor people in the so-called developing countries, starving, living in shacks, paid only a few pennies a day for work etc. while the rich are living high on the hog & rolling in dough & cheating the labourers & cheating each other!

31. What's going to happen to those poor countries that are already bankrupt when they hit the floor, the ground level, the bottom?—Or go right on through it!—They'll be in a mess & there will be strife & riots & all kinds of horrible things going on, until the Man comes in & promises to straighten everything out & correct everything & get things going again by just abolishing the old system & establishing a totally new credit system with his Mark of the Beast credit cards or computer chips in their foreheads or hands or whatever! Then they've got the whole solution, a new system built by the Beast to save the World & to make everybody zombie slaves of his government & to have him hailed as their god!


32. Some of them are trying to say, "We're not going to have a recession, it's not that serious yet", all these peace prophets trying to encourage the people. See, it's all a matter of faith, & if they can encourage the people's faith enough, then they won't stop buying & spending money. They'll keep on buying on credit & keep on hoping they're going to have a salary next year & blah blah. These false prophets who are not predicting doom are actually guaranteeing it! Because if people go on doing what they've been doing, it's going to guarantee that there's doom!

33. They like to use the word "recession" now, a nice new name, it doesn't sound near so bad as "Depression". Depression was too awful, horrible, depressing! So they say, "Maybe we'll have a little recession, we might have a slight recession", blah blah. I don't see it, do you? I don't see how this can be anything but it! It's too late! I think this has got to be it. The World has got to start paying the Fiddler! They've danced the dance & now they've got to pay! They've played around & they have wasted money & they have robbed the poor & they have fought their wars & destroyed millions, & the hour of judgement is coming, it's got to come!

34. I just don't see how they can possibly survive this economic Crash which has already destroyed a lot of people's faith in the System. They're going to stop buying, they're going to stop spending so much, they're going to stop borrowing so much & going into debt so much, they're going to hope they can start paying off before everything goes flat. And with everybody doing that, it just pushes things right on down. They're already doing it.

35. Car sales were declining‚ but now they're all encouraged because sales were up a little bit just before Christmas, & retail sales etc. have gone up a little bit. "Oh my‚ the World's recovering!"—Because everybody spends their last penny on Christmas! Even if they're going broke, they're not going to miss Christmas for the children & the relatives & blah blah. But wait & watch what happens after Christmas, see what the stats are going to be then. If things go up again after Christmas, I'll be surprised. I think they're going to start taking a nosedive in January after the Christmas buying spree is over.

36. They aren't buying houses now, that's declined 8.9% in one month! And car sales were declining until I guess they figured they could buy one more new little toy at least for Christmas‚ & that'll be the last of the big spenders!

37. So hang onto your hat & hang onto the Lord especially!—'Cause things are moving really fast!—It won't be long now! PTL!