Generations and Solutions
Paul Krugman and his minions aside, most of us know that the massive federal debt (currently $17.5 TRILLION) is nothing short of inter-generational theft.
So often we complain that our worthless lawmakers are "stealing from our grandchildren."
But is that really true?
Of course, no-one (N O - O N E, nobody AT ALL) is calling for a balanced budget but let's just pretend for a minute.
Let's pretend we could balance the budget tomorrow. Let us pretend we could actually have a budget surplus in this twisted day and age.
And if we're dreaming we might as well dream BIG - let's imagine we could recreate the largest US Federal Budget Surplus in HISTORY ($236 Billion in the year 2000.) and do it every year, year-in year-out, for as long as it takes to pay off that huge debt.
How long would it take Paul Krugman's progeny pay off his Ponzi scheme?
Well, PK is 61 years old. Leaving his real kids out of it, let's just assume his offspring follows the oft-stated average of 20 years per generation. (That's about how long it takes for one baby to grow up and have another.)
OK, Paul's child is 41 and already paying, so is his grandchild at 21. His great-grandchild is only one year old but she'll get her turn when she starts working 15 years later (I started at 16, so have/will many others. Maybe not HER, but....)
Twenty years later (35 years from now), Krugman's great-great-grandchild will pick up the burden - as will, twenty years after that, his great-great-great grandson. In fact, his great-great-great-great-grandchild will dodge the bullet by only a year or so.
But this is a dream world of impossible expectations. What if we made it just a little more realistic - just the tiniest bit.
Assume every other condition remains the same but we can only manage the SECOND highest budget surplus in history - $127.3 billion in 2001.
If we still balance the budget tomorrow and keep it that way - and we pay down over a hundred billion a year, it'll take only... 137 years!
Paul Krugman's great-great-great-great-great-great-great-grandchild will write the last check to pay off the legacy of the "worst" generation.
Ten generations (including ourselves) - six of which as yet unborn - to pay off our folly.
And of course this is still living in a fantasy.
The obvious fact is that PK and his ilk have no intention of ever paying off this debt.
And some day, when the financial chicanery falls through,
when the artificially deflated interest on our Treasuries begin to rise from the lowest rates in history,
when the interest payment on all that debt doubles, triples, quadruples...! - the sh!t WILL hit the fan.
And then the pundits will say the obvious solution is to "forgive" this "crippling" debt,
and on that day untold trillions of dollars of invested wealth will disappear.
And our nation will fail.
Make no mistake we are talking financial collapse. Not a recession, not a depression, but the complete collapse of untenable economic "system".
And REAL bad things ALWAYS arise from such times.
We'll still be here. We'll still be Americans. But our Constitution will be "proven" "unworkable" and abandoned. And a strong-man WILL take over - they always do when the world goes to hell.
However, unlike the suppositions I started with, there is no fantasy here. This WILL happen. And it won't take generations.
But, there is an answer. It's not the answer to every problem we face, but it will buy us the time to work on all the rest.
A BALANCED BUDGET AMMENDMENT.
Nothing more - nothing less.
It can be done. It's just a constitutional amendment. We do them all the time (well, figuratively speaking). We just have to change some minds. Well, pretty much everybody's mind really, but still.
What could be more important.
Really.
-----------------
"I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing." Thomas Jefferson
---- (SHOW YOUR WORK) ----
($17,514,000,000 / $236,000,000 per year = 74.2 years)
($17,514,000,000 / $127,300,000 per year = 137.58 years)
now he pays
now child pays,
now grandchild pays,
15 years later great-grandchild begins to pay,
35 years later great-great-grandchild
55 years later great-great-great-grandchild
75 years later great-great-great-great-grandchild
95 years later great-great-great-great-great-grandchild
115 years later great-great-great-great-great-great-grandchild
135 years later great-great-great-great-great-great-great-grandchild
----------------------------------------------
So often we complain that our worthless lawmakers are "stealing from our grandchildren."
But is that really true?
Of course, no-one (N O - O N E, nobody AT ALL) is calling for a balanced budget but let's just pretend for a minute.
Let's pretend we could balance the budget tomorrow. Let us pretend we could actually have a budget surplus in this twisted day and age.
And if we're dreaming we might as well dream BIG - let's imagine we could recreate the largest US Federal Budget Surplus in HISTORY ($236 Billion in the year 2000.) and do it every year, year-in year-out, for as long as it takes to pay off that huge debt.
How long would it take Paul Krugman's progeny pay off his Ponzi scheme?
Well, PK is 61 years old. Leaving his real kids out of it, let's just assume his offspring follows the oft-stated average of 20 years per generation. (That's about how long it takes for one baby to grow up and have another.)
OK, Paul's child is 41 and already paying, so is his grandchild at 21. His great-grandchild is only one year old but she'll get her turn when she starts working 15 years later (I started at 16, so have/will many others. Maybe not HER, but....)
Twenty years later (35 years from now), Krugman's great-great-grandchild will pick up the burden - as will, twenty years after that, his great-great-great grandson. In fact, his great-great-great-great-grandchild will dodge the bullet by only a year or so.
But this is a dream world of impossible expectations. What if we made it just a little more realistic - just the tiniest bit.
Assume every other condition remains the same but we can only manage the SECOND highest budget surplus in history - $127.3 billion in 2001.
If we still balance the budget tomorrow and keep it that way - and we pay down over a hundred billion a year, it'll take only... 137 years!
Paul Krugman's great-great-great-great-great-great-great-grandchild will write the last check to pay off the legacy of the "worst" generation.
Ten generations (including ourselves) - six of which as yet unborn - to pay off our folly.
And of course this is still living in a fantasy.
The obvious fact is that PK and his ilk have no intention of ever paying off this debt.
And some day, when the financial chicanery falls through,
when the artificially deflated interest on our Treasuries begin to rise from the lowest rates in history,
when the interest payment on all that debt doubles, triples, quadruples...! - the sh!t WILL hit the fan.
And then the pundits will say the obvious solution is to "forgive" this "crippling" debt,
and on that day untold trillions of dollars of invested wealth will disappear.
And our nation will fail.
Make no mistake we are talking financial collapse. Not a recession, not a depression, but the complete collapse of untenable economic "system".
And REAL bad things ALWAYS arise from such times.
We'll still be here. We'll still be Americans. But our Constitution will be "proven" "unworkable" and abandoned. And a strong-man WILL take over - they always do when the world goes to hell.
However, unlike the suppositions I started with, there is no fantasy here. This WILL happen. And it won't take generations.
But, there is an answer. It's not the answer to every problem we face, but it will buy us the time to work on all the rest.
A BALANCED BUDGET AMMENDMENT.
Nothing more - nothing less.
It can be done. It's just a constitutional amendment. We do them all the time (well, figuratively speaking). We just have to change some minds. Well, pretty much everybody's mind really, but still.
What could be more important.
Really.
-----------------
"I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing." Thomas Jefferson
---- (SHOW YOUR WORK) ----
($17,514,000,000 / $236,000,000 per year = 74.2 years)
($17,514,000,000 / $127,300,000 per year = 137.58 years)
now he pays
now child pays,
now grandchild pays,
15 years later great-grandchild begins to pay,
35 years later great-great-grandchild
55 years later great-great-great-grandchild
75 years later great-great-great-great-grandchild
95 years later great-great-great-great-great-grandchild
115 years later great-great-great-great-great-great-grandchild
135 years later great-great-great-great-great-great-great-grandchild
----------------------------------------------
The only time eco/politico's think farther than the next election is when they're planning their own dynasties.
You and I? We're fodder.
He claims to be spouting Economic Philosophy, but in reality, he's interested in just One Thing...
The same thing that all major party politicians are only interested in.... Control (and personal power.)
You should not let yourselves be deceived by what comes out of their mouths.
I don't think PK and BO really believe this treatise. Though how they can deny it - I don't know.
I would actually be very interested in seeing a counter from the opposition.
But you're right NP, they don't give a damn about us at all.
All that changes, however, once interest rates go back up. That is why having the banks who run the Fed holding all that debt is such a big deal: they buy the debt now for basically the cost of money, then cash in big in the future! And inevitably, the rates WILL go up.
Another one of the dangers of fiat currency: you can print and issue it and get it backed by an international cabal that only really is out to cash in on the inevitability of rising interest rates.
They do buy T-bills for their "rock-solid safety", but with the way that the Fed is printing money, the value of those T-bills is decreasing far quicker than most people think.
I used to own T-bills earning 8% per year. At that rate it made sense. At the rate they return now, it really isn't worth any more than a dollar itself, and you don't have any immediate liquidity.
For preservation of capital, I got an annuity guaranteeing me 5% or more every year. It is not quite as "rock solid" as T-bills, but frankly I trust MetLife more than I do the government now.
It is the foundation of the investment pyramid, and that is what is so ******* scary. The foundation is not rock solid anymore. Frankly it is ripe for a fall, and that is exactly what George Soros is trying to engineer.
I realize the interest rate is next to nothing, but don't nations, banks, institutions, funds and even very affluent private citizens buy T-bills for their rock-solid safety.
Once you get above $100K (or so) the FDIC doesn't cover it. And once you get above a certain $Net Worth it becomes more about preservation of capital.
Just the foundation of the investment pyramid, of course, not the whole thing.
I don't know - just what I learned a zillion years ago.
Off shore cities and space habs.
It's inevitable. We want it too much.
SERVICING the debt is just another line item in the budget - an interest-only payment to "roll-it-over" every year.
But even a moderate spike in interest rates could balloon that interest-only payment beyond the entire federal budget.
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