Is the U.S. Insolvent

[BitWhys]

2005 that number is not even close as of jan.2007

http://youtube.com/watch?v=rW5KgF7OyiA&mode=related&search=

That segment doesn't say anything about net worth, which is what I'm asking Toro about, and makes a much bigger deal about unfunded liabilities than it should. The issue there is the the OASS fund is a stack of off-the-book non-marketables where real financial assets should be.

 

[BitWhys]

40T IS 40,000,000,000,000. so toro's figure and yours are pretty similar

I know. I know. I'm just trying to drag another source out of him.

 

[Albertabound]

I still can not access your link BitWhys, I sure wish i could though. Quite curious

 

[Albertabound]

<H1><SPAN lang=EN-GB><FONT face=Verdana size=2>

<H1>A Modest Proposal for Eliminating the Personal Federal Income Tax<B><FONT face=Verdana size=2><SPAN lang=EN-GB style="mso-bidi-font-family: Arial; mso-bidi-font-size: 12.0pt">

 

[BitWhys]

heh

that's because I munched the link.

this should work

$41T

serves me right for working from memory.

 

[Albertabound]

Returning the power to create money to the government and the people it represents would generate three new sources of revenue for the public purse:

1. The interest earned on loans would be returned to the government

Using the figures for 2002 (the last relatively normal year before the United Sates was at war in Iraq), total assets in the form of bank credit for all US commercial banks were reported to be $5.89 trillion. (9) Assuming an average interest rate of 6 percent, about $353 billion in interest income was thus paid to commercial banks. This interest was earned, not be lending anything of their own, but by advancing the ‘full faith and credit of the United States.’ Returning this interest to the collective body of the people to whom it properly belongs would thus have generated revenue for the government of $353 billion in 2002.

2. Congress could issue new interest-free notes(Greenbacks) to the extent(and only to the extent) needed to "grow" the money supply in order to cover productivity and interest charges


In the monetary scheme of Benjamin Franklin, paper money was issued ‘in proper proportions to the demands of trade and industry’. What is the ‘proper proportions’ of monetary growth? One way to approach the problem is to look at current growth. The money supply (M3) grew from $7.96 trillion in November 2001 to $8.49 trillion in November 2002, an increase of $529 billion or 6.6 percent. (10) Under the present system, the expansion in the money supply needed to keep up with productivity and interest charges must come from federal borrowing, since private borrowing zeroes out on repayment. If the government were to quit ‘borrowing’ money into existence, this source of growth would dry up, and there would be insufficient money to cover the interest due on commercial loans. Like in a grand game of musical chairs, some borrowers would have to default.
If the average collective interest rate is 6.6 percent, and if the government can no longer ‘borrow’ that money into existence, it will need to issue enough new Greenbacks to increase the money supply by 6.6 percent just to keep the system in balance. In 2002, that would have meant creating $529 billion in new debt-free US Notes.

3. If the government were to pay off the federal debt with new greenbacks, it would no longer have to budget for interest on debt

Using 2002 figures, money paid in interest on the federal debt came to £333 billion. Paying off the debt would have reduced the collective tax bill by that sum.

Combining these three sources of funding - $353 billion in interest income, $529 billion in new US Notes to cover annual growth in the money supply, and $333 billion saved in interest payments on the federal debt – the public coffers could have been swelled by $1,215 billion in 2002. Total personal income taxes that year came to only $1,074 billion. Thus by reclaiming the power to create money from the private banking system, congress could have eliminated personal income tax for 2002, with a $141 billion dollars to spare. How much is $141 billion? According to the Unites Nations, a mere $80 billion added to existing resources in 1995 would have been enough to cut world poverty and hunger in half, achieve universal primary education and gender equality, reduce under-five mortality by two-thirds and maternal mortality by three-quarters, reverse the spread of HIV/AIDS, and halve the proportion of people without access to safe water world-wide (11)

The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity. -Abraham Lincoln

 

[Albertabound]

Every time a president has tried to implement this (issuing of greenbacks or gov't issued notes) he has been assassinated.

History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. -James Madison

 

[Toro]

That's the problem Toro, the U.S. can not possibly ever pay off the debt.

Of course they can.

Canada's debt went from 100% of GDP just 10 years ago to about 60% today, which, BTW, is slightly lower than the US federal government's debt.

I'll repeat, the net worth of the United States is about $45 trillion. For those of you who are financially challenged, "net worth" means the value of your assets minus liabilities. Total asset value in the US is something like $62 trillion. Government debt is $8 trillion and private debt is something like $10 trillion. (Or thereabouts).

So yes, the US can pay off their debts. No problem.

 

[Toro]

Gold bugs have been trumpeting the end of the American banking system for decades.

Yes, they have been wrong, and they will continue to be wrong.

The faith the gold bugs place in gold is one of religious ferocity. They will never, ever see the top in gold, and they will hand the heads of those who do invest in gold when it gets to $1000 on a silver, er I mean golden platter.

 

[Toro]

That's just the principal, it's more like $100,000/person with the interest added on in the U.S. But that is exactly the thinking needed. Due to the fractional reserve banking system we could never make a run on the banks because the don't have our money. A bank only has to have 10% of what they loan out. So you see we could never get our money back from them because it does not exist.

You have it completely backwards. A bank run occurs because they don't have all the money at the bank. That's the definition of a bank run.

Here is an explanation.

http://en.wikipedia.org/wiki/Bank_run

 

[Toro]

not to question the figure, but where are you getting that from and why would you prefer it to this one...

Table 1.1. Current-Cost Net Stock of Fixed Assets and Consumer Durable Goods

(heh - temporalily pooched. has it pegged at just over $40T at EOY 2005)

ON EDIT: my chomp. fixed the link.

Its right here BitWhys.

http://www.federalreserve.gov/releases/z1/Current/z1r-5.pdf

The Fed releases it quarterly.

As of the third quarter 2006, total assets are, in fact, $67 tillion, total non-government liabilities are $13 trillion, for a household net worth of $54 trillion. Subtract the $9 trillion in government debt (which doesn't include government asset BTW) and you get $45 trillion. The US government has something like $2 trillion in assets, so it is in fact a bit higher.

 

[Toro]

That segment doesn't say anything about net worth, which is what I'm asking Toro about, and makes a much bigger deal about unfunded liabilities than it should. The issue there is the the OASS fund is a stack of off-the-book non-marketables where real financial assets should be.

Actually, that is a good point.

But the problem with including all unfunded liabilities, such as pensions and medical, is that, at the stroke of a pen, they can be wiped out. For example, if the retirement age is raised from 65 to 72, you eliminate most, if not all, the social security liabilities. These unfunded liabilities exist by legislative fiat and can be extinguished by legislative fiat as well.

 

[tamarin]

Toro, as far as the past proves the present, you are exactly right on gold. It has been a terrible trap for those investing in the metal during one of its euphoric swings. But given that the greenback is increasingly being contested as the world's reserve currency, it is within the misty realm of possibility that the dollar can be toppled. If it is, gold should have its mythical run.

 

[Toro]

bump bump

 

[Toro]

bump
bump

 

[Toro]

Sorry about that

Toro, as far as the past proves the present, you are exactly right on gold. It has been a terrible trap for those investing in the metal during one of its euphoric swings. But given that the greenback is increasingly being contested as the world's reserve currency, it is within the misty realm of possibility that the dollar can be toppled. If it is, gold should have its mythical run.

Look, I'm a gold bull, but the dollar isn't going to collapse. It might go down - and it certainly will against the emerging Asian nations - but that is a far cry from collapse.

The gold bugs have been saying this for years, but guess what, 85% of foreign savings outside of the United States has wound up in the United States! 85 frickin' percent! In 2006! While the gold price has been rising!

The gold bugs who've been peddling this apocolyptical nonsense have been dead wrong.

http://runningofthebulls.typepad.com/toros_running_of_the_bull/2007/01/worlds_assets_h.html

 

[L Gilbert]

That's just the principal, it's more like $100,000/person with the interest added on in the U.S. But that is exactly the thinking needed. Due to the fractional reserve banking system we could never make a run on the banks because the don't have our money. A bank only has to have 10% of what they loan out. So you see we could never get our money back from them because it does not exist.

The U.S. debt with compounding interest is more along the lines of $700 trillion it is not fathable to even consider trying to pay this off.

Yeah, I forgot about that being the principle. And about the comment concerning a run on the banks, I was half joking. A run would sure put them in a pickle barrel wouldn't it, though? Mass suicides out of bank windows. A sudden loss of stock of pharmacies consisting of Pepto Bismal, Tums, Alka Seltzer, Rolaids, etc.

 

[L Gilbert]

heh

that's because I munched the link.

this should work

$41T

serves me right for working from memory.

lol
I'm sure there are several of us whose memory banks work at the same sort of efficiency.

 

[L Gilbert]

You have it completely backwards. A bank run occurs because they don't have all the money at the bank. That's the definition of a bank run.

Here is an explanation.

http://en.wikipedia.org/wiki/Bank_run

Sounded the same to me. He said they only keep 10% of your money at the bank. The rest doesn't exist. If we ran the banks they'd be 90% short of our money.

 

[Toro]

http://en.wikipedia.org/wiki/Bank_run[/quote]Sounded Sounded the same to me. He said they only keep 10% of your money at the bank. The rest doesn't exist. If we ran the banks they'd be 90% short of our money.

No, what he is saying is that there isn't enough currency. Currency is different from money. Money can take any form. Most money in the world is actually in the form of electronic digits.