What business on Earth can operate at a Trillion dollar loss for three years in a row? The one Uncle Sam chairs.

Yes. It’s true. The AP reports:

The [US] deficit in 2011 would drop to $1.27 trillion under the administration’s plan, the third straight trillion-dollar-plus imbalance. The budget gap would fall to $828 billion in 2012 but would remain at levels surpassing any previous deficits through 2020.

I am trying very hard to understand how the US economy will genuinely rebound with this much debt over the next decade. The plan is to pay down the debt when good times return, but how many politicians will forgo new programs (in their districts) to cut a payoff check to creditors holding US Treasuries?

I am in Palm Beach this week. Everywhere I look I’m reminded of the insane Social Security and Medicare entitlements which will vest over the next 15+ years. From which level of the Ponzi triangle will the money come?

I know the sun will eventually rise. But there are a lot of clouds on the economic horizon.

Michael Panzner is author of Financial Armageddon.

While most eyes were focused on the better-than-expected gross domestic product data for last year’s fourth quarter, this week’s report from the Commerce Department’s Bureau of Economic Analysis also included details on U.S. personal income.

Along with wages and salaries, dividends and interest income, this category includes personal current transfer receipts, which the BEA defines as “income payments to persons for which no current services are performed and net insurance settlements.” That is, government social benefits (and, to a very minor extent, net transfers received from businesses).

As you can see from the following graph, while the relationship between personal income and GDP has not changed all that much over the course of the past six decades, the share of income accounted for by transfer payments has jumped more than 200 percent.

The latest data also confirms that the financial crisis has played a major role in boosting Americans’ dependence — for lack of a better word — on government largesse, with the run-up over the past two years accounting for around a quarter of the relative increase since 1947.

With an ever-greater share of Americans receiving some sort of financial assistance from the government, the obvious question is how — or whether — this shift will affect the political landscape, especially when it comes to making tough choices about social programs, in particular, and public finances, in general.

If and when policymakers decide, for example, that the time is right to rein in spending and cut back on public sector borrowing, will the political will be there to see those efforts through? Or, as cynics might suggest, is a financial crash landing the only real “exit strategy” that is on the table right now?

I guess we’ll find out soon enough.

Michael Panzner is also the author of the acclaimed book:

Despite thousands of years of anecdotal evidence, we now have scientific proof that those in positions of power tend to become hypocrites.

Researchers at the Kellogg School of Management at Northwestern University “sought to determine whether power inspires hypocrisy, the tendency to hold high standards for others while performing morally suspect behaviors oneself. The research finds that power makes people stricter in moral judgment of others – while being less strict of their own behavior.”

Now, who is going to start studying whether people in government tend to use their positions for personal gain?

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Congressman Alan Grayson

This was one of our 10 Best Interviews from 2009:

In May, a cool and collected Congressman Alan Grayson questioned the Federal Reserve Inspector General about the trillions of dollars lent and spent by the Federal Reserve. Inspector General Elizabeth Coleman said she had no idea where the money went. Two months later, Congressman Grayson asked Federal Reserve Chairman Ben Bernanke the same questions. Here is the exact exchange:

Grayson: “So who got the money?”
Bernanke: “Financial institutions in Europe and other countries.”
Grayson: “Which ones?”
Bernanke: “I don’t know.”
Grayson: “Half a trillion dollars and you don’t know who got the money?”

As you can see, like Congressman Ron Paul, Congressman Grayson is one of the rare voices asking the most important questions on behalf of the US Taxpayers. Most importantly, Congressman Grayson understands the Fed’s secretive transfer of wealth from taxpayers to private interests as “The story of the millennium.”

If this sounds like the stuff of conspiracies, simply look at any chart of the US dollar and you can see it has lost over 95% of it’s value since the Federal Reserve was created in 1913.

I caught up with Congressman Grayson to better understand the problem with our Federal Reserve, the rising momentum for the Federal Reserve Transparency Act of 2009 (H.R. 1207), and how we can make the Fed more accountable to their four government delegated duties …

Damien Hoffman: Congressman Grayson, I recently penned an article called “Has the Federal Reserve Failed?” in which I looked at their four government delegated duties and concluded they simply have not done their job. What is your proposal to make the Federal Reserve more transparent and accountable?

Congressman Grayson: H.R. 1207 is one of the simplest bills imaginable. Unlike the healthcare bill which is over 1000 pages, H.R. 1207 is a page and a half. The bill lists the existing exclusion of the Federal Reserve from oversight by the Government Accountability Office (GAO) and allows the GAO — an independent body — to audit the Federal Reserve Bank.

The Federal Reserve Bank has not had an independent audit since it was created almost 100 years ago, and it needs an audit. Many times we have exposed gross acts of irresponsibility on the part of the Federal Reserve. So, we need to dig in and get details.

Just a few weeks ago, while Chairman Bernanke was testifying to Congress, we examined the Fed balance sheet and P&L statement only to find what looked like the Fed handing over half a trillion dollars to foreigners. This was very surprising! When I asked Chairman Bernanke if this was true, he said, “Yes.” When I asked him who got the money, he said, “Fourteen foreign Central Banks.” And when I asked to who did they give the money, he said, “I don’t know.” “I don’t know” is not good enough when you’re talking about $500 billion. That’s $1700 for every man, woman, and child in this country.

Damien: What is the status of the bill?

Congressman Grayson: I am very sure the bill will pass — possibly by the end of September, but more likely by the end of October.

Damien: Congressman, what do you say to the primary criticism that auditing the Fed’s book is like exposing confidential information which can lead to harm?

Congressman Grayson: The Fed made that exact same argument in court and recently lost across the board in the case of Bloomberg LP v. Board of Governors of the Federal Reserve System [U.S. District Court, Southern District of New York (Manhattan), No. 08-9595.]. The judge looked at the facts and noted that shining a spotlight on what the Federal Reserve’s actions will only be a good thing. So, that argument has been demolished based on the evidence.

Damien: Congressman, while we are waiting for a Fed audit, does anyone know what the Fed has been doing given that they have not fulfilled their government delegated duties as listed on the Federal Reserve website?

Congressman Grayson: They are performing a truly remarkable, surreptitious transfer of wealth from public to private hands. They are taking their ability to print money and shore up failed banks. They are simply stuffing money into the pockets of private interests.

In the case of the half a trillion dollars, they stuffed the money into foreign private pockets. In the case of another $230 billion, it has been tracked as a secret bailout to Citicorp in the US. The fact is the Federal Reserve continuously puts all of us on the hook for decisions they make to play favorites with private interests to the tune of trillions of dollars.

Source: Zerohedge.com

Damien: Congressman, what do you say to those who call your allegations a conspiracy theory?

Congressman Grayson: Something I found very intriguing was the Semi-Annual Report from the Federal Reserve to the Congress. That’s a mother-load of secrets if you read it very carefully and ask the right questions.

Since it looks like the Federal Reserve may soon be subject to the Freedom of Information Act, that opens many opportunities for the public to see the facts.

These are not conspiracies. The Federal Reserve’s own website has some incredibly interesting information about the general state of the US economy and the distribution of wealth in our country. I was recently reading our national wealth capped out at $62 trillion two-years ago has crashed to $50 trillion since. Those are Federal Reserve statistics on their website.

Damien: Congressman, I know you have another interview in a moment, so thanks for your time. I would love to follow up with you on this story sometime soon.

Congressman Grayson: Super. This is the story of the millennium. There are very few stories you can ever write about where the numbers involved have 13 digits in them. I look forward to staying in touch.

Our upcoming book will feature interviews with stars such as Jim Rogers, Dylan Ratigan, John Mauldin, Dr. Brett Steenbarger, Todd Harrison, and many more. To make a free reservation for your copy from our first printing, simply join our V.I.P. list below:

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As part of his larger spending plan, President Obama introduced a new proposal last week that would reimburse homeowners who purchase energy-efficient appliances and insulation. The new scheme is intended to stimulate the economy and reduce the energy bills of those who take full advantage of it by 20%.

Exact details of the new program weren’t elaborated on, but according to a source involved in writing the bill, homeowners may be eligible for a 50% rebate on qualified purchases, potentially coming out to a maximum of $12,000. At the moment, income remains an irrelevant factor in determining how much a household is able to receive.

Many questions remain unanswered about the proposed program expected to cost nearly $10 billion: how will it be administered, and how will it be protected from swindlers who may take advantage of these newly available funds?

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On Monday night we posted Tyler Durden’s breakdown of the SIGTARP audit of the AIG bailout. Will this report resurrect the Fed Audit movement now that Ron Paul’s End the Fedbook release PR has died down?

I contacted Congressman Alan Grayson to see how some of our representatives view the jaw-dropping report:

“This audit report is a vivid illustration of the danger of secret bailouts that transfer public resources to private banks.  When all else fails, Wall Street can still stick it to the taxpayer.”

Congressman Grayson and I discussed Fed Transparency back in December. Since then, H.R. 1207 (the Federal Reserve Transparency Act) has been floating in the water. After reading the AIG Audit Report, if you don’t believe the Fed needs more transparency, your retirement account may continue floating in the water too.

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This article was originally published at Zero Hedge on September 15, 2009.

It was just yesterday that Tim Geithner was lying that banks are constantly increasing lending to consumers. Well, yet another lie refuted. Banks, and not just any banks, but those receiving government bail outs and subsidies, continued constricting lending in July, with total average loan balance outstanding declining by $54 billion from $4,295 billion to $4,241 billion, a 1.3% decline, following a 1.1% decline in June.

As for the reason why loan originations in July declined a whopping 10% after posting a 12.7% increase in June, the government simply noted that this was due to “decreased demand from borrowers.”

And so the circular lie continues: the government claims lending is increasing, when in fact, it is not, and when confronted with this fact, the government claims this is due to lack of interest. Furthermore, with retail sales reportedly higher, the consumer is allegedly spending more, with average wages declining, meaning consumer need to borrow to finance purchases, or else eat into their meager savings. Yet all this is occurring on the foreground of a rapidly increasing savings rate. So consumers are not borrowing, they are saving more, yet somehow sales are increasing: the lie is so circular that if there was a Kudlowbot, its head would explode trying to “spin” this null argument.

Last but not least, the primary politically correct reason for bailing out banks was to ensure that they can continue lending. So here are the numbers: $4,434.7 billion in loans outstanding in January, $4,241.4 billion in July: a 4.4% decline, which, all else being equal, would have to be offset by a comparable increase in the rate of savings. However, with wages declining and more and more people becoming unemployed, all else is anything but equal. At least bank CEOs get their precious bail out capital and golden parachute packages (ref: John Thain) as popular media outlets continue spinning lies and spewing factless propaganda.