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Will America's debt doom us?

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Re: Will America's debt doom us?

#91

Post by pedasmith »

MuffinFlavored wrote: post #68
wcunning wrote: post #35

Earlier quoted context omitted.

Clinton ran a current account surplus, but overall debt grew because Medicare and Social Security were still losing money at the time. Not to mention that it wasn't all Clinton, some of it was the opposition Congress.

This is a dumb unrelated question on my end but are the returns of Social Security very bad? If you put 6.2% (12.4% total with employer contribution) of your income away into index funds that grew at 7% per year, at $100k/yr gross salary ($12.4k/yr) from ages 25 - 65 (40 years), you would end up with $2.6m (in today's dollars). $2.6m converted into dividend funds with a 3% yield would be $6.6k/mo. I don't know anybod…

Essentially, all your numbers are subtly wrong and all of their wrongness is making the final number look much larger. You have to adjust for inflation, including 'weird' inflation. You have to account to suddenly becoming disabled after 20 years. Including the employer contribution is arguably misleading.

Social security is security: no matter how I get screwed, I'm only poor when I'm old, not poverty stricken and dead.

Re: Will America's debt doom us?

#92

Post by Cd00d »

MuffinFlavored wrote: post #68
wcunning wrote: post #35

Earlier quoted context omitted.

Clinton ran a current account surplus, but overall debt grew because Medicare and Social Security were still losing money at the time. Not to mention that it wasn't all Clinton, some of it was the opposition Congress.

This is a dumb unrelated question on my end but are the returns of Social Security very bad? If you put 6.2% (12.4% total with employer contribution) of your income away into index funds that grew at 7% per year, at $100k/yr gross salary ($12.4k/yr) from ages 25 - 65 (40 years), you would end up with $2.6m (in today's dollars). $2.6m converted into dividend funds with a 3% yield would be $6.6k/mo. I don't know anybod…

Find me 7% growth on $10k dollars for multiple decades running and you can have all my money. In other words, that's a very unreasonable mean growth rate.

Re: Will America's debt doom us?

#93

Post by AnimalMuppet »

wang_li wrote: post #76
metabagel wrote: post #65

Earlier quoted context omitted.

Rather, President George W. Bush used the existence of the surplus as a reason to enact two tax cuts. Those tax cuts, their extension (mostly) by Obama, the Trump tax cuts, the wars in Iraq and Afghanistan, and sizable increases in the defense budget are the major contributors to the budget deficit and hence the accumulation of debt since 2001.

You left out the fact that nearly 2/3 of Americans are net tax recipients. Everything that the government does at all levels is paid for by either debt or the highest 40% of earners.

Did that change from Clinton to Bush? If not, then it wasn't how we got from a surplus under Clinton to the deficit.

Re: Will America's debt doom us?

#94

Post by treis »

JohnFen wrote: post #82
treis wrote: post #39

Earlier quoted context omitted.

>It tells us how many years of productivity we owe. That's not accurate though. We can pay off the debt tomorrow and skip the years of productivity. It really is an apples to oranges comparison. The debt isn't denominated in productivity. It's denominated in dollars that the government can create for "free". Of course there are knock on effects of creating enough dollars to zero out the debt, but it's not equivalent…

> It's denominated in dollars that the government can create for "free". The government cannot create wealth "for free". It can print more dollars, but in doing so it makes each dollar worth less. No wealth is actually gained. > there are knock on effects of creating enough dollars to zero out the debt Doing that is impossible, though. Reducing the value of a dollar means that you'll need even more dollars to repay t…

>The government cannot create wealth "for free". It can print more dollars, but in doing so it makes each dollar worth less. No wealth is actually gained.

That's the point. The government isn't on the hook for wealth. They are on the hook for dollars. And dollars, to the US government, are "free".

>Doing that is impossible, though. Reducing the value of a dollar means that you'll need even more dollars to repay that debt than you would have needed otherwise. There is no net gain here.

The amount of debt doesn't go up if the value of the dollar goes down.

Re: Will America's debt doom us?

#95

Post by AnimalMuppet »

burke_holland wrote: post #70

This is some SERIOUS misrepresentation of the facts. Just as an example: "One-third of the debt is money the government owes to itself". To itself? And whom might that be? Oh right, THAT'S US. That money is owed to the people, and they're probably doing to need it. Especially considering that Social Security, Medicare, and Medicaid account for 36% of the federal budget - which is....let me do the math - one third. ht…

And they're probably going to need it? Well, when is Social Security projected to run out of money? I think they're going to need all of it by then. (Yeah, I know, some is Medicare. It's also projected to run out of money, just a bit later.)

Re: Will America's debt doom us?

#96

Post by neilwilson »

The US debt is a problem in the same way that the earth constantly falling into the sun is a problem.

You've missed a velocity vector in your analysis.

Ask yourself this: if you get dollars for your maturing Treasury, where do those dollars end up in aggregate? They are either taxed away due to them circulating past tax points as they are spent and respent, which eliminates the need for a bond, or they are saved which increases the demand for a new bond from the individual, the deposit holding bank and the central bank (on the same dollar due to the hierarchy of money).

Where's the problem?

Re: Will America's debt doom us?

#97

Post by manfredo »

theflyinghorse wrote: post #60
dustingetz wrote: post #20

Earlier quoted context omitted.

The book "Looting Greece" by progressive economist Jack Rasmus explains in technical detail the "twin deficit" strategy budget deficit is balanced by trade deficit, which hints at why USA has aircraft carriers stationed around the world, projecting power that tilts the free markets in its favor which is what makes this strategy work. Here is an excerpt: http://www.dustingetz.com/:rasmus-usa-twin-deficit/

I don't understand why US having military presence around the globe tilts the free markets in their favour. Realistically, no military outside of perhaps Russian could stand up against the US but I don't think US are outright forcing trade agreements at a gun point, or am I wrong?

It's difficult to impose sanctions without having control of waterways. The US can enforce sanctions against Iran and Russia, but the reverse is not true. This puts the former is a position of advantage. True, aircraft carrier diplomacy is a bit more subtle than the the "sign this treaty or we'll blow up your harbor" gunboat diplomacy of old. But it's still the application of force to put the nation at a diplomatic and economic advantage.

Re: Will America's debt doom us?

#98

Post by caseysoftware »

MuffinFlavored wrote: post #68
wcunning wrote: post #35

Earlier quoted context omitted.

Clinton ran a current account surplus, but overall debt grew because Medicare and Social Security were still losing money at the time. Not to mention that it wasn't all Clinton, some of it was the opposition Congress.

This is a dumb unrelated question on my end but are the returns of Social Security very bad? If you put 6.2% (12.4% total with employer contribution) of your income away into index funds that grew at 7% per year, at $100k/yr gross salary ($12.4k/yr) from ages 25 - 65 (40 years), you would end up with $2.6m (in today's dollars). $2.6m converted into dividend funds with a 3% yield would be $6.6k/mo. I don't know anybod…

$100k/year is way above what most people will ever make. The average person will peak in the $50-60k/year range. If you exclude the top percent or two as extreme outliers, it's even lower.

Ref: https://smartasset.com/retirement/the-average-salary-by-age

Re: Will America's debt doom us?

#99

Post by wang_li »

MuffinFlavored wrote: post #68
wcunning wrote: post #35

Earlier quoted context omitted.

Clinton ran a current account surplus, but overall debt grew because Medicare and Social Security were still losing money at the time. Not to mention that it wasn't all Clinton, some of it was the opposition Congress.

This is a dumb unrelated question on my end but are the returns of Social Security very bad? If you put 6.2% (12.4% total with employer contribution) of your income away into index funds that grew at 7% per year, at $100k/yr gross salary ($12.4k/yr) from ages 25 - 65 (40 years), you would end up with $2.6m (in today's dollars). $2.6m converted into dividend funds with a 3% yield would be $6.6k/mo. I don't know anybod…

>I don't know anybody getting $6.6k/mo from Social Security...

Of course you don't. The maximum benefit in 2019 is $3,770/mo for people who retire at 70. If you retire at 66, then the max is $2,861/mo. And these are only what you get if you maxed out 35 years of SS payments. Besides, SS is designed to only replace 40% of your pre-retirement income.

Re: Will America's debt doom us?

#100

Post by wang_li »

AnimalMuppet wrote: post #93
wang_li wrote: post #76

Earlier quoted context omitted.

You left out the fact that nearly 2/3 of Americans are net tax recipients. Everything that the government does at all levels is paid for by either debt or the highest 40% of earners.

Did that change from Clinton to Bush? If not, then it wasn't how we got from a surplus under Clinton to the deficit.

I was responding to a commenter who enumerated their list of perceived fiscal failings of the government, from Bush to Obama to Trump.
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