Consider a lifeboat, with 12 people on board, in the middle of the ocean, with no apparent hope of immediate rescue. There is a sail, and the captain knows how to sail the boat and navigate, and there are 5 other people who are experienced sailors. The rest are old folks and children. They can reach land in a month, if the wind holds out, but they only have enough food and water for 2 weeks. If they keep everyone on the boat, they will all die. If they throw the old people and the children off the boat now, the remaining 6 might live.
This is how I see the federal budget right now. If we keep paying out Medicare and Social Security at the rate we are paying now, the government will go bankrupt, our economy will collapse, the world economy will collapse, and millions of US citizens will literally starve to death, if they don't get killed in the fight over food and other supplies needed to survive. And billions of people worldwide will face starvation, and there will be wars over food and water. I don't think this is hyperbole. I think it is literally true.
If 20 or 30 trillions of dollars worth of US government obligations goes into default, everything in the world will go into default, and we will have a depression the likes of which has not been seen in a thousand years, if ever.
We're facing the greatest disaster of all time. Federal bankruptcy and default.
The only way to get the budget into manageable shape is to cut entitlements. That's where the money is. Some people are going to have to endure hardship so our economy can survive.
Right now, we're headed for a new dark age where personal security is almost non-existent and people fight over scraps in order to survive.
Will we wake up in time?
"How did it happen, Daddy? Was it nuclear war?"
"No, son. It was Medicare."
How does the government go "bankrupt" when it can print as much of the world currency as it needs? The world has not used "money" in many years. We exclusively use privately-issued debt instruments as "money".
Democrats won't do it because entitlements are a cornerstone of their platform. Republicans won't do it because they'll be labeled with every -ist derogation known in the English language, and then some.
(06-16-2017, 08:15 AM)Byron LeftTown Wrote: [ -> ]How does the government go "bankrupt" when it can print as much of the world currency as it needs? The world has not used "money" in many years. We exclusively use privately-issued debt instruments as "money".
What do you think would happen if we printed money to pay our debts? We're talking 20 or, maybe by then, 30 or more, trillions of dollars of US government debt.
That much money printing would devalue the currency and cause inflation. Inflation would lead people to demand more interest in exchange for buying our debt. No one is going to buy a bond that pays 2% when inflation is 4%. So the government will have to offer more interest in order to sell the bonds. More interest on the bonds means a greater chunk of the federal budget will go to interest, which will make the deficits and the debt much much worse and the result will be the same. At some point, we will either have completely out of control runaway inflation, or government default, and probably government default anyway.
We cannot avoid bankruptcy and default by printing money. It doesn't work.
The only solution is to start NOW to solve this problem. The longer we wait, the worse it will be.
(06-16-2017, 07:12 AM)The Real Marty Wrote: [ -> ]Consider a lifeboat, with 12 people on board, in the middle of the ocean, with no apparent hope of immediate rescue. There is a sail, and the captain knows how to sail the boat and navigate, and there are 5 other people who are experienced sailors. The rest are old folks and children. They can reach land in a month, if the wind holds out, but they only have enough food and water for 2 weeks. If they keep everyone on the boat, they will all die. If they throw the old people and the children off the boat now, the remaining 6 might live.
Great capture paragraph. It definitely got my attention.
Here is my perspective. Both, the boat situation and medicare are a result of bad planning. As such you cannot discard people and just let them die due to broken promises. The people of prior generations who worked hard in factories were promised medicare and social security and thus worked their [BLEEP] off throughout their life.
Our generation is a fend for ourselves generation resulting from layoffs, lack of pension, and a cut throat corporate environment. If you were to say social security were to be cut off in the year 2050 so be it but we need to support our elders who were brought up during the depression and fought wars to give us our freedom.
The numbers are meaningless. Might as well be 100 trillion - it will never be paid back because the debt does not really exist. It's a total Ponzi scheme. The "government" is borrowing from "itself". It makes "payments" with more borrowed "money".
Everyone "buys a bond" that pays 2% when inflation is 4%. There are no risk-free investments that keep up with inflation. A whole generation's savings have been destroyed with 0.01% interest on savings accounts. Suppose you worked all your life and retired with $400,000. At current interest rates you would earn $40 per year.
(06-16-2017, 09:17 AM)Byron LeftTown Wrote: [ -> ]The numbers are meaningless. Might as well be 100 trillion - it will never be paid back because the debt does not really exist. It's a total Ponzi scheme. The "government" is borrowing from "itself". It makes "payments" with more borrowed "money".
Everyone "buys a bond" that pays 2% when inflation is 4%. There are no risk-free investments that keep up with inflation. A whole generation's savings have been destroyed with 0.01% interest on savings accounts. Suppose you worked all your life and retired with $400,000. At current interest rates you would earn $40 per year.
I know I'm going down the rabbit hole here, but I have to ask.
If the debt does not really exist, and we can just print as much money as we want, then why don't we just print the money to pay the government's obligations, and then we can reduce everyone's taxes to zero? If the numbers are, as you say, meaningless, then why levy taxes at all?
(06-16-2017, 08:28 AM)The Real Marty Wrote: [ -> ] (06-16-2017, 08:15 AM)Byron LeftTown Wrote: [ -> ]How does the government go "bankrupt" when it can print as much of the world currency as it needs? The world has not used "money" in many years. We exclusively use privately-issued debt instruments as "money".
What do you think would happen if we printed money to pay our debts? We're talking 20 or, maybe by then, 30 or more, trillions of dollars of US government debt.
That much money printing would devalue the currency and cause inflation. Inflation would lead people to demand more interest in exchange for buying our debt. No one is going to buy a bond that pays 2% when inflation is 4%. So the government will have to offer more interest in order to sell the bonds. More interest on the bonds means a greater chunk of the federal budget will go to interest, which will make the deficits and the debt much much worse and the result will be the same. At some point, we will either have completely out of control runaway inflation, or government default, and probably government default anyway.
We cannot avoid bankruptcy and default by printing money. It doesn't work.
The only solution is to start NOW to solve this problem. The longer we wait, the worse it will be.
While you're right that the only way to dig out of this hole is to bite the bullet and cut entitlements, the odds of that happening are non-existent. There's nobody with the spine to do the right thing who actually has a say in the matter.
Entitlements are going to gobble up a larger piece of the GDP as we progress as baby boomers continue to hit retirement age, and the number of workers required to just maintain that increases, the country is going to fall deeper into a hole that it can't dig out of (we may already be past that point).
If you look at the birth rate, there are going to be fewer and fewer people paying into the system to support the ever increasing entitlements. Anyone who has dared to suggest doing what is best for the country is vilified and attacked as someone who wants to throw grandma over a cliff, starve children, and let people die because they can't get proper medical care. Fear is a powerful motivator. What nobody has ever attempted to do is to use the same tactics to show people just how bad things could get if we continue down the current path.
The government has seen record tax revenue in recent years, but the deficit has grown at an even higher rate. Quantitative easing has propped up the myth that the economy is growing, but now the Federal Reserve is starting to slowly pull back and raise interest to get that money out of the system. It was great for the stock markets, but the potential of hyper-inflation is a legitimate risk.
The typical progressive response will be to tax the rich more and not cut entitlements in any way. We could tax the upper 1% at 100%, and it would barely make a dent in the deficit.
There was an interesting video I saw years ago where they broke down what you would need to do to squeeze enough revenue out of the country just to cover the cost of operating for a year. It's a bit dated, but all that means is that it doesn't take into account things like the ACA. Still, it shows you what would be required to just cover our expenses for a year.
As far as the US going bankrupt, I'm not sure how that could happen, although I'm sure it could. The country holds extensive land and mineral rights assets that could be used to leverage the debt. It still wouldn't wipe out the deficit, but it would avoid a full-on collapse.
At the end of the day, entitlements are going to be cut. It has to happen. But, odds are, it's not going to do so until the nation is literally on the brink.
You can't just look at entitlements though as they make up a small percentage of the overall federal budget.
The first step to getting our of this hole would be to end base line budgeting and actually freeze all spending at current levels across the board. Until that happens and we talk about true numbers nothing will change.
(06-16-2017, 10:25 AM)FBT Wrote: [ -> ] (06-16-2017, 08:28 AM)The Real Marty Wrote: [ -> ]What do you think would happen if we printed money to pay our debts? We're talking 20 or, maybe by then, 30 or more, trillions of dollars of US government debt.
That much money printing would devalue the currency and cause inflation. Inflation would lead people to demand more interest in exchange for buying our debt. No one is going to buy a bond that pays 2% when inflation is 4%. So the government will have to offer more interest in order to sell the bonds. More interest on the bonds means a greater chunk of the federal budget will go to interest, which will make the deficits and the debt much much worse and the result will be the same. At some point, we will either have completely out of control runaway inflation, or government default, and probably government default anyway.
We cannot avoid bankruptcy and default by printing money. It doesn't work.
The only solution is to start NOW to solve this problem. The longer we wait, the worse it will be.
While you're right that the only way to dig out of this hole is to bite the bullet and cut entitlements, the odds of that happening are non-existent. There's nobody with the spine to do the right thing who actually has a say in the matter.
Entitlements are going to gobble up a larger piece of the GDP as we progress as baby boomers continue to hit retirement age, and the number of workers required to just maintain that increases, the country is going to fall deeper into a hole that it can't dig out of (we may already be past that point).
If you look at the birth rate, there are going to be fewer and fewer people paying into the system to support the ever increasing entitlements. Anyone who has dared to suggest doing what is best for the country is vilified and attacked as someone who wants to throw grandma over a cliff, starve children, and let people die because they can't get proper medical care. Fear is a powerful motivator. What nobody has ever attempted to do is to use the same tactics to show people just how bad things could get if we continue down the current path.
The government has seen record tax revenue in recent years, but the deficit has grown at an even higher rate. Quantitative easing has propped up the myth that the economy is growing, but now the Federal Reserve is starting to slowly pull back and raise interest to get that money out of the system. It was great for the stock markets, but the potential of hyper-inflation is a legitimate risk.
The typical progressive response will be to tax the rich more and not cut entitlements in any way. We could tax the upper 1% at 100%, and it would barely make a dent in the deficit.
There was an interesting video I saw years ago where they broke down what you would need to do to squeeze enough revenue out of the country just to cover the cost of operating for a year. It's a bit dated, but all that means is that it doesn't take into account things like the ACA. Still, it shows you what would be required to just cover our expenses for a year.
As far as the US going bankrupt, I'm not sure how that could happen, although I'm sure it could. The country holds extensive land and mineral rights assets that could be used to leverage the debt. It still wouldn't wipe out the deficit, but it would avoid a full-on collapse.
At the end of the day, entitlements are going to be cut. It has to happen. But, odds are, it's not going to do so until the nation is literally on the brink.
This.
It's possible to cut future entitlements, such as raising the retirement age. That was done in the 1980s, so there's precedent. Eliminating whole government agencies would help a lot, but that's another thing with no chance of happening. I'm still an advocate of the Fair Tax. That has no chance either.
We already do just print the money to run the government. $70 billion is mailed out each month in Social Security checks, but there is no "money" in the account - Social Security is literally a file cabinet full of IOUs in Parkersburg, West Virginia.
http://usatoday30.usatoday.com/news/wash...fund_x.htm
We could absolutely reduce everyone's taxes to zero, since
zero of the income tax collected goes to run the government. Please read the 1982 Grace Commission Report to confirm this fact.
The 1913 Income tax was invented to give a sense of value to the worthless 1913 Federal Reserve Notes which replaced legal US Currency. The Federal Reserve is a private corporation. Their Notes cannot be redeemed for lawful money = defined in the 1792 Coinage Act as 371.25 grains of fine silver.
(06-16-2017, 10:35 AM)copycat Wrote: [ -> ]You can't just look at entitlements though as they make up a small percentage of the overall federal budget.
The first step to getting our of this hole would be to end base line budgeting and actually freeze all spending at current levels across the board. Until that happens and we talk about true numbers nothing will change.
Good luck getting them to do that! It would take away a political weapon where a reduction in the increase from the prior year is defined as a cut.
There have been people pushing for zero based budgeting for years, and it falls on deaf ears as the bureaucracy continues to expand. Just doing that alone would certainly have positive consequences.
(06-16-2017, 10:38 AM)MalabarJag Wrote: [ -> ]This.
It's possible to cut future entitlements, such as raising the retirement age. That was done in the 1980s, so there's precedent. Eliminating whole government agencies would help a lot, but that's another thing with no chance of happening. I'm still an advocate of the Fair Tax. That has no chance either.
Exactly.
If the cuts focus not only on entitlements, but also on legitimately cutting back the size of government, there are a couple of departments that could be significantly scaled back or eliminated all together in favor of passing those functions back to the states. Unfortunately, the departments that would be most likely targeted will never be cut because of the political clout they wield. I don't care if the country was literally bankrupt, they'd fight tooth and nail to stay alive.
The Fair Tax plan is a terrific idea that will never see the light of day. It's kind of like the Penny Plan where they were simply asked to cut 1% for every dollar they budgeted. One percent was deemed too steep a "cut".
(06-16-2017, 11:50 AM)FBT Wrote: [ -> ] (06-16-2017, 10:35 AM)copycat Wrote: [ -> ]You can't just look at entitlements though as they make up a small percentage of the overall federal budget.
The first step to getting our of this hole would be to end base line budgeting and actually freeze all spending at current levels across the board. Until that happens and we talk about true numbers nothing will change.
Good luck getting them to do that! It would take away a political weapon where a reduction in the increase from the prior year is defined as a cut.
There have been people pushing for zero based budgeting for years, and it falls on deaf ears as the bureaucracy continues to expand. Just doing that alone would certainly have positive consequences.
Exactly. If they would do this one simple thing the budget would balance itself over time.
When I hear "government" and "bankrupt", I can't help but smile about the millions upon millions of tax dollars being spent on this bogus Russian investigation.
Priorities.
(06-16-2017, 10:50 AM)Byron LeftTown Wrote: [ -> ]We already do just print the money to run the government. $70 billion is mailed out each month in Social Security checks, but there is no "money" in the account - Social Security is literally a file cabinet full of IOUs in Parkersburg, West Virginia.
http://usatoday30.usatoday.com/news/wash...fund_x.htm
We could absolutely reduce everyone's taxes to zero, since zero of the income tax collected goes to run the government. Please read the 1982 Grace Commission Report to confirm this fact.
The 1913 Income tax was invented to give a sense of value to the worthless 1913 Federal Reserve Notes which replaced legal US Currency. The Federal Reserve is a private corporation. Their Notes cannot be redeemed for lawful money = defined in the 1792 Coinage Act as 371.25 grains of fine silver.
The funny thing is that our whole economy is built on rocks that only have value because we say they do. Paper, gold, silver, diamonds, coins, land, stocks, bonds, whatever...it's all a house of cards.
(06-16-2017, 09:59 AM)The Real Marty Wrote: [ -> ] (06-16-2017, 09:17 AM)Byron LeftTown Wrote: [ -> ]The numbers are meaningless. Might as well be 100 trillion - it will never be paid back because the debt does not really exist. It's a total Ponzi scheme. The "government" is borrowing from "itself". It makes "payments" with more borrowed "money".
Everyone "buys a bond" that pays 2% when inflation is 4%. There are no risk-free investments that keep up with inflation. A whole generation's savings have been destroyed with 0.01% interest on savings accounts. Suppose you worked all your life and retired with $400,000. At current interest rates you would earn $40 per year.
I know I'm going down the rabbit hole here, but I have to ask.
If the debt does not really exist, and we can just print as much money as we want, then why don't we just print the money to pay the government's obligations, and then we can reduce everyone's taxes to zero? If the numbers are, as you say, meaningless, then why levy taxes at all?
The economy is built on the population's faith in the currency. If you print more money the costs go up because prices are how infinite dollars deal with the scarcity of finite resources. When inflation gets out of control then the currency loses its value and eventually people will lose faith in it and use other methods of exchange. If you want to see it in action, read the book Fiat Money Inflation in France, its not long and describes the French economy between the Revolution and Napoleon and the rise and fall of the Assignat.
And taxes are for two things, to buy votes and to control the population.
[quote pid='1002962' dateline='1497878253']
The funny thing is that our whole economy is built on rocks that only have value because we say they do. Paper, gold, silver, diamonds, coins, land, stocks, bonds, whatever...it's all a house of cards.
[/quote]
This shows you don't really understand the difference between fiat value and inherent value. The ounce of gold has true value. Someone invested many gallons of fuel and many hours of labor to bring it out of the ground. It can be used to make valuable things like beautiful jewelry, high-tech circuitry, or Donald Trump's toilet seat.
The $100 Federal Reserve Note has no inherent value. If you think it does, then explain how it has 100x more inherent value than a $1 Federal Reserve Note. I won't hold my breath. Its real value comes as something to burn for heat, to wipe yourself with or to stuff into a coat lining to keep yourself warm.
Of course its fiat value (value assigned by government decree) is $100 FRNs and whatever real goods you can trade it for before it becomes as completely worthless as every other fiat currency in history.
(06-19-2017, 10:19 AM)Byron LeftTown Wrote: [ -> ][quote pid='1002962' dateline='1497878253']
The funny thing is that our whole economy is built on rocks that only have value because we say they do. Paper, gold, silver, diamonds, coins, land, stocks, bonds, whatever...it's all a house of cards.
This shows you don't really understand the difference between fiat value and inherent value. The ounce of gold has true value. Someone invested many gallons of fuel and many hours of labor to bring it out of the ground. It can be used to make valuable things like beautiful jewelry, high-tech circuitry, or Donald Trump's toilet seat.
The $100 Federal Reserve Note has no inherent value. If you think it does, then explain how it has 100x more inherent value than a $1 Federal Reserve Note. I won't hold my breath. Its real value comes as something to burn for heat, to wipe yourself with or to stuff into a coat lining to keep yourself warm.
Of course its fiat value (value assigned by government decree) is $100 FRNs and whatever real goods you can trade it for before it becomes as completely worthless as every other fiat currency in history.
[/quote]
Again, the rock has value because you say it does. How much value because someone somewhere set a price. In the end it's still just a rock.
And I know and understand those concepts perfectly, you're just using the size and type of a rock as the indicator of value vs the numbers printed a a piece of paper. It's existential value in either case.
(06-16-2017, 08:15 AM)Byron LeftTown Wrote: [ -> ]How does the government go "bankrupt" when it can print as much of the world currency as it needs? The world has not used "money" in many years. We exclusively use privately-issued debt instruments as "money".
Correct, but even hard currency like gold is just metal that has a pretty color and physical properties that we like. Commodities are the real value, control the food and water and everything else will come to you.
(06-19-2017, 01:43 PM)HandsomeRob86 Wrote: [ -> ] (06-16-2017, 08:15 AM)Byron LeftTown Wrote: [ -> ]How does the government go "bankrupt" when it can print as much of the world currency as it needs? The world has not used "money" in many years. We exclusively use privately-issued debt instruments as "money".
Correct, but even hard currency like gold is just metal that has a pretty color and physical properties that we like. Commodities are the real value, control the food and water and everything else will come to you.
Very similar to religion, ie my sacred text is the Word of God while yours is just a fairy tale. My tangible embodiment of value is acceptable while yours is just a piece of paper.