The end of the U.S. government

[Fern]

Originally posted by: Dissipate

Originally posted by: Fern

The government ending from financial troubles? I don't see that hapening.

Fern

Why do you say that right after you admit that the political class is growing while the productive class is shrinking, at the same time the government's debt continues to grow unabated?

I don't forsee any senario where the Fed Gov goes bankrupt.

Pay back foreign owned bonds? Please, just print more money. They'll be paid back with inflated $s. Who are the Chinese gonna complain too? They don't even vote.

Default? Whaddya gonna do if the Fed defaults, complain to the government (courts)?

If the gov needs more money, it takes it. Been doing that a very long time.

Long before the fed gov is "starved out" of existance, we will be.

I think it only this morning in a NYT paper I read that the budget deficit is 1.5% of GDP (prolly exclusive of "war" funding). So, I'm not yet buying the "sky is falling" stuff yet. And, IMO, the bankers control the planet, they won't let the fed gov go bankrupt if only for their own purposes.

Fern

 

[Dissipate]

Originally posted by: blackangst1

Originally posted by: Dissipate

Originally posted by: Fern

The government ending from financial troubles? I don't see that hapening.

Fern

Why do you say that right after you admit that the political class is growing while the productive class is shrinking, at the same time the government's debt continues to grow unabated?

You dont honestly think the fed debt, as it exists today, is relevant...do you?

Productive class shrinking? WTF is a productive class?

Yes I do think it is relevant when about 19% of the federal budget just goes to paying interest on the debt, and when foreigners are a major chunk of the lenders. As I said before, foreigners are now funding a major part of the U.S. government.

Text

The productive class are those ever rarer individuals who work but who are not on the government payroll/contract.

 

[Dissipate]

Originally posted by: Fern
I don't forsee any senario where the Fed Gov goes bankrupt.

Pay back foreign owned bonds? Please, just print more money. They'll be paid back with inflated $s. Who are the Chinese gonna complain too? They don't even vote.

Great idea. I suppose no one here at home will notice the effects of that inflation, only the Chinese will be affected.

Default? Whaddya gonna do if the Fed defaults, complain to the government (courts)?

Defaulting won't keep it from going bankrupt.

If the gov needs more money, it takes it. Been doing that a very long time.

Problem is that Americans are already taxed to the hilt. Most Americans now have to feed the government before they feed their own kids. A significant increase in taxes will either cause a revolt, or simply result in even less tax revenue.

Long before the fed gov is "starved out" of existance, we will be.

I think it only this morning in a NYT paper I read that the budget deficit is 1.5% of GDP (prolly exclusive of "war" funding). So, I'm not yet buying the "sky is falling" stuff yet. And, IMO, the bankers control the planet, they won't let the fed gov go bankrupt if only for their own purposes.

Fern

I'm not saying it is going bankrupt immediately. But it is certainly on that path, and I do not see the politicians changing course(they have no reason to).

 

[tomywishbone]

I don't care, as long as I'm here to see it.

 

[Fern]

Originally posted by: Dissipate

Originally posted by: Fern
I don't forsee any senario where the Fed Gov goes bankrupt.

Pay back foreign owned bonds? Please, just print more money. They'll be paid back with inflated $s. Who are the Chinese gonna complain too? They don't even vote.

Great idea. I suppose no one here at home will notice the effects of that inflation, only the Chinese will be affected.

Why do you think the gov will give a crap about that? They'll just blame each other (and the other party) and try to keep hold of their offices

Default? Whaddya gonna do if the Fed defaults, complain to the government (courts)?

Defaulting won't keep it from going bankrupt.

Umm... Defaulting is going bankrupt. When one defaults, either they can petition the bankruptcy courts for protection, or the lender can petition for their money. Otherwise bankruptcy technically exists when your liabilities exceed your assets (trivia ftw)

If the gov needs more money, it takes it. Been doing that a very long time.

Problem is that Americans are already taxed to the hilt. Most Americans now have to feed the government before they feed their own kids. A significant increase in taxes will either cause a revolt, or simply result in even less tax revenue.

Bah, when I first started practicing as a tax CPA the highest federal rate was 70%. When the governement decides it needs your money, the government takes it. Sure, there will economic problems, but the pols will just blame each other.

Long before the fed gov is "starved out" of existance, we will be.

I think it only this morning in a NYT paper I read that the budget deficit is 1.5% of GDP (prolly exclusive of "war" funding). So, I'm not yet buying the "sky is falling" stuff yet. And, IMO, the bankers control the planet, they won't let the fed gov go bankrupt if only for their own purposes.

Fern

I'm not saying it is going bankrupt immediately. But it is certainly on that path, and I do not see the politicians changing course(they have no reason to).

I agree with the "they have no reason to" part. On a bad path? Prolly so, but the pols are in the business of awarding benefits to various groups to get elected. Until that model changes, I see no way for change to come. Whenever the "end day" is forcast to arrive, I suspect it's stil too far off to get most people's attention at this time. We Americans are notorious for short-term thinking and focus.

Look, the looming demographic "time bomb" that exists in most of the Western world, and certainly in Asia is well documented and understood (too many elderly and not enough young to support them etc). How often do you hear about that? What's being done? "Rarely", and "nothing" would be my answers. Same for gov spending IMO.

 

[Dissipate]

Originally posted by: Fern

Umm... Defaulting is going bankrupt. When one defaults, either they can petition the bankruptcy courts for protection, or the lender can petition for their money. Otherwise bankruptcy technically exists when your liabilities exceed your assets (trivia ftw)

Sorry, I should have said that it will not prevent collapse.

Bah, when I first started practicing as a tax CPA the highest federal rate was 70%. When the governement decides it needs your money, the government takes it. Sure, there will economic problems, but the pols will just blame each other.

As a CPA, of all people, 20% of the federal budget going to pay interest on the national debt does not alarm you? What does it have to get to? 25%, 30%, 40%?

 

[CaptnKirk]

in a flaming paper bag being stamped out on somebodys porch on a Halloween night . . .

 

[dyna]

The US is slowing becoming socialistic. The people want the government to provide everything for free. And we will then realize that we are now socialistic. It will be defining in that the social programs we create will be so huge, like many of the corporations today, that a notion of the private sector will only be in history books. Actually that text may not be there because the government may not believe it is good for you. At some point the government will be so big and controlling that the nation and government we once knew will be gone.

 

[Arkaign]

Our currency is backed by nothing but faith in a semi-private bank. Our debt is astronomical, and very few (maybe less than .5%) have enough tangible wealth (even if you "own" your land and home, it can be seized easily) to survive an economic collapse.

People don't think enough about this, but it's true : our modern economic survival literally depends ENTIRELY on external forces, primarily energy. It takes fuel to do everything, to deliver goods, to get to and from work, to power our infrastructure. If a regional or global nuclear war unfolds due to the incredible stresses in the middle east, it would end our country as we know it. Oil prices would do a lot more than double, as the entire production and distribution system would be paralyzed. Inventories would evaporate quickly, as they are ludicrously thin to begin with. You'd be likely to see the price of oil at $1k+ per barrel, maybe more. People would be unable to get to work, power their homes, get delivery of goods, our entire society would dissolve overnight. In WW2 about 100 million people died over a 6 year period. This time around, it would be more likely to see billions die in less than 12 months.

There is nothing about our 21st century society that would be amenable to running without a consistent oil supply. Look at the chaos caused by Katrina, and that was such a *tiny* blip in refining / distribution. Prices at the pump shot up drastically. Imagine having to pay $40/gallon for gas, and then having no gas at all after a few days.

The destruction of the United States will happen from economic forces that are globally pressurized. Without oil, we're as good as dead. This is the prime national security threat to our existence. Terrorism is a pathetic blip in comparison. What's a few thousand lives compared to our very existence?

 

[blackangst1]

Originally posted by: dyna
The US is slowing becoming socialistic. The people want the government to provide everything for free. And we will then realize that we are now socialistic. It will be defining in that the social programs we create will be so huge, like many of the corporations today, that a notion of the private sector will only be in history books. Actually that text may not be there because the government may not believe it is good for you. At some point the government will be so big and controlling that the nation and government we once knew will be gone.

And dont forget to add to the irony...it's all crafted by the American people. Not the big bad government. Not voting and not making a decision >IS< casting a vote AND making a decision.

 

[ProfJohn]

I don?t think our government will come to an ?end? instead it will just continue to evolve as it has for the past 200 years.

Look at our government today and you will see it is VERY different from what it was at the start in 1787.

England is a good example of this as its government has slowly evolved over the last 1000 years into its present form.

 

[brandonb]

Originally posted by: Skoorb
Your numbers are plainly crazy. There are plenty of people who make way less and do fine including a house and all that. I know a guy who makes $70k/year, lives in a $210k house with about $7k/year in property taxes (yes $7k/year), has 4 kids, continues to save money, and even goes on vacations

$4000 a month income ($48000 a year)

Lets take the payments

$1200 uncle sam (income tax)
$1200 rent (small house)
$350 car/house insurance, property tax (or association fees)
$300 food
$200 car payment
$200 gas for car
$150 bills for house
$100 basic living essentials (phone, internet, clothes budget)

That leaves $300 left per month, I'm sure you can think of things that would suck that out of your pocket that I didn't list. Somethings differ from person to person in that budget depending on the persons need (save money if you live in apartment, or add more to car payment if you have a nicer car, etc), but realistically speaking, thats probably about average for the average person to live. You can shave money off that if you want to live cheap (getting an apartment for example), but I'm speaking average. Most people want to live an average life. You will need about $48000 a year to achieve that.

 

[The Lurker]

To say that the government will end is kind of silly, since even if there is a coup or collapse people will still group together and form a "government". It will just be a very different government.

That being said, our government will only go as far as people will let it. So, our only real threat is if a majority of the population becomes too apathetic to get involved in the government (making it easier for a few fanatics to control everything).

 

[PrinceofWands]

Originally posted by: brandonb

Originally posted by: Skoorb
Your numbers are plainly crazy. There are plenty of people who make way less and do fine including a house and all that. I know a guy who makes $70k/year, lives in a $210k house with about $7k/year in property taxes (yes $7k/year), has 4 kids, continues to save money, and even goes on vacations

$4000 a month income ($48000 a year)

Lets take the payments

$1200 uncle sam (income tax)
$1200 rent (small house)
$350 car/house insurance, property tax (or association fees)
$300 food
$200 car payment
$200 gas for car
$150 bills for house
$100 basic living essentials (phone, internet, clothes budget)

That leaves $300 left per month, I'm sure you can think of things that would suck that out of your pocket that I didn't list. Somethings differ from person to person in that budget depending on the persons need (save money if you live in apartment, or add more to car payment if you have a nicer car, etc), but realistically speaking, thats probably about average for the average person to live. You can shave money off that if you want to live cheap (getting an apartment for example), but I'm speaking average. Most people want to live an average life. You will need about $48000 a year to achieve that.

Those numbers mean nothing to people in other areas of the country however. There is no 'average' because it depends almost entirely on where you live. I've never made 30k a year in my life, but I've had and done all the things in your list, plus a huge amount of extras for fun. Such a large percentage of the people make under 48k a year (70% of the population more or less) that you simply can't arbitrarily decide that it's 'average' based on your own life.

 

[blackangst1]

Originally posted by: brandonb

Originally posted by: Skoorb
Your numbers are plainly crazy. There are plenty of people who make way less and do fine including a house and all that. I know a guy who makes $70k/year, lives in a $210k house with about $7k/year in property taxes (yes $7k/year), has 4 kids, continues to save money, and even goes on vacations

$4000 a month income ($48000 a year)

Lets take the payments

$1200 uncle sam (income tax)
$1200 rent (small house)
$350 car/house insurance, property tax (or association fees)
$300 food
$200 car payment
$200 gas for car
$150 bills for house
$100 basic living essentials (phone, internet, clothes budget)

That leaves $300 left per month, I'm sure you can think of things that would suck that out of your pocket that I didn't list. Somethings differ from person to person in that budget depending on the persons need (save money if you live in apartment, or add more to car payment if you have a nicer car, etc), but realistically speaking, thats probably about average for the average person to live. You can shave money off that if you want to live cheap (getting an apartment for example), but I'm speaking average. Most people want to live an average life. You will need about $48000 a year to achieve that.

I think your numbers are pretty inflated. I dont live in a cheap part of the country...Phoenix in fact. 5th largest city in the US.

$1200/mo income taxes? WTF. Even if you claim 0 exemptions, you wont pay 30% income tax. Not to mention your tax burden is lower if you are paying for health insurance.

$1200 for rent? Here in Phoenix $1200 will get you a 3 bedroom/1800 SF house. A small house can be had for 700-900.

Anyway.

 

[Socio]

The US will be gone by 2100 give or take a few years.

The mass importation of immigrants from south of the border and elsewhere will never stop just get worse. This will lead to the US will becoming a one party state, democrat by 2025. In fact GWB just might be the last Republican president the country ever sees.

By 2050 Democrats will yield much of the country to incoming foreigners, their customs, religions, culture, and ultimately the majority vote power. As a result the country will be plagued by corruption and poverty, so bad both US government and State Governments will no longer be able to afford welfare, any form of social security, Medicare, or any other type of free services. To avoid any civilian uprisings over this the right to bare arms will be abolished and bans on all fire arms will be passed.

By 2075 due to massive debt accrued by the US government from rising corruption, poverty and unrest, US military spending will stop, our nuclear arsenal will be dismantled and likely sold off along with warships, planes, carriers etc?.

By 2100 the US military will be in shambles, citizens will have no arms to protect them selves. China?s population will be busting at the seams and they will need new land for their people. So China will invade, easily gain control of the country, slaughter everyone and move in and the United States of America will be hence fourth known as New Asia.

By 2200 the Chinese will have taken over Canada Mexico, Central and South America, Arab Muslims will have taken over Europe, India, and other nations surrounding Asia. The Arabs Muslims will be pushing in on Asia; this will force the Asians to flee to New Asia, be assimilated, or die.

By 2300 the White and Hispanic races will be extinct the Muslim empire will have engulfed what was left of Asia as well as Australia and New Zeeland. They will eventually clash with the New Asian Empire in a massive war of supremacy that will start with control over the Chinese occupied Hawaiian Islands and end with the destruction of the world.

The end!

 

[Fern]

Originally posted by: blackangst1
I think your numbers are pretty inflated. I dont live in a cheap part of the country...Phoenix in fact. 5th largest city in the US.

$1200/mo income taxes? WTF. Even if you claim 0 exemptions, you wont pay 30% income tax. Not to mention your tax burden is lower if you are paying for health insurance.

I ssumed that was what was withheld from his paycheck. 7.65% for social security, maybe anoth 7.5% for state income taxes, and 15% for federal income taxes.

$1200 for rent? Here in Phoenix $1200 will get you a 3 bedroom/1800 SF house. A small house can be had for 700-900.

Yes, seemed quite high to me considering he mentions a roommate. One would think that they share the rent. So, it seems total rent would be $2,400. Pretty damn steep. Maybe he's in CA?

 

[Fern]

Originally posted by: Dissipate

Originally posted by: Fern

-snip-

Sorry, I should have said that it will not prevent collapse.

Bah, when I first started practicing as a tax CPA the highest federal rate was 70%. When the governement decides it needs your money, the government takes it. Sure, there will economic problems, but the pols will just blame each other.

As a CPA, of all people, 20% of the federal budget going to pay interest on the national debt does not alarm you? What does it have to get to? 25%, 30%, 40%?

Personally, I hate paying interest. But I wonder what % of the average person's income goes to interest?

But the bottom line is that I feel no matter bad finances get, it will not "kill" the US government. We just disagree here.

Fern

 

[ProfJohn]

Someone explain to me how bad finances cause the government to come to an ?end.?

As long as the government is collecting tax revenue it will be able to exist in one form or another. The most likely thing to happen would be massive cut backs in government programs. And then the government would refinance its debt in such a way that it can continue to operate.
Since it is the government it can pretty much do what it wants with its debt, such as suspend interest payments etc. Now this would have a huge impact on the economy, but it would not cause the government to collapse.

The only way I see a complete collapse of our government would be following a complete world economic collapse in which the government can no longer raise revenue. At which point it becomes everyone for themselves.
Highly doubt that will happen any time soon.

 

[Dissipate]

Originally posted by: ProfJohn
Someone explain to me how bad finances cause the government to come to an ?end.?

As long as the government is collecting tax revenue it will be able to exist in one form or another. The most likely thing to happen would be massive cut backs in government programs. And then the government would refinance its debt in such a way that it can continue to operate.
Since it is the government it can pretty much do what it wants with its debt, such as suspend interest payments etc. Now this would have a huge impact on the economy, but it would not cause the government to collapse.

The only way I see a complete collapse of our government would be following a complete world economic collapse in which the government can no longer raise revenue. At which point it becomes everyone for themselves.
Highly doubt that will happen any time soon.

Rome was collecting taxes when it collapsed. The same thing can and will happen to the U.S. government.

 

[Infohawk]

I don't see illegal immigration ending the US Government anytime soon. I also don't see bankruptcy doing it? Why? The US is a big enough country to just ignore its debts. Granted, this would be an unprecedented economic disaster, but no where near as drastic as the end of the US Government.

The end of the US government is so far off in the future that it is just guessing, but my guess would be that something like states rights ends the federal government. Probably nothing like the civil war, but something more like devolution in the UK.

 

[Dissipate]

For those that don't believe me that the fed gov is going bankrupt, here is a video of a lecture by an economist at MIT about his book:

ABOUT THE LECTURE:
A word of advice to baby boomers: be very kind to your children. They will quite likely be paying a steep price for your happy golden years. Laurence Kotlikoff says the future is dark indeed for the Social Security system. The fiscal gap between what the federal government expects to take in and what it pays out is so big that the Treasury Department had to censor the number in the federal budget. Kotlikoff?s current figure: $51 trillion. Today?s payouts to retirees for Social Security and Medicare/Medicaid have already broken the bank, and future expenditures will take us right into an economic catastrophe, says Kotlikoff. Why? Because today there are 33 million people over 65 receiving an average annual Social Security payment of $23k -- but in four years there will be 77 million seniors collecting. The equation involves demographics and money: a predominantly old population with extended lifespan requires benefits that far exceed the capacity of young workers to pay for them. And please don?t mention the spiraling costs of health care. Kotlikoff blasts the Bush and Clinton administrations for negligence and cover-ups, and says he doesn?t ?see a way out of our fiscal system melting down short of doing something immediately.? His starting point for a bailout: ?Pay off what you owe with a federal retail sales tax.?

ABOUT THE SPEAKER:
Laurence J. Kotlikoff is a Research Associate of the National Bureau of Economic Research, a Fellow of the Econometric Society, and President of Economic Security Planning, Inc., a company specializing in financial planning software. His previous books include Essays on Saving, Bequests, Altruism, and Life-Cycle Planning; Macroeconomics: An Integrated Approach; Generational Accounting; and What Determines Saving.

Kotlikoff received his B.A. in Economics from the University of Pennsylvania in 1973 and his Ph.D. in Economics from Harvard University in 1977. From 1977 through 1983 he served on the faculties of economics of the University of California, Los Angeles and Yale University. In 1981-82, Kotlikoff was a Senior Economist with the President's Council of Economic Advisers. He has served as a consultant to the International Monetary Fund, and the World Bank, among others. He has provided expert testimony on numerous occasions to committees of Congress including the Senate Finance Committee, the House Ways and Means Committee, and the Joint Economic Committee.

Text

So there you have it. If the politicians don't do something immediately, disaster is imminent. Does anyone hear of the politicians doing anything immediately? I don't. That's why I think the whole system is going bust.

 

[Moonbeam]

The end of the world happened in childhood. We now project the end of the world in myriad forms out there. We need the tension of fear externalized to help us suppress the madness that we fear will erupt from within. Everything we fear already happened.

 

[Infohawk]

Originally posted by: Dissipate

So there you have it. If the politicians don't do something immediately, disaster is imminent.

Can you give a date? If the US government collapses for the reason you say it will by that date, I will be impressed.

 

[Dissipate]

Originally posted by: Infohawk

Originally posted by: Dissipate

So there you have it. If the politicians don't do something immediately, disaster is imminent.

Can you give a date? If the US government collapses for the reason you say it will by that date, I will be impressed.

No, I'm not Nostradamus, sorry. But, as the economist points out in the lecture, it could come sooner than imagined if foreign investors who buy long term U.S. bonds get cold feet.