Today's thoughts run in several directions at once. We wriggle into them as into a badly made sweater: one arm too long, shoulders too wide, and a hole too small to get our head through. It may not look elegant, but it will be serviceable.

We begin with the short end of the thing:

Thirty-five years ago yesterday, the U.S. government told its foreign creditors to drop dead. It does not dare so say so out loud, but now it is about to say the same thing to the American people...and to foreign holders of U.S. paper, too.

That is what our faith-based global monetary regime has wrought: a massive increase in debts and obligations.

But who will pay it?

We turn to our family hearth for illustration.

"Look, I don't owe you anything," was what we heard yesterday at the breakfast table. Jules, back from college, feels he should not be treated like the younger children.

His mother had just given him a long list of chores.

"Well...hold on...we gave you your life," countered his mother.

"Hey, I didn't ask you for that; you did it for your own sakes," Jules replied.

"Well, how about this: we just gave you breakfast. The least you can do is to take the dishes to the kitchen," his mother said.

"No, you invited me to come here. I really didn't want to come here for the summer. There's nothing to do here. You can't invite me and then force me to work," Jules noted.

Jules, you will note, is in a weak bargaining position. He does not earn his own way in life. He cannot really say "no" to his parents, without potentially suffering a big drop in his standard of living.

But we rush to add that we have not invited you, dear reader, into our dining room and into our family squabbles to make idle chatter. You probably get enough of that at home. We do it to illuminate our subject: what one generation owes another.

You see, Jules wants to feel independent, a young man...free, white, and over 18. He should be able to do what he pleases, he figures. But he has the U.S. Congress, the Bush administration and the world's dollar-based monetary system all working against him, hammering out shackles, chains, and leg irons that he and the rest of his generation will have to wear their entire lives. The latest report in the Financial Times claims the shackles weigh in at $79 trillion. If there are 100 million people in Jules' generation, that works out to $790,000 for every one of them.

We played the part of provocateur, as usual, gladly.

"What do you think of that, Jules?" we needled our young man.

"You've got to be kidding. I'm not paying it. And I couldn't pay it even if I wanted to," came the reply. "And why should I have to work all my life so some old geyser "

"Jules..." protested his mother.

"Well, so people of your generation can retire to Florida on their fat, happy derrieres? Besides, it's all smoke and mirrors," Jules said.
There is, of course, so much smoke it is like the Great Fire of San Francisco, and a fun house full of mirrors, too - in the fed's Magic Money Show, which is what makes it so entertaining.

Every public spectacle is amusing in its own way, but all have the same basic theatrical elements: each begins with legerdemain or an outright lie, it progresses into a farce, and ends in disaster. The founding lies of the Fed are as follows: that a bank can create money out of thin air...that experts who can't tell you whether oil is going up or down tomorrow can nevertheless manage an entire economy...and that a committee of bureaucrats can cobble together a short-term lending rate better than the market itself.

This same Fed has now turned the world economy into a financial circus; accountants juggle the books; deficits soar through the air like trapeze artists; the animals in the trading pits roar; the magicians try to convince the rubes that they can't believe the evidence of their own eyes. And, the clowns at the Fed pretend that they know what they are doing.

The dollar is now so elastic that people think that the budget can be stretched like Lycra tights on a fat woman, and yet somehow it will snap right back into place. They believe they can spend, spend, spend...and daddy will never take the T-bird away.

In the last nine years, $40 trillion worth of new financial commitments has been added to Social Security and Medicare alone, USA Today tells us.

Who is supposed to make them good?

Jules and his friends?

It is as if a man were to go into a restaurant, order a bottle of champagne, enjoy a nice meal and when the bill comes around, say, "My wife had a son last week...save this for him. Just let the interest build up until he's ready to begin paying it off."

"Yeah, right," says Jules.

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.