USA is bankrupt

We've had sunshine politics for so long, it's now considered a right by many that it should never rain. I mean, up until tonight, the neo-conservative line on the forum was that anyone who said we had massive financial problems "hated America".

People really need to smarten up, because this is serious stuff.

In related news, the FBI can't pay it's bills.
http://news.yahoo.com/s/ap/20080110/ap_on_go_ca_st_pe/fbi_unpaid_phone_bills

Excerpt

 

WOW!!! I'm speechless. What a disaster. Then again nothing surprises me about our government, I've lost faith in it.

 

American may not support the war, but the Chinese and the people in the middle east do, they love our stable secure government bonds. But selling bonds or the war in Iraq are not the problems, we promised people more then we can afford and during the good times spent the extra money that came in

 

Germany tried that and it failed miserably.

 

This is pretty funny. I didn't catch it the first time.

"If the fed..."

LMAO.

The thing is, as soon as people understand how the FED increases the monetary supply, and who gets to use the money first, before the economy adjusts aggregate pricing to compensate, you start to feel sick in your stomach, and then you are overcome by a sudden desire to vote for the Republican candidate from Texas.

 

That's incorrect, and we're not going to get past these problems in an effective way until people understand what the biggest cause of government waste and deficit spending is.

War.

It has enormous costs, social and economic, and returns no social benefit to the society, in fact, if you ascribe to the theory of blow back, one could argue that it yields a negative return by undermining domestic safety.

There are times you have to fight for self defense, but we're still feeling the effects of Vietnam war spending, because we no longer have a gold standard and government spending and printing is totally unrestrained (except by the eventual collapse).

 

It's such a simple concept yet most people (I guess Gtech included) don't get it. If you increase the supply of something it looses it value.

 

Right The Iraq war is driving us into bankruptcy which we spend $200 billion year on but not Social Security and Medicare which we spend $1.4 trillion a year on

 

Social Security. You can't take people's money their entire working life for a pension, and then default on the pension.

The Iraq war costs are the current cost, not the long term costs. Couple that with DoD spending, where they can lose a trillion dollars like pocket lint, and you have the makings of an incredible boondoggle.

 

If they're so much in debt, where do they get the money to spend on war and stuff?
I'm really clueless when it comes to the economy but this sounds worse than global warming..

 

They borrow it from foreign governments like China and we pay up the wazoo on interest every single day.

 

They obviously won't be able to pay it back.. and if they can't pay it back, won't they just bring other countries' economies down too?

 

It will have a global ripple effect.

A simple view of how we got here is this.

When the working class was greater than the "retired class", surpluses were paid into Social Security. Those surpluses were supposed to be banked, and earning interest at Treasury rates. The interest it was assumed would compensate for inflation over time, and by compounding, grow the fund.

But what almost every government does in the world, with a social trust fund, is skim the surplus out, and spend it as general revenue. Politicians cannot resist the lure of having a surplus available and not spending it.

Well, fast forward to today. The first of the Baby Boomers are set to become Social Security eligible, with another potential 78 million over the next 20 years. But the fund is empty, and as these 78 million transition from the workforce into retirement, the fund will go into a revenue deficit (bring in less than it is sending out).

Now if the surpluses (plus interest) were there, that would not be a crisis. But because the money has been leached out, and never replaced, the government is going to go broke, or deny millions of people a livable pension unless it takes drastic measures now.

Well, you might ask, how can they go broke, when they always seem to spend more than they bring in?

That's the problem with an economic policy based on deficit spending. The failure can be pushed around, covered up, and hidden for a long time, until the wave of debt becomes due, simultaneously.

And that is what we are facing now. As seems to always happen, everyone assumes that the sun is supposed to shine every day. But it doesn't we all know that. We're on the doorstep to the entitlement crisis with a devaluing dollar, a very likely recession, and very little domestic manufacturing capability.

It's not all bad though. We could turn this around. But it has to happen fast, and the reforms have to be substantial.

Unfortunately, there is no political will to get this done, and most people are oblivious to the problem, what it means to them, their children and the future of America.

 

Excellent post in a fascinating discussion. Thanks.

 

Nice little mention of Ron Paul in there too. Hopefully stories like these will wake people up to how important the stuff Paul is saying about the economy is. People say economy is their #1 issue in these exit polls and Paul is the only who really talks about doing anything serious about the economy.

 

My pleasure. I cannot stress how important this is. The partisan arguments are irrelevant now. We need a consensus on how to proceed, and proceed progressively, QUICKLY.

And it has to start with people here identifying their representatives, and making it clear their position and voting record with regards to fiscal policy will determine any chance at reelection.