Last October, the very first month of the new fiscal year, the national debt went up $71,432,813,603.80 bringing the total debt to a record $9.1 trillion. This is a debt that can be paid off only by the American taxpayer, no matter what the government says to make you think otherwise.

Forty-four percent of this debt ($4 trillion) is held by phony trust funds. Social Security leads the pack with two trillion in “holdings” and the overrated baby-boomers (a fantasy) are expected to force the supplemental retirement system to cash-in much of these holdings within the next ten years, or so the story goes.

Several of the other trusts are drawing taxpayer money all the time and some of them have been set up to be supplied and kept alive by taxpayer money. The second largest trust, the Federal Employees Retirement System (FERS) is an example of the latter. With many of the other trust funds it’s simply a matter of naming a trust and throwing some nonmarketable bonds in it, like the Department of the Air Force General Gift Fund. All in all, it’s the greatest fraud of all time.

Here’s how it works to double tax us through Social Security as one example.

Since 1983, monthly payroll taxes have generated a substantial surplus every month of every year, more money than the retirement system needs in order to make all of its commitments. The government takes this surplus money and spends it as fast as it comes in. Then they deposit an equal amount of “special” nonmarketable (cannot be sold or traded) bonds in the so called trust fund. The government wants you to believe that it’s possible to both spend and save the same money.

These nonmarketable bonds draw interest just as though they had real substance.

Making this payment costs nothing. There’s no money involved, just paper. The interest from fiscal 2007 was $82.4 billion bringing the total fund to an annual increase of $186 billion. With compound interest paid against the closing balance from each previous year, this really piles up.

Politicians and their spinmeisters will tell you that the entire trust is simply a debt that the government “owes itself” or that you needn’t worry because the government is going to somehow take care of it when bankruptcy is probably their only option.

Often you will hear that these nonmarketable bonds are worthless and mean nothing. This is an absolute lie because these markers are demands against the Treasury. Whoever is in charge of the trust fund can take these to the Treasury and real cash will be drawn from the General Fund of taxpayer money. Taxes are the government’s only source of revenue.

With a large part of the debt held by foreign nations, it isn’t long before they wise up to what a poor investment they’ve made. Our current credit problems, along with a dollar falling in value worldwide, plus the well known fact that the average American family responsible for redeeming this debt is itself deeply in the hole to banks for credit card charges and mortgages – all adds up to making legitimate U.S. Treasury securities a poor and high risk investment. What was once considered “the safest investment in the world” is rapidly obtaining the status of junk bonds.

On the other side, the problems of the sub-prime mortgage market are one of our largest credit problems with millions losing their homes and banks and investment houses going under. Add in the fact that last year, fiscal 2007, we had a $758 billion deficit in the balance of trade which is not going to go away. With most of our former manufacturing base operating in cheaper labor countries we have little except “weapons of mass destruction” to offer other nations while they sell us the staples we need and the things we’ve grown accustomed to having.

At this point there’s not much corrective action the government can take. If the fed drops interest rates, inflation will flare up even more than it has already. I’m sorry but it looks like we are heading for a depression worse than the Thirties.

What do you do when one of your children tests the limits of your permissiveness? You’ve all heard that “if you give them an inch they’ll take a mile.” Well, we gave the government several miles and they’ve been extending it ever since. No one has been watching much of what they do with our money, particularly what happens at the Treasury. There has been little oversight from those responsible for redeeming this debt – the taxpayers that will be the ones held responsible.