U.S. is Insolvent!

using an interest rate to figure future obligations like social security wouldn't be an accurate way of determining that future obligation would it? I mean, if medical costs inflate at 100% that 5% or whatever isn't gonna do squat to help it out.
and to say that we'll just have to change the social security rules to fix it also is a bogus attept to get out of an obligation, unless of course, the government choses to pay back everyone who they have collected that money from, with a decent interest rate attached for use of the money. and even if you did that, unless you wish to see some of the elderly people dying off in the future because of lack of money, lack of food, lack of healthcare, well, my bet is that the future government will be spending alot of money in the future for those baby boomers.

and one thing is sure.....sending our precious young people off to die in a war is NOT HELPING the future tax revenues! many of those late boomers who would have had at least a child to help them will lose that the child in the war. as well as our government losing a taxpayer.

they should have just left the money they had collected from us alone, drawing interest. and be grateful for what we were giving them. if they have to sqeeze now to pay their obligations, I suggest they quit screwing around, building bridges to nowhere, and giving their business buddies all those nice windfalls. at least make an effort!! they ain't doing that are they though. they're spending like drunken sailors, just to come back to us saying we can't do it, see the mess that the economy is in...
it's the mess they've made the economy..and if the late boomers have to pay for it by getting nothing back from their social security, then well, they should also pay for it by getting nothing for their hard labor they put into screwing the danged economy up to enrich themselves and their buddies!!

if they decide to rewrite the laws so the late boomers get nothing, or next to nothing, they they will lose one taxpayer right here!

Originally posted by djohnsto77
Your problem is thinking in a closed system where you need the money in the bank now to pay a future bill.

Social Security is a trust fund. What is being paid out today is designed to come from dividends on what was paid in yesterday.

What was paid in yesterday, however, has been spent... ALL OF IT, plus an additional 9 trillion in the form of debt.

So... tax revenues will rise... but SS due will rise as well. The annuity representing this tax revenue flow will not pay the annuity due (SS) in full because it is not intended to... it is intended to augment the size of the trust fund each year. The trust fund's dividends should then in turn to pay SS. But there is no trust fund, only national debt. That leaves us with a shortpayment. The disparity between what is expected to come in vs. what is expected to go out can be shown to have a:

Net Present Value of negative 44 trillion.

But that's not the case, tax revenues will rise along with inflation rates negating any difference in the time value of money now and in the future in this special case.

????

I don't get it.

Negating any difference in the time value of money?

Money will always have a time value. A dollar in the bank today will always be worth more than a dollar in the bank tomorrow.

Good sir, I do suggest you crack open a copy of Principles of Managerial Finance and do a little reading on the Time Value of Money.

Or at least check wikipedia for a definition of Net Present Value

I am,

Sri Oracle

Originally posted by Sri Oracle
If I owe Jane 20 dollars on 1/1/2010 , the "Net Present Value" is NOT negative 20 dollars.

Net present value (using 5.8) would be:

2010 20
2009 18.84
2008 17.74
2007 16.71
2006 15.75

If I owe Jane 20 dollars on 1/1/2010 and the long term interest rate is 5.8 the Net Present Value of that debt is only $15.75. Managerial Finance 101.

So... if I had $15.75 in my interest bearing (5.8%) savings account today, I would be in position to pay Jane 20 dollars come 1/1/2010.

But If i do not have 15.75 in my interest bearing account as of the end of the year, I would need to have $16.71 magically appear in 2007 for it to grow in time to be worth the 20 I owe her in 2010.

Are you with me now?

If we had positive NPV 44 trillion in our social security account today we would be in position to pay what is due in the future assuming it grew at 5.8% annually.

We have negative 9 trillion.

So next year we will be that much closer to our SS obligations being due.

And we will NOT have collected interest on the 44 trillion we are supposed to have on hand, because on hand we're at -9. So now we owe the 44 trillion that was due last year PLUS the intesest we were supposed to earn on that 44 trillion that would have made it grow (one year's worth) towards the necessary total future value due.

53 becomes 56

Sri Oracle

The problem with all of these calculations is that this $53 trillion dollars isn't due in one lump sum. This is a projected amount based off of the total Social Security liability. Think of it like a mortgage. You don't take out a mortgage that you have to pay off totally in one lump sum. Your mortgage is a series of payments.

This guy's report, while technically correct, is pure horse processed oats.

The problem is most Americans are unaware of the scale of the debts.

They are under the impression the USA economy is doing well.

It is a bit like running up a mountain in credit card bills while giving the impression to everyone else that your finances are in great shape.

Originally posted by Clipper
The problem is most Americans are unaware of the scale of the debts.

They are under the impression the USA economy is doing well.

It is a bit like running up a mountain in credit card bills while giving the impression to everyone else that your finances are in great shape.

Which is Standard Operating Procedure for most American citizens.

I hope the people realize that Both Houses have spent the last 20-30 years with a large vaccuum cleaner attached to the Sociual Security System budget. Of course they might get all riled up and go on a shooting spree without realizing that it has been a Felony to assault any person that has held a Federal Office that influences Policy/Budget for quite some time.

So they can screw you financially, and if you try to do anything about it, you go to jail while they collect their various private and public pensions. Congressmen and Senators get another special pension just for holding office which I think is roughly %40 of their salary!

im pretty sure most of the US debt, near 70%, is owe by american interest. I know its bad to have such a high deficit but your solvability is more concern about external debt from the country.

Originally posted by JIMC5499

The problem with all of these calculations is that this $53 trillion dollars isn't due in one lump sum. This is a projected amount based off of the total Social Security liability. Think of it like a mortgage. You don't take out a mortgage that you have to pay off totally in one lump sum. Your mortgage is a series of payments.

This guy's report, while technically correct, is pure horse processed oats.

Right. But on a balance sheet you report the NPV of your mortgages to arrive at your net worth (debt).

The US places the ss trust as a seperate "off balance sheet item" because it is large and comlex and carries a equally complex ammortilization shedule from which a NPV of 44T is distilled.

That does not mean that the 44T is not part of our (US) total debt.

No different than an enourmous corporate pension plan being disclosed as an off balance sheet item. It is still a liability.

When you speak of 9 trillion total US debt, that is correct except for what it owes its own people in the form of a ss trust that is not there.

to put it another way:

If a corporation owed a pension program of NPV (44) million and they had 64 million in a trust account, they would report on their balance sheet POSITIVE 20 million in the row associated with their pensionary plan.

If a corporation owed a pension program of NPV 44 and they had NPV 44 in a trust account right now, they would report ZERO on the balance sheet.

If a corporation owed a pension program of NPV 44 and they had ZERO in the trust account, they would report on their balance sheet NEGATIVE 44.

The last is the case of the US.

I am,

Sri Oracle

While the monies are to be paid out over time, they are not there! Money taken from the tax payer has gone into the general fund and all we have is a bunch of IOU's in a filing cabinet in a small building in West Virginia.

Even when we had a surplus under Clinton it was because of excess social security payments.

We are broke!

Print Money

Hyper Inflation

Cheapen Debt

I.E. Weimer Germany

Go Figure

mel1962, may I point to another example, more contemporary than Weimar Germany? New Zeeland which had terrible economic problems and are doing wonderfuly now

CG

I hope we can make the necessary adjustments like New Zealand did!

I hope the new congress is dedicated to reducing spending and we need to reform SS.

Originally posted by mel1962
I keep hearing about the Amero will be introduced after the dollar collapse's!

I just keep buying silver and gold, hope the best, prepare for the worst!

Will you be exchanging gold and silver for Amero's once the dollar collapses and the Amero is introduced as the solution to the people's economic misery?

Originally posted by In nothing we trust

Originally posted by mel1962
I keep hearing about the Amero will be introduced after the dollar collapse's!

I just keep buying silver and gold, hope the best, prepare for the worst!

Will you be exchanging gold and silver for Amero's once the dollar collapses and the Amero is introduced as the solution to the people's economic misery?

Only for the right price!

Originally posted by mel1962

Originally posted by In nothing we trust

Originally posted by mel1962
I keep hearing about the Amero will be introduced after the dollar collapse's!

I just keep buying silver and gold, hope the best, prepare for the worst!

Will you be exchanging gold and silver for Amero's once the dollar collapses and the Amero is introduced as the solution to the people's economic misery?

Only for the right price!

Why would you believe that the new currency would have any value?

Originally posted by In nothing we trust

Originally posted by mel1962

Originally posted by In nothing we trust

Originally posted by mel1962
I keep hearing about the Amero will be introduced after the dollar collapse's!

I just keep buying silver and gold, hope the best, prepare for the worst!

Will you be exchanging gold and silver for Amero's once the dollar collapses and the Amero is introduced as the solution to the people's economic misery?

Only for the right price!

Why would you believe that the new currency would have any value?

Its hard to say, Canadian dollor is strong and Mexican Peso is weak. I would say that depending how much the dollar collapses we could see anywhere from a 2:1 exhange to 100:1 yikes! Hyperinflation followed by the collapse of the dollar and the introduction of the Amero will result in severe deflation, therefore holding of gold and silver should be a good hedge. I buy gold and silver coins on Ebay, many times I get them for metal price.

Originally posted by mel1962
I would say that depending how much the dollar collapses we could see anywhere from a 2:1 exhange to 100:1 yikes! Hyperinflation followed by the collapse of the dollar and the introduction of the Amero will result in severe deflation, therefore holding of gold and silver should be a good hedge.

Mel, I don't think they will get people to part with their gold and silver easily after the collapse. They will likely have an initial public offering of Ameros for gold, but if you don't accept thier intially offered exchange they may just seize it. I think they will most likely ban the ownership of gold and silver. It's also probable that they will seize any privately held gold and silver holdings of any die hard hold outs.

Originally posted by In nothing we trust

Originally posted by mel1962
I would say that depending how much the dollar collapses we could see anywhere from a 2:1 exhange to 100:1 yikes! Hyperinflation followed by the collapse of the dollar and the introduction of the Amero will result in severe deflation, therefore holding of gold and silver should be a good hedge.

Mel, I don't think they will get people to part with their gold and silver easily after the collapse. They will likely have an initial public offering of Ameros for gold, but if you don't accept thier intially offered exchange they may just seize it. I think they will most likely ban the ownership of gold and silver. It's also probable that they will seize any privately held gold and silver holdings of any die hard hold outs.

hopefully a hacker erases my ebay transactions!

Originally posted by mel1962
hopefully a hacker erases my ebay transactions!

I don't think they will go through the trouble of house to house seizures and culling though the economic records. They will just make it known that if you spot anyone attempting to use gold or silver in a financial transaction that you will call the authorites immediatly.

I'm sure that gold will remain a viable instrument of exchange on the black market. I'd be sure that I trusted anyone who I exchanged gold and silver for goods and services though.

They will confiscate guns the same way. There's a reward if you turn in your gun wielding neighbor.

[edit on 21-12-2006 by In nothing we trust]

Originally posted by mel1962
While the monies are to be paid out over time, they are not there! Money taken from the tax payer has gone into the general fund and all we have is a bunch of IOU's in a filing cabinet in a small building in West Virginia.

Your analogy would only be true if we no longer paid into Social Security. Since you're budgeting for accounts payable, how about throwing in receivables as well? Accounts receivables are figured before accounts payable. You're leaving out a huge part of the balance sheet.

Even when we had a surplus under Clinton it was because of excess social security payments.

Ugh, the name dropping. I believe this is an excellent topic, let's not point political fingers. We'll be at this all day long! Some will say "surplus was there due to the prior administration...blah blah blah"

Fact is, we have a system (social security) that is flawed and needs to be updated for current (and future) generations. Let's figure this out together.

One thing is for sure; the social security system is just like any other 'social' system, over time it'll surely be abused. Systems have to be continually updated, improved, and amended in order to continue.

Social security payments are still being sent out, no checks have bounced yet.