Galt's Gulch

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  • Posted by $ stargeezer 11 years, 11 months ago
    Anybody wonder why 3 years ago I went on Strike and stopped earning taxable income? When this insanity has, for once, run it's course (sound familiar?), I'll return once more to working to earn the living and the position in my community a producer deserves.
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  • Posted by freedomforall 11 years, 11 months ago
    You'd think a government of, by and for the people would have realized that paying interest on government debt is not necessary and only enriches banksters.
    But of course the banksters cartel are running the government so the goal is to tranfer wealth from hard working people to banking cartel looters.
    I don't trust government to issue money from nothing, but private bankers have proven to be thieves with that power and responsibility. The Federal Reserve Act must be revoked and replaced by a non-usury system of money and credit creation. Neither public nor private bankers can be trusted with such centralized power.
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  • Posted by LionelHutz 11 years, 11 months ago
    While Tyler Durden's article is all about how continuing to make the minimum payment on the national credit card is going to kill us in the end, he also brought up the point that Social Security revenue collection is supposed to be set aside for that purpose. I thought it would be worth analyzing THAT major driver of the continued borrowing.

    By Wikipedia, the Baby Boom was 1946-1964: 19 years.
    For simplicity's sake, assuming:
    an even distribution of population across that time span,
    a uniform 65 year retirement age,
    a lifespan that means even when the last boomers retire the first boomers will still be alive and drawing on the system,
    The conclusion is reached:
    The baby boom impact to social security and medicare will be felt from 2011-2029, and we are therefore 3/19th (16%) of the way into a pain that will only increase year after year.

    The following table shows the amount of money collected each year by FICA+Medicare withholdings, then what is spent on this purpose, then a percentage reflecting how much of the collection covered the costs, and then a not-so-incidental column showing the amount of debt added that year to cover shortfalls.

    C = Collected (Billion $)
    S = Spent (Billion $)
    C% = Coverage Percentage
    B = Borrowed (Billion $)

    Year C S C% B
    =================================
    1999 579.02 596.05 97.14% 0 <--- Look ma, no borrowing!
    2000 572.48 590.37 96.97% 0
    2001 665.00 684.00 97.22% 0
    2002 735.00 798.00 92.11% 200
    2003 726.00 814.00 89.19% 400
    2004 736.00 828.00 88.89% 400
    2005 800.00 925.00 86.49% 300 <--- Baby Boom Early Retirees
    2006 849.60 955.80 88.89% 248
    2007 873.60 1037.40 84.21% 162
    2008 894.90 1103.71 81.08% 459
    2009 879.50 1196.12 73.53% 1413
    2010 864.00 1244.16 69.44% 1293
    2011 828.69 1333.11 62.16% 1300 <--- Baby boom starts in earnest here
    2012 848.88 1344.06 63.16% 1087
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    • Posted by Robbie53024 11 years, 11 months ago
      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 LionelHutz 11 years, 11 months ago
        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
          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 Robbie53024 11 years, 11 months ago
    I just cashed out my savings bonds. They are making nothing in interest, and they will soon be defaulted on in any case. Buying gold and silver.

    See my post about the methods Saul Alinsky advocated in Rules for Radicals. This is part of the plan.
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  • Posted by LionelHutz 11 years, 11 months ago
    You know those pie charts you see at the back of the 1040 instruction manual? I save those.
    Using the Zero-Hedge methodology on prior years, I find he probably should have broke this story in 2010.

    PIT% = Percentage of total Income generated by collection of Personal Income Tax
    PIT$ = What PIT% means in Dollars (billion)
    NID% = Percentage of total Outlays paid out to Net Interest on Debt
    NID$ = What NID% means in Dollars (billion)
    ZH% = The Zero Hedge metric

    YEAR...PIT%...PIT$...NID%...NID%...ZH%
    2008 39% $984B 8% $239B 24.3%
    2009 26% $547B 5% $176B 32.2%
    2010 26% $562B 6% $207B 36.8%
    2011 30% $691B 6% $216B 31.2%
    2012 32% $784B 6% $212B 27.0%
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