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I realize it's not responsible to site statistics without providing the sources of same, but I'm doing this anyway based on recent numbers found readily on some fairly reputable websites just to state the irony of these 'best of times' we live in.
Mull over these figures -
Total US Debt: 44 trillion +
National Debt: $ 8,566,000,000,000.+
($147,312. for every man, woman & child in the US)
Healthcare expenditures US 2006 projected at $2.17 trillion +
US trade imbalance 2006 in excess of $ 500 billion
China holds $340 + billion in US Treasury Bonds
50% + US workers have less than $50,000 saved for retirement, and 75% of workers with little in savings report less than $10,000 dollars in retirement savings.
..so let's go spend billions & billions in ethnic wars abroad & worry about which movie star is sleeping with which movie star.
What was America's GDP valued at last year? What percentage of GDP is this debt? How does this compare to other industrialized nations? How does the current American debt% of GDP compare historically?
America's GNP is about 12 Trillion dollars. But Brian makes great points. We are so far in personal and public debt that it's a wonder the financial system functions at all. Put a crashing housing market in the mix and trillions of dollars of value beginning to disappear like the tech stock values during the 2000 stock market crash, and you have wealth evaporation occuring even as debt levels continue to rise. There is no way out of this unimaginable debt except by default. And the U.S. government will (while not officially) default by allowing explosive inflation at some point to pay these debts down with hyperinflated dollars. People who are in severe debt risk their futures regardless of which direction a U.S. economic crash goes. U.S. easy credit and encouragement to borrow with exotic loans and mortgages and live on credit cards with $50 late fees and 29% interest have made potential economic slaves of millions of Americans. The only protection is avoiding debt and paying off what you owe as fast as possible. Other nations are heavily in public debt too like Italy, Japan, Britain, etc, but not one of them on the scale of the U.S. where not only is public debt in the stratosphere, personal debt is too. Credit card debt is mostly American, Canadian, British, and Australian. Most other countries don't use credit cards like we do.
The feds wont allow hyperinflation. They will raise interest rates as high as they need to stop inflation. I can see inflation rising to maybe 5% but thats it.
($147,312. for every man, woman & child in the US)
Just a minor quibble:
The current national debt, approaching $9 trillion as you note, is $29,000 per capita, or more meaningfully, $70,000 per taxpaying household.
The $44 trillion number is the minimum future unfunded social security and medicare benefit (not counting perhaps $12 to 16 trillion for the new medicare prescription drug benefit), which we of the "baby boomer" generation have declared our children and grandchildren "owe us". That's where the $147,312 per capita (over $500,000 per taxpaying household) number comes from.
But it isn't technically a debt, like a note or bond, but is only an obligation under current laws. Future voters can (and in my view, should, and in reality will simply have to) change the law to cut the benefits.
Just a minor quibble:
The current national debt, approaching $9 trillion as you note, is $29,000 per capita, or more meaningfully, $70,000 per taxpaying household.
The $44 trillion number is the minimum future unfunded social security and medicare benefit (not counting perhaps $12 to 16 trillion for the new medicare prescription drug benefit), which we of the "baby boomer" generation have declared our children and grandchildren "owe us". That's where the $147,312 per capita (over $500,000 per taxpaying household) number comes from.
But it isn't technically a debt, like a note or bond, but is only an obligation under current laws. Future voters can (and in my view, should, and in reality will simply have to) change the law to cut the benefits.
As a 20-year-old who has now been working for four years and watching his paycheck continually get brutalized by social security deductions, can I ask what's going to happen to MY generation in 45 years or so? I'm not willing to accept an "I.O.U." from the government in what is supposed to be MY hard-earned money! Unless the problems in the social security system are corrected, we're going to see millions of angry future senior citizens in my generation heading to Washington DC and pillaging the Capitol! As life expectancies continue to rise, we're going to soon see many more people drawing from the system than paying into it, are we not? We already have about 20% of the population here in the Scranton area in excess of age 65, so this "aging" problem is probably going to reach here, AZ, and FL first before anywhere else!
As a 20-year-old who has now been working for four years and watching his paycheck continually get brutalized by social security deductions, can I ask what's going to happen to MY generation in 45 years or so?
Please accept my apology on behalf of the 'boomer generation. We have virtually guaranteed your standard of living will be lower than ours, because 1/4 of your income will be going to us for the rest of your working life.
Pillaging the Capitol wouldn't help. I suggest voting. After all, it's only because my generation votes that we were able to rig such a vast intergenerational transfer of wealth from you to us.
I know there's no one to vote for today. Until a larger number of your generation vote, you won't even have candidates willing to run on a meaningful SocSec reform platform, and worth voting for.
The sad thing is that rather modest reforms now (indexing the COLA to wages, not prices) would avoid drastic reforms later (a 30% cut in SS payments). But because your generation doesn't vote, no politician dares represent your interests and even propose this.
p.s. It's not just social security taxes you should be worrying about. Under the Unified Budget Act, we spent the social security trust fund and refilled it with Treasury notes, which will be cashed in to pay our SocSec benefits. It is impossible to run $1 trillion/year Federal deficits without runaway inflation, so your income taxes shall increase by about 50% to repay us. Again, my apologies.
p.p.s. Oh, I almost forgot your question, "What will happen in 45 years?" Well, follow our example, and pass the debt on to your grandkids! Seriously, once my 'boomer generation starts dying off around 2036, the demographics will begin to improve. So it's only YOUR generation that is truly screwed.
Last edited by RodFarlee; 11-08-2006 at 07:43 AM..
The feds wont allow hyperinflation. They will raise interest rates as high as they need to stop inflation. I can see inflation rising to maybe 5% but thats it.
NAF, I'm sorry, but perhaps you don't understand the system? I'm not sure I do much better, but maybe just enough to outline the problem.
The Federal Reserve Board has control only of the Federal funds discount rate offered to banks for overnight loans. They have no control of longer term interest rates (except by talking, and indirectly by juggling various things temporarily). Long term rates are set entirely by the market, at auctions of Federal notes and many other public and private transactions. If buyers (e.g. foreign banks) begin to doubt the future value of the dollar, they will demand higher interest rates.
The problem MoMark outlines is that our vulnerability to this has gotten dangerously high, and is rising every day. The fundamentals are weak enough that our economy now relying more on faith than on substance. If foreign banks lose confidence, the Fed could quickly lose control of interest rates.
Last edited by RodFarlee; 11-08-2006 at 07:44 AM..
I'd like to arrainge a deal with the feds that I stop contributing to the Social Security program, get back what I've already contributed, and be responsible for my own retirement. I can't ***** myself any worse than they're gonna ***** me with this farce.
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I'm not willing to accept an "I.O.U." from the government in what is supposed to be MY hard-earned money! 
Unless the problems in the social security system are corrected, we're going to see millions of angry future senior citizens in my generation heading to Washington DC and pillaging the Capitol! 
As life expectancies continue to rise, we're going to soon see many more people drawing from the system than paying into it, are we not? We already have about 20% of the population here in the Scranton area in excess of age 65, so this "aging" problem is probably going to reach here, AZ, and FL first before anywhere else! 
