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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Thursday, February 05, 2009

According to Pollster Rassmussen....

Fifty percent (50%) of U.S. voters say the final economic recovery plan that emerges from Congress is at least somewhat likely to make things worse rather than better, but 39% say such an outcome is not likely.
duh.

Government meddling over the past 70 years is what has created this idiotic crisis and until Americans finally come to their senses, increased government meddling will only make the next crisis all that more painful.

As we can see from the following chart
, the present value of difference between social security and medicare payments and the current taxes that support these payments creates a shortfall of about 3 times GDP. 3 times GDP is around $40 trillion dollars.

I think that the catalyst for the next crisis will be the inability of the US Government to borrow money to fund its shortfalls and its current outstanding debt. This will be caused by needs to fund increasing payments under ponzi-like retirement programs like Social Security.

As expenditures start to increase rapidly for social security payments, the government will have to issue more debt to pay for it, since the current surpluses in tax collections will no longer be able to subsidize current government budget expenditures.

So, this represents an additional saving shortfall of $40 trillion in addition to the current debt held intra-government of around $4+ trillion designed to cover these shortfalls.

Anyone that thinks this is doable is completely unrealistic. What will happen, is that later baby-boomers will be forces to work for their whole lives since SS will be unavailable as either a supplemental payment or as a medical insurance system.

We have our parents and grandparents to thank for this mess since they designed it, coerced payments out of us to fund it and didn't allow for changes that align the retiree interests with actual economic performance.

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