The Last Ditch by Tom Paine

In that case, the value of the US stock market is also greater than all of he money in the world.
Does this little nugget of information mean anything much at all?

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Demetrius

If you saw my post of yesterday, Tuesday, “That Sinking Feeling” on the item from The Automatic Earth, that money may no longer exist.

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Cascadian

“When the people find that they can vote themselves money, that will herald the end of the republic”….Benjamin Franklin.
The great experiment succumbs to greed. Democracy does not work when too many want a free ride.

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Mark

http://en.wikipedia.org/wiki/File:UK_GDP.png
Yes, yes… democracy has failed…. I presume this is because debt doesn’t matter when government policy is in the hands of evil old men sending the rest of us off to kill each other.
“national defence”

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Cascadian

You have an amazing repertoire Mark, pity so little of it is on topic.
Hint-we are discussing USA debt and the populace insatiable desire to increase it.
http://www.usdebtclock.org/
And yes, wars are expensive and debt always matters, money wasted on useless social services are no better than money wasted on wars.

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Cascadian

I would invite you to spend some time here:
http://www.usdebtclock.org/
take a look in the lower right-hand corner at unfunded liabilities (the emphasis is on unfunded) where will this money be coming from, when it represents 787% of current GDP? GDP is already required for current budget requirements.
Clicking on world debt clocks in the upper left-hand side is also interesting, please ponder how all these countries can be in debt and what this means about the value of their currency-Yes, I am aware of the argument that the debt is similar to a mortgage, except nobody is paying down their mortgage are they?

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Moggsy

Cascadian, I am guessing from his arguments with Tom on other posts that Mark is one of the ones who discovered they can vote themselves money… ^_^

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Cascadian

Indeed, though in fairness Mark seems to have a job (which he dislikes but is willing to continue) so he is contributing to society and the national wealth, which is more than can be said for a large portion of Obama supporters.

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Mark

So in your view… social services are as bad as war?

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Mark

The unfunded liabilities are, I imagine, promises to pay people when they are old. So you are taking the money that would be paid to every person, each year at some stage in the future, lumping it all together and saying “that’s a lot!”.
But it doesn’t reLly make sense because the payment of those liabilities will never be owed at the same time – the gov,t will only ever have to pay a fraction.
It’s like if I said “in order to feed every person in Britain for the rest of their lives we will need more food than we can produce in one year! Disaster!”
It’s meaningless.

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Cascadian

I see you totally missed sentence one and two, and as if to make my point added some more of your nonsensical argumentation.
Please note I said uselesssocial services, and before you ask for an example I would define that as most of what the NHS attempts to do at ruinous cost. The so-called justice system with its ruinous revolving-door baby-sitting service and many others.

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Cascadian

Ever heard of NPV of a series of future payments or how an annuity works?
It does not really matter if you don’t because the British Government (and I suspect the US government too) is also illiterate on this concept.

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Mark

Yes… I have…but in that case you should be comparing the unfunded liabilities to the value of all assets in the US, not its annual income.
What is the net present value of The US?

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Mark

Found it
“Overall, the fiscal imbalance is equal to 5.7 percent of the present value of all future GDP ”
http://dailycaller.com/2012/07/16/report-federal-unfunded-liabilities-total-84-trillion/#ixzz2BhepkmrZ
5.7 percent not quite as scary as 700…

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Mark

Fair enough.
I agree that if noone wanted to do anything, iw would be the end of democracy, but I don’t think that is the situation now, I don’t think democratic governments are more lkely to get into debt and I don’t think that the NHS is as bad as war (even if it is, it needn’t be).

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Moggsy

Cascadian, I guess I don’t really mind if someone does not actually contribute to “society”, not as long as they don’t expect to get anything much from “society” if they don’t. Mark sounds awfully like he does.
I am so glad he is “willing” to continue to work. I of course get so much pleasure from working, and contributing to the less than willing, it’s practically indecent – not. ^_^
No such thing as a free lunch. Someone has to cover it.

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Moggsy

Mark/Cascadian, Surely not all the assets, there is future value added seems to be left out. Shouldn’t it involve future earnings?
If you are say looking at a pension due to start paying out in 10 years time then you need to factor 10 years contributions, maybe compounded or maybe returns from investments the contribution is used for.
All basically guesses until they happen.

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Moggsy

Being clearer, it’s like if I take out a mortgage and say OMG! That’s more money than I own in all the world, way more than I could earn in 10 years!! (yes ignoring the asset)
But I don’t have to pay it all just now. I will be paying it out of my lifetime’s earnings and who knows what that will be? Even if you average a million people’s lifetime earnings it is still uncertain. Just allowing for inflation (that you can just bet will not exactly be held back any by quantitative easing)
The thing is, can I afford to pay the capital + interest and all my other bills? If can’t then it will be tears before bed time.

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Cascadian

Nope, we are talking government liabilities to current and future pensioners.
A prudent government does not sell off its entire assets to pay these, but then again we are talking government so I see the confusion.

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Cascadian

Their $84T unfunded liability does not correspond to the debt clock number so I’m having difficulty with this.

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Cascadian

It’s all an academic exercise because nobody can reliably predict future interest rates least of all government.
If you want to scare yourself plant an interest rate of 0% (which is todays effective rate) into the formula.
Bottom line, future pensions can only be paid by financial malpractice or massive expansion of the economy. Which do you think the government can manage?

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Cascadian

Shake your head Moggsy, there are plenty of free lunches and the people who get them have the vote too! The free lunch is paid by the government with freshly printed debased currency.
Result-trillion dollar per year deficits.
That in a nutshell is the problem.

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Cascadian

Another gloomy analysis of the problem.
http://www.zerohedge.com/news/2012-11-06/it-doesnt-matter

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Tom

Yes, but you and Mark are at cross purposes. He does not distinguish between the state and the people, so he’s prepared to put all private assets and future earnings into the balance against the debts politicians have run up over the past decades to bribe economic illiterates.

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Cascadian

You are correct, but let’s be clear Mark and his cohort is in the ascendency and represent a majority of the voters.
While that divide is still close in the USA something like 52%-48%, in the UK the divide is closer to 70%-30%.
Can it be long before the state starts siezing personal assets? I would expect that a liebour-limpdem coalition would be very amenable to asset seizures.

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Tom

That’s already happening. On death, 45% of net assets in excess of £325,000 are confiscated by the state. These are assets acquired from taxed income. How does that respect property rights?

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Mark

No, we’re not talking at cross purposes – the original point, that the debt is “more than all the money in the world” or “700 times GDP” may be comparing apples with oranges (stock and flow), but it is also comparing the liabilities of government with the production of the entire economy.
So, you two, in order to make your alarmist point already put all current earnings up against future liabilities, which is just silly.
Whether or not those liabilities are a good thing is an entirely different argument.

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Mark

Sorry 7 times GDP…

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Cascadian

Okay, one last time from a different source. The full article is here:
http://www.americanthinker.com/2012/08/the_government_is_bankrupt_and_will_destroy_the_economy.html
Relevant part:
The unfunded liabilities of the federal government are enormous, dwarfing everything else. They arise from promises made to citizens, primarily with respect to Social Security and Medicare. Government maintains that it has no legal liability to honor these promises and hence does not recognize them as debt. For seniors or near-to-be seniors counting on what they have paid all these years, that attitude is not comforting.It is unlikely that these programs will be canceled, although they will eventually be modified. Even so, there is likelihood that the promises will not be kept.
1.Estimates of the present value of these obligations range from $50 trillion to over $200 trillion, depending upon the actuarial assumptions made. Gary North uses Laurence Kotlifkoff’s figures and explains the calculation (my italics):
The total obligation of the federal government to voters that is not funded at the present time is now $222 trillion. 2.This does not mean that, over the entire life of the program, the government will be short $220 trillion. It means that the present value of the unfunded liability is $220 trillion. This means that the government would have to set aside $220 trillion immediately, invest this money in non-government projects that will pay a positive rate of return, and will therefore fund the amortization of this debt. I have written about the estimate here.
This estimate is 14 times what government reports as debt ($16 trillion). The number is unfathomable. 3.To put it into perspective, the entire net worth of the U.S. is estimated to be only $60 trillion, as shown in this chart:
According to Kotlikoff’s calculations, 4.the U.S. government has promised its citizens almost four times the entire net worth of the nation. If the government confiscated everyone’s net worth, people would be left penniless, and the government would still be unable to fund these promises.
So for clarity the USA is fcked, and yet they vote themselves more freebies.
bolded comment 1.Is the point I tried to make above about how much is required to be deposited to payoff future liabilities.
bolded comment 2.PV of those liabilities could be as much as $220T in todays money.Nobody really knows, it depends on a LOT of assumptions.
bolded comment 3.Makes an estimate of the PV of the entire USA not just the government, the number you were trying to get at.
bolded comment 4. Confirmation-the USA is fcked,even if they confiscate everybodies wealth.

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Cascadian

Thats depressing, can you not get around it by buying art, stamp collections and fine shotguns and willing them?

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Cascadian

Just in case you thought “Oh well, what those dumb yanks do does not affect me”. We have this.
http://www.zerohedge.com/news/2012-11-12/uks-most-disturbing-number-total-unfunded-pension-obligations-321-gdp
There are three solutions left to government hyper-inflation, default or kill-off the pensioners.

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Mark

But that doesn’t make sense. Why would we have to “deposit the money” now?
The question is whether the economy will have the capacity to support these people – whether it will be possible to provide them all with healthcare and pensions. If it will, there are no problems and if it won’t then it doesn’t matter what we save – it simply won’t happen.
The chart you quote with the figure of 60trillon is not the NPV of the US – it is the net worth of US households. Seeing as the GDP of the US is 15 trillion, this figure seems ridiculously low. I’m not sure why this is.
If the USA is fucked, if itis impossible for them to provide healthcare and pensions then a lot of people are going to die horrible deaths. Nothing we do in terms of saving will change that. Fortunately, what you are saying isn’t true.

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Mark

The amazing thing is that even when ithas been clearly demonstrated that someone is talking complete rubbish, they continue saying exactly the same thing.

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Cascadian

Lets be clear Mark, you demonstrated NOTHING, you provided an ill-informed opinion.

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Moggsy

Mark, As far as the UK government pension scheme goes, it really works like something called a Ponzie scheme, where the crook uses current investment to finance promises of unrealistic returns for a while. The con collapses when there are not enough new investors to fund the returns. Of course everyone looses their money because what they put into it in the past has basically been spent..
Any private individual tried it they would be locked up. Pension schemes need to have cash invested in them. If the British government at the time had been economically literate and honest they would have set the state pension scheme up more like a real pension scheme.
Thank goodness although the British government insists on forcing you to invest in it’s Ponzie scheme it does still also allow people to invest in pensions of their own. The bad news is Gordon Brown gutted those previously well managed successful schemes by raiding them for money.
The thing is, until the next raid, if people are sensible, make their own provision… and don’t rely on the state, they may have enough to see them ok-ish in their old age.
But with interest rates so low and the inflation pump being primed with QE we will probably all be grateful for the state sponsored Liverpool care pathway…

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Mark

OK, but it isn’t unrealistic to provide people with something in old age plus healthcare, if it is – if there is no way in which we can afford for old people to live without working… no way we can provide their healthcare… how will saving money help?
Far from being preferable or necessary, it is completely nonsensical for the government to tax us now in order to finance future spending.

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Mark

What are you actually worried about? That the freeloaders, who you obviously despise, won’t receive what they are expecting?
Why?

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Cascadian

Well, I suppose because I expect governments who forcibly set up schemes and extract exhorbitant taxes should actually provide the services that they promised to the taxpayers and not fraudulently distribute the funds to the freeloaders who contribute nothing and never will.
It might also be that I despise misuse of the language, wherein people like Tom are called greedy because they have provided for their family and can afford to own luxury goods, while the freeloaders extract welfare for a lifetime of leisure and bemoan the fact they cannot afford luxury goods too.
It seems awfully perverse to allow full-time welfarists the vote so that they can continue their parasitic lifestyle.
Which brings us back to:
“When the people find that they can vote themselves money, that will herald the end of the republic”….Benjamin Franklin.
The great experiment succumbs to greed. Democracy does not work when too many want a free ride.

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Moggsy

Mark, “How will saving money help” not sure if you are being ironic here? How will saving money towards your old age help?
You being what you are naturally think in terms of the state confiscating the cash, your idea of “saving”? But even then if it was done by someone who could count over ten without taking their shoes off it might work.
Well here is how it ought to work. Well call him Bill. He is young, he finds work and instead of spending all he earns he puts a little bit away each week out of his pay check.
He does not just put it under his mattress he puts it into a managed fund he chose where it is put to work along with lots of other people’s money to earn more money. The earnings the money he has in the fund are ploughed back into it to earn still more money.
By the time he is old and can’t work the money he has put away has turned into quite a little nest egg, provided the government didn’t pick his pocket. That money spread out over the years he has left lets him afford to live without working. He let him afford to live without working not you or the authoritarian “we” You don’t get to “let” him, to hold your power over him and treat him like dirt. It is already covered.
What I said above is the simple version. Some schemes work on averaging life expectancy with all the members.
That’s how it helps and is absolutely not nonsensical. I expect it will slide off teflon coated your mind but I made the effort.
The problem with the NHS is that is was set up by bozos the wrong way and is a whole other story.

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Moggsy

Or am I not quite getting what you are saying with all the … in there? I do have a problem with this thinking it is ok, or even the only way, to just take my money and give me hobson’s choice. The state’s way or the highway. The state is not competent.

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Mark

Yes, ok, but I am being told that it will be an impossibility for us to provide old people with healthcare and pensions – that we simply won’t have the resources to cope. If that is the case, by saving lots of money and investing in other things, all we will achieve is an increase in the price of healthcare or food, or whatever it is we don’t have.
Obviously, the idea that we won’t be able to provide old people with these things is pretty stupid – but if it were impossible, saving money wouldn’t make any difference, because… well.. it is impossible.
And if it is possible, then the same thing could be achieved by government.
“He let him afford to live” – you make a big point of this, as if to say that government involvement in this matter is somehow immoral because it would interfere with freedom. But if we look at the other side to this, you are saying that you will let some people die, if they don’t have enough money.
You go to work every day at the beck and call of your boss, doing something, probably more or less pointless and if you aren’t able to find a job, if you can’t find a boss, you will die a horrible death? You are completely dependent upon societies approval for your life.
Sounds more like slavery than freedom to me.

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Mark

It doesn’t really harm anyone though, does it, even if they aren’t doing exactly what you want them to do.
The same can’t be said for wars however.

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Cascadian

Even by your standards Mark, that comment is astoundingly ignorant.
People in Greece, Portugal and Spain are riotting today in the streets, people are commiting suicide when the bailiffs arrive to repossess their home. They thought they had a welfare system to fall back on in times of economic stress, but it is gone, pissed away by socialists redistributing taxes to freeloaders and chasing impossible dreams of green projects.
Wake up!

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Mark

No, no no… It is you and your balanced budget, austerity mad compatriots who are causing that particular problem.
The welfare system is being undermined, just as the economy is.. and the only possible explanation beyond ignorance is that the rich hope it will give them greater power over the poor.

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Cascadian

You have it backwards as usual, the welfare system has been undermined by freeloaders and compliant government.
In case it escaped your notice the riots are between the Unions (workers of sorts) and the government. Not the rich and poor.
Nice try, class-warrior.

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Moggsy

Mark, I just got through explaining real clearly that while it might be impossible for “us” if you mean the state there by “us”? like the royal “we”, it does not have to be a problem. I already went over why the state set up has issues. Maybe re read it?
Not an issue with “resources”, or only in the same way as if I didn’t get in enough groceries for the week I would run out before the end of the week – unless I went shopping for more.
You seem to twist stuff and change definitions almost playing with words to do it. Maybe making jokes?
I agree government could achieve much better. Just maybe not with the economically dishonest/illiterate systems they have. Problems are chickens coming home to roost. They would need to change things. Pensions they could make honest and it would not be too visible to the public.
I figure with health there are too many powerful vested interests and too much dogma and inertia to really get a proper handle on it. If anyone tried anything some fool would start on about privatising the health service and inequality. It’s not like it isn’t all rationed by post code now.
Don’t you make up stuff about what I said. I didn’t say anything about letting people die – that is you making it up. Is that how it works? The state is greater than the individual and sacrifices must me made for the greater good?
So a kid dies of leukaemia for lack of treatment? Sad but necessary? one death is a tragedy a thousand is a statistic?
What makes me sick is reading how people try to pay for something the state refuses and gets cut out of funding for the rest of their treatment as punishment.
If you are talking pensions I am saying if the money taken for pensions were properly invested instead of being used it to cover current pensions being paid out then there would have been enough.

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Tomsmith

“It doesn’t really harm anyone though, does it, even if they aren’t doing exactly what you want them to do.”
Yes taking people’s property that they own and giving it to other people does hurt the rightful owners.

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Tomsmith

Acting to stop property being taken by force and given to someone else does not constitute power of the rightful property owners over that someone else.

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Tomsmith

“the welfare system has been undermined by freeloaders and compliant government”
Welfare is not undermined. There is not good welfare and bad welfare. Welfare recipients are not divided into deserving and non-deserving groups. Welfare is simply wrong. Charity is the voluntary alternative. What is a gift unless freely given? Stolen property is not a gift

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Tomsmith