WOOO HOO!!!!! I am broke too!

June 2, 2003, 1:23AM

[url=www.chron.com/cs/CDA/ssistory.mpl/business/1927461]Lessons in how to make $43 trillion disappear[/url]

By SCOTT BURNS
Universal Press Syndicate

ON Friday, May 16, the word was out. A $350 billion tax cut was a done deal.

So why did the stock market sink that day? Why did it plunge the following Monday, losing 2.5 percent of its value?

One possible explanation is Treasury Secretary John Snow and his comments on the dollar. Another is concern about new terrorist attacks. But let me suggest a third possibility. Despite efforts to suppress it, word is getting around we can't afford a tax cut.

The story starts one night in January, only days after Treasury Secretary Snow had replaced Paul O'Neill. A cell phone rang as two men were leaving a restaurant in Santa Fe, N.M. The caller told Boston University economist Laurence Kotlikoff that six months of work by two economists was going to be deleted from the president's budget. The budget was due to be published in February. I know this happened because I was the second man: Kotlikoff was in Santa Fe working on a book project with me.

The material to be deleted from the budget document was an updating of generational accounting. O'Neill had requested an estimate of the government's true long-term obligations.

The estimate would include the formal debt of the U.S. Treasury plus equally serious government promises to provide retirement income and medical care. (Readers who think promises of Social Security and Medicare aren't as serious as U.S. Treasury bond promises should visit the nearest elderly person.)

The resulting information might easily have been lost in a document whose online girth is measured in megabytes.

Except for one thing.

The new accounting shows the United States is broke.

It shows the true obligations of government were 10 times larger than Treasury debt held by the public. It shows the present value of these unfunded obligations is a mind-numbing $43 trillion.

In a recent telephone conversation I asked one of the project economists, Jagadeesh Gokhale, why he thought his work was cut. Gokhale, a senior economist for the Federal Reserve Bank of Cleveland, was circumspect. He suggested the figures were a surprise to the new Treasury secretary.

Here's another interpretation: Snow's first task was to sell the president's tax cut. The sales job would be awkward if an official government document announced we were already $43 trillion in the hole.

The Federal Reserve, by the way, recently put the net worth of all households at $39 trillion. This problem goes way beyond taxing the rich, the poor or the middle class.

So the generational accounting figures disappeared from the budget.

But they did not cease to exist. In early March the other economist on the project, Kent Smetters, testified before the Subcommittee on the Constitution of the United States in the House of Representatives. Smetters, an expert in Social Security and Medicare, is at the Wharton School in Philadelphia.

Asked to comment on the Balanced Budget Amendment, Smetters was direct, saying, "I support practically any effort to make it harder for one generation to pass large fiscal burdens to future generations ... ."

Unfortunately, he noted, government cash accounting is a poor basis for a Balanced Budget Amendment. "The government reports that the national debt in 2003 was about $3.8 trillion in the form of government `debt held by the public.' But that number ignores massive imbalances in Medicare and Social Security programs and the government's other programs.

"When the liabilities associated with those programs are taken into account, the nation's fiscal policy is currently off-balance by over $43.4 trillion in present value, a number that is not reported in standard budget documents," he said (italics added).

The American Enterprise Institute will soon publish a pamphlet, co-authored by Jagadeesh Gokhale and Kent Smetters. The draft copy does more than lay out the size of the government's unfunded liabilities. It shows how much the current generation is benefiting at the expense of the next.

It shows, for instance, that past and current generations of Social Security recipients will receive $8.7 trillion more in benefits than they will pay in employment taxes.

Republicans and Democrats have distracted us with unending battles between haves and have-nots for decades. Over the same period they have bankrupted the country.

Perhaps that terror, not the terrorism of al-Qaida or currency traders, may explain the odd market decline after a tax cut that was supposed to make stocks soar.

God you're an Idiot.

SGtar15

don't get me started on this 'federal reserve' CRAP!

hmm...guess its time to cut some social programs.

Well said

Use #103456 for duct tape.

[kiss] You guys are great.

Easy there big fella.

[:D]

They should have a yard sale. I'll buy some surplus Minimi's.

Or we could do the Caligula solution and whore out the Senators' wives. I bet Hillary has a hot little ho somewhere.

With a total debt about 40 trillion and an annual GDP of about 10 trillion that makes the GDP/Debt ratio about 4:1

Hey, I guess I'm broke too! [:\]

My total debt is about 3-4 times my annual income too!!!

Rule 3---personal attacks----is "You're an idiot" a personal attack?

Narc.



DOH!!!! [brick]

The 10% has spoken again I see.

[size=5][red]Not when it's the truth ! [b](Imbroglio)[/b][/red]
[/size=5]

Would calling someone a "narc" be a personal attack [brick][:D]

Whenever someone says, "We can't afford a tax cut.", 9 times out of 10 they are democrat.

Is Imbrog finally showing his true colors?

... What happened to you [b]Imbroglio[/b]? You used to be witty, cunning and sometimes funny.

... As of your recent return all you do is cut & paste [b]Democractic Underground[/b] threads.

... Why?

Well if we are that deep in debt, and I suspect those figures might be accurate, then a $350 billion dollar tax cut isn't going to matter one way or the other.

What this tells us is that we need to be concerned about the future.  The Soviet Union went bust and we all saw what happened there.  The fact is that being a super power is just too damn costly.

We can't let ourselves go the way of Russia.  What is the solution?  The solution is WAR!!!

That's right we crush all of our enemies NOW while we still have a line of credit.  Russia, Europe, the Middle East, China, Taiwan, Australia, we crush all of them now before they have chance of imposing their socialists ideologies onto a broken American empire.

Now is the time to strike.

You're half right.



But, this is where you go off the deep end:



You're using the term "we" as if you and I are part of the elite of the American empire. You and I (The American People) are, in fact, included in the empire's list of "enemies." You and I are the cannon fodder the emperor will use to go out in the blaze of glory you're suggesting.

Maaaaaan... I don't [i]intentionally[/i] kill threads, it just happens, sometimes. [pound]

There must be a country mechanic on this board who knows how to fix her.

Nationalize our own monetary system (eliminate the Federal Reserve, in other words) and nullify our debt to that Federal Reserve.    Issue new currency with a one year period in which the old currency is tied to the new currency, dollar for dollar, penny for penny, and then, after the end of that one year grace period, divorce the new currency from the old, and tie the new dollar to a firm fixed gold price, like 200 new dollars per ounce.

Of course, first, our government should quietly start buying all the gold it can,  using the current dollar to do it.   Sure, the dollar will go down in relative value as a consequence, but the point is to accumulate enough gold to back up every new dollar, making it by default the strongest currency in the world.

What is the Federal Reserve?   It's an organization of mostly FOREIGN banking institutions that control the US money supply.  The national debt is the money that WE owe THEM in exchange for THEM handling our money.  Is that fucked up, or what?

The Fed needs to go.

CJ

To which EMPIRE are you referring?

   

           what he said [bounce]

Klinton saw the problem when he got into office.  The problem was that he did the exact wrong thing of raising taxes.  He should have lowered expenses.  If he had of lowered expenses, then our economy would be great now.  About 2 years after Klinton went into office, we passed the point of no return in being able to pay off the debt.  Now it is just going to get bigger and bigger causing a supper depression and the Dems will blame it on the Republicans.

Sorry to sound so pessimistic, but I just call them like I see them.

I don't think it matters what kind of thread Imbro starts, there's always gonna be a jackass or two there to call him an idiot.  You guys need to fuckin relax.

....and youve been here how long?

[img]http://photos.ar15.com/WS_Content/ImageGallery/IG_LoadImage.asp?iImageUnq=9229[/img]

Does it really matter how long I've been here or how many posts I have?  Some of you guys are just ate up with this shit about how many posts people have or how long they have been here.

Well put.

$43 trillion

Gee, that sounds like a lot; isn't that a lot?

I guess a million isn't much anymore.

yes it does you goatfuck.

Nice. Real mature.  So.....you're about 14 years old?

Don't even bother responding, I'm done with this mickey mouse shit.

An obvious statement but true nonetheless.

It's ok.  All the US has to do is extort more companies and industries like tobacco and MSFT.

Let's see, some jerkoff with 64 posts who has been here for 3 months jumping in people's shit for slamming Imbro.

Yes, it matters how long you have been here because you don't know the history behind the reactions to Imbro.

Adieu, Farewell, Shalom, Goodbye.  I shall not miss you,  [:K]liberal Troll!

Perhaps you have not noticed but at arftcom insults are another form of compliments.

Well said, Watson!

Janet Reno

Lets ask the WALTONS of WAL-MART fame for some money, they've got multi-billions to bail us out.

Who cares, it's just "Fiat", (thin air),  money any how!!!
Oh Wait!! I Forgot!! The National Parks, My land, and YOURS are "collateral", on the National debt.....[snoopy]

Guernsey’s monetary experiment

 
by Louis Even
_________
_____

 

Guernsey is a small island located in the English Channel. An Anglo-Norman population. This island is located closer to the French coast than to the English one.

At the close of the Napoleonic wars, the island, like several other countries, was in pitiful condition, both physically and financially.

 

No money

 
Sea walls, roads, markets were needed. There was no manpower shortage. But there was no money to pay for these works.

The money used by the people on the Island was the money from England, the pound sterling. But, like after any war, the financiers were calling back the money advanced to finance the slaughter, and the pounds sterling were very scarce everywhere.

The Island had an autonomous government, "the States of Guernsey." So it had the rights inherent in all sovereign government, among other rights, that of regulating the volume of money in circulation in the country. But, no more than any other country, the States of Guernsey had thought of exercising this sovereign prerogative.

 

An intelligent governor

 

The Island was especially in need of a new market house, and a committee was set up to take care of it. The committee went to see the governor to explain the situation to him :

* "We need a new Market, but we have no money to build it."

* "With what material are you going to build a market?" asked the governor.

* "With stone and wood."

* "Do you have it in the island?"

* "Certainly, and in plenty."

* "Do you have workers?"

* "Yes again. But it is money that is lacking."

* "Could not your parliament issue the money?" asked the governor.

 

A new idea!

 

This idea had never occurred to the committeemen, who had never analysed the money question. They knew where to get money when there was some: but they never wondered where money begins or can begin.

The method of taxing when there was money was quite familiar. But the method of infecting the money that is lacking, and of taxing only after, was something new to our administrators.

 

Issues of national currency

 

An estimate of the cost was prepared and the States printed the money required, which was paid to those who either worked on the project or furnished materials for it.

As the new currency was paid out into circulation among the people, exchanges were being expedited. The wage-earners went to the shopkeepers, the shopkeepers went to the producers, the producers bought enough to increase their production.

The currency was accepted everywhere. The government took measures against inflation by decreeing hat money would be withdrawn by taxes, so it does not accumulate. And, in fact, the money was retired on schedule by taxes. But, as the increasing activity required a corresponding volume of money, other issues were brought out by the government for other works.

On October 12, 1822, the new Market House was completed and opened. Not a penny of public debt on this public enterprise.

 

The bankers intervene

 

At the time of the original issue, there was no bank upon the Island. This explains, without doubt, why there was no opposition to the issue of State money.

But ten years after the first issue, the Island had become so prosperous, thanks to the activity allowed by a sufficient volume of money, that the banks of England had an eye on this island.

English bankers set up branches in the island and brought the population around to orthodox rules. "It was unsound." They said, "to let the government finance its enterprises without getting into debt."

The bankers did everything to stop further issues, to introduce the system of interest-bearing loans to the government, and to withdraw from the island the State money that had been paid out into circulation.

There was some resistance, but the bankers won their point, with their usual methods; and on October 9, 1836, the States of Guernsey had abdicated their sovereign prerogative over the control of the volume of money. From then on, the amount of the national currency decreased gradually, and was replaced by money issued by private bankers in the form of loans getting the island into debt.

Nevertheless, there is still about 40 000 pounds sterling ($200 000) of national currency outstanding at this date in the Island. (According to Gertrude M. Coogan in Money Creators, published in 1935).

 

Why a financial problem?

 

As we can see, with natural resources, workers, and a bit of common sense, there is no financial problem.

But when shrewd exploiters want to regulate economic activities according to their power and their profit, there the financial problem arises.

Of course, minds in search of arguments to justify the present regime will say that Guernsey was only an insignificant small island; that the control of the volume of money by the representatives of the people is good for a small country, but not for a big country.

All right. Take note of what these gentlemen object to you today. Next week, these same gentlemen will tell you that the money problem cannot be solved properly in a small territory or a province, but must be brought to a federal or even an international level!

It was not Social Credit yet in Guernsey from 1820 to 1836. No doubt that the development of that time and that place would not have allowed to go as far as to give a dividend to consumers. But it was already a non-debt-bearing national currency, issued in accordance with the possibilities in front of the needs.

The issues of national currency by the States of Guernsey caused neither inflation nor idleness. They created activity and prosperity. But these issues did not make any slaves, and that is why the bankers intervened.

OH CRAP, don't tell me the feds put our money in ENRON !

Oh no, not the gold crap again...

What you seem to be missing is that gold, in and of itself, has no more real value than dollars...

The value of an ounce of gold is just as 'theoretical' as the value of a dollar bill.

It's a wholely artificial thing, assigned based on the relative desire of people to posess gold, vs the amount of gold available to posess. Replace 'gold' with 'dollars', and the same thing applies.

The concept of basing an economy on gold is a relic from the days when it was the primary medium for creating money. Gold WAS money, and it's value was not related to the value of the metal that made up the money (since the average person has no way of telling what the composition is, but rather accepts the official value of the coint), but to the value of the money itself. The value of money, weather in terms of gold, sea shells, paper, or just as a number has nothing to do with what the money is made of.

Linking the economy to the price of gold is absurd for other reasons: It ties the value of US money to the world supply of gold. Gold goes up, the value of dollars goes up. Gold goes down, down goes the dollar (irregardless of the actual state of the economy)...

At least with the current system, the only thing that can screw with the dollar is the actual state of the US economy...

What I want to know is where the funny old imbroglio went, and who is this trolling DU neophyte that took his login?

He's right ya' know.

Yep! I'll take firearms, ammo, whiskey, food, and toilet paper any day!!!

Illustrating my point exactly...

Money, weather made of gold, paper, or whatever, is just a convenient way of exchanging value. It doesn't matter what it's backed by, as the value of the 'backing' is as theoretical as the value of the money itself... It's a medium of exchange...

What matters is that everyone believes that said medium of exchange (whatever it is) has value, and thus everyone excepts it in exchange for things with PRACTICAL value (like cars, fuel, guns, ammo, food, services rendered, etc...)...

Gold has very little PRACTICAL value. With the exception of very high-tech manufacturing processes, it is utterly useless. It has an artificial value (just like money) that is based on the historical use of gold AS money, and little more. Herein lies the problem: Any event significant enough to destroy the value of the paper dollar will ALSO destroy the value of gold for the duration of the disruption (after which both paper money and gold will recover, of course). In such a scenario, it's back to the barter system (Yeah, right, the world just went to hell in a handbasket, and you want me to give you this case of ammo for a shiny bar of metal? Got any gas, food, or something else I can USE?...)...

And short of such a scenario, we have nothing to fear WRT the value of dollars. Because if the dollar goes bust, it (Having replaced gold as the standard for economic comparison. Even the economic value of gold is expressed in... US DOLLARS) will take the whole world with it... Which will create the scenario mentione above....

And it will happen weather the economy is backed by gold or good ol' fashioned American firepower (Let's see, why is the USD the 'standard' for rating currency... Maybe because of our superpower status, the stability this brings, and the forces that preserve it)....