Since we're all political lately, here's a pastiche of some of my recent
thoughts on the spending/debt/unfunded liabilities issues.
First, here's what I got from a few minutes of math. (I'll write trillions
as 1,000s of billions to keep it clear.)
The total U.S. federal debt is $14,293 billion; the total U.S. federal
budget is $3,601 billion. The richest man on earth - Carlos Slim of Mexico -
has a net worth of $74 billion (including family members). So the U.S.
public debt would burn through Carlos Slim's entire fortune in 1.889 days,
and U.S. federal spending would burn through it in 7.822 days. Note that
this isn't income, but total net worth. It requires total expropriation and
liquidation - which means no future income taxes, investments, job creation,
charity, employment, company creation, or anything else from this man's
fortune. This is breaking the richest man in the world down to pauperhood.
Now, the four richest men in the world in net worth are: Carlos Slim (and
family) at $74.0 billion, Bill Gates (U.S.A.) at $56.0 billion, Warren
Buffett (U.S.A.) at $50.0 billion, and Bernard Arnault (France) at $41.0
billion. That's a hair under three times Carlos Slim's fortune taken alone.
So the U.S. federal debt would burn through the fortunes of the world's four
richest men in under 6 days, and the U.S. federal budget would burn through
it in a bit under 24 days.
This does not count U.S. state government debt of $1,198 billion or U.S.
local government debt of $1,743 billion.
This does not count unfunded U.S. federal entitlement liabilities, which are
estimated at between $62,000 billion at $120,000 billion, which to fully
fund in a year would burn through the total net worth of the world's four
richest men in between a bit over 33 hours (assuming $62,000 billion) or a
bit over 17 hours (assuming $120,000 billion).
So the next time you hear that the rich are greedily holding onto all the
money and causing our problems, or that they just need to pay yet a bit more
tax, or that tax cuts are to blame and spending has always been sensible, or
that the government should load us with more entitlements, programs,
bureaucracies, loans, subsidies, grants, railroads, buildings, bailouts,
stimuli, and so on ... just remember the math above, and ask yourself if any
actual solutions are being proposed.
I agree with President Obama: we need a fundamental transformation. But what
we need is a transformation into economic, fiscal, and political sanity.
Which means a government that isn't devouring our ability to survive
economically, much less remain competitive in a rapidly-evolving world.
It means an actual free market economy - with real money, which is gold and
not government-inflated paper - and a rationally-sized government (one that
protects us from enemies foreign and domestic, and that's it). We need it as
soon as possible. The transition will be painful - but how much more painful
will it be (and how much worse will the poor and the sick and the old do) -
if we put off the inevitable any longer? Time is running out.
Debt source: http://www.usdebtclock.org/
Net worth source: http://en.wikipedia.org/wiki/Forbes_list_of_billionaires
Recommended reading, for a view of just part of the 100 years of this
situation's developing:
http://dailyreckoning.com/what-didnt-change-when-nixon-cut-the-gold-link/
[ It is more difficult to determine top world *income* earners, but when I
find it I will do a follow-up. Obviously the burn-through rates will be much
faster. ]
From msnbc.com: "A more revealing calculation is the CBO’s measurement of
what’s called the fiscal gap. That figure is conceptually cleaner than the
national debt — and consequently more alarming. Boston University’s
Kotlikoff has extended the agency’s analysis from 2085 out to the infinite
horizon, which he says is the only method that’s invulnerable to the
frame-of-reference problem. It’s an approach used by actuaries to make sure
that a pension system doesn’t contain an instability that will manifest
itself just past the last year studied. Years far in the future carry very
little weight, converging toward zero, because they are discounted by the
time value of money. Even so, Kotlikoff concluded that the fiscal gap —
i.e., the net present value of all future expenses minus all future
revenue—amounts to $211 trillion." -
http://www.msnbc.msn.com/id/43929476/ns/business-stocks_and_economy/
Here's a visualization of what half the infinite-horizon unfunded
liabilities looks like: http://usdebt.kleptocracy.us/
One of the most dangerous aspects of the whole progressive tax/debt fueled
system is that people have become acclimated to, indeed dependent on, the
benefits of an unsustainable system without seeing the actual costs. It's a
diabolical system that has encouraged dependency on aid - exactly like
foreign aid dependency, a well-recognized reality in International
Relations - while concealing the reality of its funding sources and their
effects upon us.
Peggy Noonan came up with a fantastic term to describe the post-WW2 boom
that only just ended: The Great Abundance.
All of these crazy entitlement levels and wild pension benefits arose during
the Great Abundance, which more historically-minded people knew could not
last forever. But since we "hate the poor" and "want them to suffer and die"
(things that I have been told for decades by compassionate liberals), our
warnings were not heeded.
Clearly, we just wanted to selfishly give money to the rich.
All of this makes me think of an assistant to Jane Addams, the famous
humanitarian of Hull House fame, who visited Soviet Russia in the midst of
the bloodbath of the 1920s and was shown no bloodbaths. She came back to the
United States and said words to the effect of, "How wonderful it was, to see
everybody equally shabby!"
But the ultimate insanity is this - http://www.slate.com/id/2300428/ - they
are talking about magically resolving the debt issue by creating a
$5trillion coin. How much deeper into madness can we go? Why not make a
quadrillion dollar coin? Then we'll all be rich!
MRB
http://www.fuguewriter.com
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