[SeaGypsy]

I just stumbled on this chart, what do people think about it? No miracle in sight...

[AgentR11]

The difference is that Detroit can't print currency to pay its obligations.

The bulk of that $218k is in the form of unfunded health&pension liabilities. So, basically both are bad, but they aren't really the same kind of bad, nor is one worse than the other.

[Keith_McClary]

That's per capita. It would be two or three times as much per family. And if you take out civil servants, pensioners and families on unemployment benefits, leaving only private sector workers, it would be more like ten times. Fortunately the 1% still has some taxable assets.

[SeaGypsy]

So ok the US can print it's way out of much of this- perhaps- but doing so won't decrease the real cost of resource extraction or imports. Was it Pops a while back said something about the major economies all having a gun to each other's heads? This looks like the gun...

[ohanian]

Get the treasury to print a $100 Trillion dollars Platinum coin and then walk over to the Federal Reserve Bank to make a deposit.

Now that's what I would call a Money Walk.

[Timo]

$this->bbcode_second_pass_quote('ohanian', 'G')et the treasury to print a $100 Trillion dollars Platinum coin and then walk over to the Federal Reserve Bank to make a deposit.

Now that's what I would call a Money Walk.

[Fishman]

Ah, the Detroitification of America. History would seem to indicate that when a country's debt outweighs its GDP, bad things happen. Welcome to the obamanation, that causes desolation. Inflation follows with all those on disability, welfare, seeing their government check unable to buy a weeks food. But hey, they voted for it. No one, no one would start a business or make major hiring under this administration. OOPS, I stand corrected, 80% of the last job data was part time.
On the side, my figs are coming in gangbusters and my chestnut trees look great, first batch of goumi berry jelly this year.

[Lore]

Correction, no one is hiring under the last two administrations. Corporate America has learned to operate just as effectively with less people, younger part time under paid people, cheap labor from other countries and where that doesn't cut it, automate the hell out of everything.

The wage disparity will continue to grow between the small minority of moochers at the top and the ever shrinking middle class until the lid blows off.

We will never see an honest 6% employment number in the US within most of our life times again, no matter who is in charge of government.

[Timo]

$this->bbcode_second_pass_quote('Lore', 'C')orrection, no one is hiring under the last two administrations. Corporate America has learned to operate just as effectively with less people, younger part time under paid people, cheap labor from other countries and where that doesn't cut it, automate the hell out of everything.

The wage disparity will continue to grow between the small minority of moochers at the top and the ever shrinking middle class until the lid blows off.

We will never see an honest 6% employment number in the US within most of our life times again, no matter who is in charge of government.

[Pops]

Correct me if I'm wrong but figured on an accrual basis, isn't a baby automatically saddled with an "unfunded liability" of millions?
Diaperss, beer, tuition, $50k of living expenses every year for 50 years of working life, then retirement cost too? That's $2 or 3 million that he doesn't have at birth but those are his "unfunded future liabilities" aren't they? Gads, you'd think he would crawl back in!

Come on, future liabilities aren't debt, they are predictions. It makes a good thread title and Fox headline but there is a difference between unfunded liabilities and debt. Debt is real, you borrowed it, you owe it. 15 or 18 trillion or whatever of real debt is a big number but adding liabilities is just spin. Spin by who you ask? Of course by the folks who want to pay even less tax than they do already.

Don't you remember? "Shrink gov 'til it's small enough to drown in the bathtub."

Unfunded liabilities are merely an accountants' prediction of future spending - 75 years out. Again, they aren't debt, just predictions, and we all know how reliable those are. SS and medicare in fact are prevented by law from spending anything other than the payroll tax money they bring in so in fact I don't see how they can have unfunded liabilities.

So, want to get rid of those liabilities? Raise the payroll tax ceiling and means test the benefits and those "debts" disappear instantly. Or along the line of lore's post, put an excise tax on robots to support the humans. lol

I don't have a problem with changing the rules. SS and medicare were designed as pay-as-you-go and if the demographics don't allow them to work as promised then change them.

But for cripes sake dont just swallow whatever line some shock-jock or partisan says whole cloth.

[AgentR11]

You have it mostly right Pops, but you are over estimating the potency of debt in comparison with other liabilities; balance sheet wise they aren't different enough for most to even care. By over estimating the potency of debt, you make the gap in importance between the two seem much larger than it is. Both can be paid or eradicated with the same ink, dribbled on the same paper, and signed by the same person. They both create an expectation of an appropriation at a future date. Anything *bad* that would happen with a default, monetization, or proper payout from collected tax revenue on one type, would happen almost identically with the other type.

In the end though, they work the same,
Debt: law says Feds pay Bob $100 in 2020. (because Bob bought a bond in 2010)
Pension liability: law says Feds pay Bob $100 in 2020. (because Bob drew a salary in 2010)

Both laws are subject to revision at any time by Congress, for any reason they deem appropriate. Anyone thinking there is a mystical force that would defend those payouts from Congressional modification is really living in a fantasy land of BAU must always be BAU.

From a conservative pov, there is a certain irritation in that the Feds can carry a pension liability on their books with no impact on any current operation, revenue, or appropriations, whereas they as a business can not. I disagree with this irritation because in the case of the Feds, they carry the obligation denominated in something that they can create any arbitrary amount of at any time they please; thus it makes no rational sense for such a future obligation to have current period ramifications. Someone buying a long bond to hold though... might want consider what that might mean in terms of their own purchasing power preservation.

[Pops]

Well, I don't think you can default on bonds without big consequences, no matter who signs what. Of course you can inflate them away to some extent, not too much though if you want to keep borrowing at a reasonable rate.

Pensions are closer to bonds in "status" than Meidicare and SS, I agree, a default here would be a bad sign. Not a lot of folks trying to change pensions I don't think, maybe they are. The whole bit about government contracts not having any adversaries since the officials don't give a rip about what happens 50 years hence is completely valid IMO - although I don't know what to do about it.

As I say, they all look the same on the books using accrual basis rules but the programs themselves were designed and actually operate more on a cash basis with a cushion, Pay As You Go - I assume so that they would have flexibility for changing demographics, economic ups and downs, etc.

But Social Security has been jiggered with every year since the '70s when they came up with cost of living adjustment and there haven't been any Power Chair riots. In the '80s parts of the benefits were made taxable as income and in fact the rate increased every year 'til then - it was reduced 2% for a couple of years post-recession and no one freaked out when it was raised back up last year. Changes are a big deal to recipients but they are totally separate from the regular US budget, creditworthiness, etc.

It's hard to get past the politics but at some point IF the economy recovers for whatever period and SS/MC need to be changed they should but they have zip to do with the federal debt. The SS trust has never been mingled with the general fund, it's always been in a Lock Box - another oldie but goodie.

[SeaGypsy]

So do you have a better specific debt analysis Pops?

[Pops]

Here from Wiki
$this->bbcode_second_pass_quote('', 'A')s of 30 November 2012, debt held by the public was approximately $11.553 trillion or about 72% of GDP. Intra-governmental holdings stood at $4.816 trillion, giving a combined total public debt of $16.369 trillion.[4][6]

[rollin]

The chart is bogus, real debt is about 50K per person. The future Social Security and Medicare problem can be solved with a stroke of the pen, raise the max limits on salary that the SSI taxes effect , raise the medicare rate and tax all income, not just wages.

With a 15 trillion dollar GDP it should be no problem to pay the debt down.
First, stop giving all that money to other countries and stop trying to run the world, that will save a huge amount of money.
Second, those minimally hiring corporations that will do anything to not hire Americans only pay 4% of the income tax. They also use our infrastructure, our police and legal protection and our resources to profit. They lately got similar rights to citizens, so let them pay their fair share of taxes, tax them like citizens. They have been getting a free ride too long. Another huge amount of money to balance the budget and pay down the debt.
I am sure that a lot of other changes can be made.

[Plantagenet]

GoogleAppleYahooCiscoStsrbucks etc. have paid essentially no taxes for years. It seems unlikely that will change anytime soon given the standoff between congress and Obama over tax reform

[SilentRunning]

Note to my kids: "Work harder to pay for our Social Security and Medicare. Love: Mom & Dad"

[Expatriot]

Did somebody on this thread actually suggest the debt would be repaid?

Some obvious things will happen:

Medicare and SS benes will eventually be reduced.
U.S. economy will continue slow descent into sh-tter.
Average citizen will get poorer.

These are only monetary effects to a small extent. Sure, the bozos who have been running the show for 60 years have taken on too much debt. At the end of the day, so what? Default on the 16 trillion and be done with it.

Don't forget, folks who get their Chapter 7 discharge are much better credit risks and have much better credit than folks who have been drowning in debt for a couple of years and are certainly going under at some point in the near future.

At the end of the day, this isn't a monetary phenomenon, although that's making the pain greater.
It's an energy phenomenon.

We are on the road back to donkeys, and every day is an incremental step toward that end.

People will get poorer because people must get poorer because the unit cost of energy is climbing and energy=economy.

It's that simple. The rest is noise. Sure, sure, rich get richer and all that, but look back at the 3 million years before the fossil fuel age. Poor people were always there, and in much greater numbers than they are today (and much skinnier).

Poor people have been allowed by the fossil fuel age to not be poor for a while.

When the wash is done, however, a man will be worth what he can produce in a year. Without fossil fuels, a man can't produce much, and so he isn't worth much. What? 300 wagon wheels a year?

Our definition of wealth is skewed by fossil fuels.

Of course poor people will proliferate in the next 100 years. What else can possible happen?

In the big picture of history, the Russian Revolution was a fight over who gets the profits from the fossil fuel age.

[PrestonSturges]

3,000,000 jobs to China under Bush, and W's Secretary of Labor (whose family got rich trading with China). She is now married to Mitch McConnell (R-Bejing).

[PrestonSturges]

$this->bbcode_second_pass_quote('Fishman', ' ')No one, no one would start a business or make major hiring under this administration. OOPS, I stand corrected, 80% of the last job data was part time.