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The Awful Truth About the Deficit


machinehead

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"This [Congressional Budget Office] report, however, includes numbers that you can use to adjust for political reality. These changes add $3.6 trillion to the [10-year] deficit. So by the time you're done, the total projected deficit is more than five times the aforementioned $1.4 trillion. Call it $7.4 trillion. And I'm being generous, assuming we spend nothing in Iraq starting Oct. 1, 2005.

 

The Scary Deficit

 

Author Allan Sloan makes a particularly incisive comment about Social Security: "As I said, about a third of the money -- $2.4 trillion -- comes from the Treasury's borrowing the Social Security surplus, spending the money and replacing it with IOUs. So a decade from now, the government will owe Social Security about $4 trillion, just as baby boomers begin retiring en masse."

 

The Enron and Worldcom schemers were pikers compared to the U.S. Congress, whose defalcations run into the trillions. And your friendly Congresscritter is protected by ... parliamentary immunity. :lol: :lol: :lol:

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Hypertiger has it wrong... we're not 6-9 months from the total wipeout. More like 7-14 years. When the baby boomers begin to retire our economy is going to implode:

 

1- Social security payouts will rise dramatically while workers paying into SS shrink.

 

2- Liquidation of stocks and bonds to pay for living expenses.

 

3- Real Estate prices will fall as the supply of housing increases (boomers will begin to die off or will need to downsize to meet expenses).

 

 

People in the 40 and under crowd better watch out. We will be taxed even more to pay for all the old age and retirement programs. The political class will not dare to end any handouts. I assume that by this time our foreign friends will stop buying our debt paper because they know they'll never get the money back.

 

We are doomed.

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The truth is this years deficit will be about 700 billion and next years will probably get close to a trillion. The WaPo article's number are soft -- way soft. DC is out of control and it matters little whether we have Democraps or Repukicans in charge. The deficit is structural. It originates in the House and the Senate, and there is little chance of any major changes taking place. A President in his first term spends most of that term positioning himself for re-election. Then he becomes a lame duck upon re-election. A congressman never stops campaigning. they barely get elected then it's off to the races again. Thank God we have campaign reform ------- yeah right. Why would someone spend millions of dollars to get elected to a job that pays $150K per year for two years? That's like paying a job service $20,000 to get you a job at McDonalds. No you pay milliions for these jobs because you get to pass out the candy and those who are recipients of your kindness will after all, share their candy with you. "Senator, since you retired we at Bigfukinguns Industries have decided to appoint you to the board at a million a year plus a generous stock option grant that vests immediately." Of course all the little contributors will show their kindness by offering speaking engaements at $100K per pop and there's the publishers who will advance you millions for a book that nobody will ever read. The reallly big money comes from consulting and lobbying, where all of your "contacts" become invaluable. If North Korea wants a nuclear test site, I nominate Washington DC. Of course all we might get is a super race of "cockroaches".

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1- Social security payouts will rise dramatically while workers paying into SS shrink.

 

2- Liquidation of stocks and bonds to pay for living expenses.

 

3- Real Estate prices will fall as the supply of housing increases (boomers will begin to die off or will need to downsize to meet expenses).

 

 

We are doomed.

You hit the nail right on the head my friend....I've already heard talk among friends that they plan on selling thier massive homes when their kids leave for college (in a few years). Who will buy them???

 

They will also liquidate thier education IRA's for college expenses....mostly in mutual funds.

 

A few older boomers I know, are also talking of starting to switch out of funds in their 401's and IRA's just to protect some of it.

 

Looks like a big drain will be comming in the next several years.

 

On note on SS though.....

 

When I started in the work force some 25+ years ago, I laughed when they said SS would probably not be there when I plan to retire. I didn't care...I figured I could save enough not to need it. Well, fact is I probably do have enough to retire ok, but after paying into SS for all these years, it better well be there for me!!

 

If not, they will have the biggest million person march to Washington in history...led by me and then we will head to Texas to take care of the Bush family for leading us here!

 

Good Luck.....Abby.

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Why should any one generation have to shoulder a debt burden that they did not create and that they did not enjoy? Plenty of examp-les in history where a society repudiated its 'obligation' to service a debt that they did not create.

 

It's kind of like getting a phone call that a grandfather you never knew existed needs your help. He's retired and he needs food and shelter as he lived well beyond his means all those years and is now flat broke. Worse, he's got a stinking big tab at Atlantic City that the caller is expecting you to shoulder. Fuggeddaboutit. Click.

 

Believe you me, there is going to be a titanic battle in the twenty teens as 'greatest generations' sense of individual entitlement smashes into a younger (and more agile) generation that just might not appreciate the thought of working more than 50% of their time to support a bunch of folks were both profligate and folish with their money.

 

Massive debts for electrical infrastructure, really sweet train systems, public facilities? Yes.

 

Massive debts for McMansions and living well beyond your means? No.

 

It will be interesting indeed.

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Hypertiger has it wrong... we're not 6-9 months from the total wipeout. More like 7-14 years. When the baby boomers begin to retire our economy is going to implode:

 

1- Social security payouts will rise dramatically while workers paying into SS shrink.

 

2- Liquidation of stocks and bonds to pay for living expenses.

 

3- Real Estate prices will fall as the supply of housing increases (boomers will begin to die off or will need to downsize to meet expenses).

 

 

People in the 40 and under crowd better watch out. We will be taxed even more to pay for all the old age and retirement programs. The political class will not dare to end any handouts. I assume that by this time our foreign friends will stop buying our debt paper because they know they'll never get the money back.

 

We are doomed.

5-9 until either the start of the fall or Hyperinflation...

 

It is inflate or die and I see no way to sustain exponential debt inflation for more than two years at the most...

 

the vast majority of the price inflation you see now is sustained by debt inflation so leverage is in fact debt inflated debt inflation ends and so will price inflation...

 

GW has cut the government wage increases citing the emergency of 9-11 in 2001 as the reason...

 

The military was supposed to get a raise but due to the war on terrorism's cost they won't be recieving it on top of veterans benifits being slashed...

 

But tax breaks for the rich are in the bag...

 

The government is able to borrow money and only needs to pay the interest the principal never needs to be paid so as far as economic injections giving raises to government workers is in fact the right action to take if your goal is to strengthen debt inflation...

 

By cutting the raises how can you expect consumers to consume more debt if in real terms their wages are shrinking?

 

Government spending is a significant portion of the debt inflation potential...cutting or suspending raises is a blow to the hyperinflation camp...

 

It will end far quicker than the looming babyboomer die off...

 

The required amount of debt inflation to sustain debt inflation has to come from somewhere and if the government is putting the "breaks on" then who or what is going to provide the required amount of debt inflation?

 

They surely can't drop interest rates on average of 83 basis points/year for the next 7-14 years like the last 23 to support the debt inflation which got us to this point...and hyperinflation is called hyperinflation for a reason...because it is over very quick...

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As for the old folks...ripping us off they were just as duped as everyone else...

 

Here we are talking about the distant future still...the future is now...it is falling apart right now and has been for decades...

 

sure I'm choked at my parents for letting this happen but they had to eat...submit or starve...they had no choice just like every child born since then to this very day has no choice...

 

Any way you cut it millions and possibly billions of people are going to die when this ponzi scheme collapses no matter what is done... unless some savior shows up that can work miracles... that is the true gravity of the situation.

 

The very existance of Humanity and it's civilization hinges on perpetual debt inflation forever...something which the current system is just not designed to do. in fact the current system magnifies the final consequences BEYOND HUMAN COMPREHENSION...

 

all you have to do is accept reality...take a vacation if you have to, to deal with the initial despair phase...

 

The fact is that unless you die real soon you are going to see the horror of total system collapse with your own eyes.

 

Right now all information outlets are geared to prevent you from seeing what I'm saying...billions upon billions of dollars are being invested in brainwashing to keep you in the dark as to the true cause...

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Has anyone else ever wondered why they have always called it the "American Dream"?

 

Maybe the creator of that little saying knew exactly what he was talking about.

 

 

im living the american dream - my american dream. im not rich, but i dont really have to work and certainly wont once i get everything moved around. im building a buffer so im extra sure i dont have to "crank it up again." 16 months - unless HT is right :(

 

suggested reading: "cashing in on the american dream, how to retire at 35." its a book on frugality and philosophy, not a get rich quick deal. it was one couple's choice for their life - its ironic how few of us actually choose our life's path. below is their website. if you cant find the book, ill LEND it to you - its an easy read and no really earth-shattering secrets, it just struck a cord deep within me.

 

http://www.geocities.com/TheTropics/Shores/5315/

 

id like to ask 2 questions and please respond.

 

1. how much is enough? (net worth)

2. how much passive income would you need to stop working?

 

another interesting read is "you money or you life" by joe dominquez. much more into the frugality mode.

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PeeB,

 

Your questions are related. Speaking for myself, with absolutely no change in my lifestyle, $6K per month after taxes will do me just fine. To answer your first question, whatever gives me that 6K per month... Obviously, if I attempt any of those frugal living pointers you mentioned, then the above number comes down. Significantly. So yes, I am definitely living the dream...

 

 

Goldi, one minor point of demurral. The "Greatest Generation" was not the boomers - in point of historical fact. Not taking anything away from the boomers...

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goldi,

 

i know from your prior posts that you're a good dude/dudette and this seems to upset you.

 

here is PeeB view of SS - BTW, i have already paid into it for 32 years. they will increase the retirement age, they will put a means test on benefits (so that if you make almost any money from investments or pension, they will offset SS bennies) and they will reduce bennies if they have to (maybe cutr it slightly for couples or just an outright cut - so that everyone has to share the burden).

 

so, someone who has lived within or below their means and sacraficed to set aside for retirement will end up getting nothing - their sacrafice will in fact subsideize someone else's retirement. am i angry - not terribly, its just the way it is - i should be as pissed as you, but im not. i saw this coming a long ways and i never counted on SS. i feel blessed to live in merika.

 

i ordered "the return to thrift" which i believe is the book i read years ago (a stoolie PM'ed me that it was like 99 cents :lol: ). the guy laid it out - the govt is screwed, so we are screwed.

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You old folks may have the voting numbers to completely screw us younger folks over but frankly we are VERY pissed at you people. Waltzing around declaring yourselves the greatest generation, blah, blah, blah..... The whole time selling us into chattel slavery to a debt the size of which is flat out beyond human comprehension.

You all did this in spite of numerous warnings from all sides. You did it knowing full well that you were mortgaging OTHER PEOPLE'S future for your own short term gain.

Goldi I'm at a loss to understand which generation you speak of. I'm 56 making me first wave baby boomer called the 60's generation (beatnics, Vietnam War). My parents are WWII generation lately called the greatest generation. They are retired.

Within the boomers there are actual several different groups. The so called boomer generation is way longer than one generation. A portion of the boomers who are condiderably younger than me are the "Yuppies". I have as much in common with yuppies as with Civil War veterans. :lol:

I apologize if you already knew all this it wasn't clear to me that you had. I find many younger people on this board to be totally confused about the generational thing. Maybe they are just mad at everyone older than them. Sounds like a 60's thing. :lol:

 

I don't know why folks are so pissed at boomers concerning the SS problem. My parents generation and older created the system as a pay as you go. Boomers have been the ones doing the paying. Without our vast numbers the system would not have worked this long. We are also the ones who will get screwed. I guess folks must think the boomers have had it so easy. Think about the difference between being one of two siblings versus being one of nine. Think about going thru life when there is never enough for your group. Not enough schools, housing, jobs etc. Think about the "greatest generation" trying to kill you off in the 60's and then trying to start a career in the 70's.

 

Every generation has it's problems to overcome. Heck my grandparents had to make it thru the great depression as immigrants.

 

Rich

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