The US Is Now Spending 26% Of Available Tax Revenue To Pay Interest | Zero Hedge

Posted by straightlinelogic 11 years, 11 months ago to Economics
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Debt has destroyed more empires than invasions.

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  • Posted by Robbie53024 11 years, 11 months ago in reply to this comment.
    Correct. Get out what you can now. Place all your savings in stable stores of value (and I don't count real estate as a stable store - it will be taxed at ever increasing levels until it is all taken back by the state).
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  • Posted by LionelHutz 11 years, 11 months ago in reply to this comment.
    You raise good points about the impact of declining employment levels and lower paying employment.
    I didn't mention the money wasn't held in trust because Tyler already did that. That's why it is especially bad that the outflow of Social Security is greater than the inflow. If there was a trust fund to draw the difference from, the Borrowed column wouldn't be increasing like it is. I was trying to express what you're saying by putting the Borrowed column in this table. It shows that when this system stopped being able to pay current bills out of current taxes, borrowing began. Not necessary if the money was held in trust. Necessary when there is the IOU. As the percentage of immediate coverage dropped, the more new debt had to be taken on. Part of that borrowed money is used to pay today's Social Security shortfall. Another part is used to pay the interest on the IOUs you speak of, which I covered in the other table. Note this isn't paying down that debt. It's just paying the interest with no paydown in principle. Without a massive increase in collections for this system, or a massive decrease in expenditures, it looks to me like the system is going to self-destruct in about another 10-15 years.
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  • Posted by Robbie53024 11 years, 11 months ago in reply to this comment.
    What you don't take into account is that the money collected for social security was not held in trust - it was spent and IOU's (in the form of Treasuries) were left in it's place. These IOU's will soon be required to be redeemed in order to pay the obligations as more boomers begin to receive than workers are paying in. This is being exacerbated with ever dwindling employment levels and lower paying employment.

    So, in addition to loan interest payments, we will have redemption of social security trust fund treasuries which will take more from the general fund.
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  • Posted by straightlinelogic 11 years, 11 months ago
    Nice work. Your figures are even more comprehensive and frightening than Zero-Hedge's. Either way, we're going broke.
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