REAL Debt = OVER $200 TRILLION

[RileyE104]

http://finance.yahoo.com/tech-ticker/%22enron-accounting%22-has-bankrupted-america-u.s.-deficit-really-202-trillion-kotlikoff-says-535354.html


“Forget the official debt,” he tells Aaron in this clip. The “real” deficit - including non-budgetary items like unfunded liabilities of Medicare, Medicaid, Social Security and the defense budget - is actually $202 trillion, the professor and author calculates; or 15 times the “official" numbers.

[noxagol]

NO! It's really 1 million billion trillion times a google!

[Bman]

Don't you understand? According to MMT we'd be richer because at that time we will have 202 trillion in paper saying so! Since it is not real we can imagine it to be anything we want.:cool:

[Zippyjuan]

The $200 trillion figure assumes no taxes collected in the future to pay for future Social Security payouts which is misleading.

[oyarde]

What is really misleading is the CBO's estimate of the debt by 2019.They have it based on growth over 3 %.

[YumYum]

The $200 trillion figure assumes no taxes collected in the future to pay for future Social Security payouts which is misleading.

Will future taxes pay future Social Security payouts when they don't pay the payouts now? Borrowed money pays the Social Security payouts and the Social Security taxes pay the interest.

[erowe1]

The $200 trillion figure assumes no taxes collected in the future to pay for future Social Security payouts which is misleading.

No it doesn't assume that.

This is debt. It will be paid for (to the extent it gets paid for at all) by future taxes. That's what debt is. The same is true of our $13 Trillion debt when you don't count those things. The fact that future taxes will be collected for it doesn't make it not debt, that's precisely why it is debt.

[Kregisen]

So why is only around 6% of this officially counted? What kind of accounting are they using??

[erowe1]

So why is only around 6% of this officially counted? What kind of accounting are they using??

The $13 Trillion is money the government has borrowed and spent already. The rest is money it has promised to spend in the future.

[madengr]

I thought that US comptroller (couple years back) said it was only $80E12. Have things grown that much since?

[Zippyjuan]

No it doesn't assume that.

This is debt. It will be paid for (to the extent it gets paid for at all) by future taxes. That's what debt is. The same is true of our $13 Trillion debt when you don't count those things. The fact that future taxes will be collected for it doesn't make it not debt, that's precisely why it is debt.

The spending is promised in the future and the taxes (the money to pay for it) also are promised in the future. They should be counted the same.

[erowe1]

The spending is promised in the future and the taxes (the money to pay for it) also are promised in the future. They should be counted the same.

Right. The taxes to pay for them are promised in the future, just like the taxes to pay for all the rest of the national debt. When our government borrows money from someone, they are saying, "We promise to collect future taxes to pay you." When they promise Social Security to you when you retire they're saying, "We promise to collect future taxes to pay you."

Of course in neither case have the actually people who will be made to pay those taxes (if the promises ever get kept) made promises. But in both cases the government made the promise on their behalf.

Calling future liabilities for entitlements debt does not assume no taxation for them. It assumes taxation, and that's exactly why they are debt.

[Zippyjuan]

Then you should count every item in the Federal Budget for the next million years. How big is the "real debt" now? The debt is not funded. Social Security has funding arranged. You don't have to borrow to pay Social Security. You do have to borrow to pay for the debt. The debt is the unfunded portion.

[fj45lvr]

Wonder what rate of INTEREST they use for future calculations?? If interest rates were what they should be in free market the deficit would BALLOON big-time

[erowe1]

Then you should count every item in the Federal Budget for the next million years.

Correct. You should count every item where future spending has already been promised to somebody, whether that promise be to pay back money borrowed from them or to pay them something the government has declared them entitled to by law. That's what this number supposedly represents (although I don't know how accurate is--I've seen other estimates much lower).

[erowe1]

The debt is not funded. Social Security has funding arranged. You do have to borrow to pay for the debt. The debt is the unfunded portion.

No, you don't have to borrow to pay for the debt. Borrowing doesn't pay for debt. In fact that wouldn't make sense--if you pay a debt by borrowing, you still have the debt. It creates it. So does promising someone a future payment that you don't already have the money for. You have to tax future taxpayers to pay for debt. That's what debt is.

Neither the debt created by borrowing money nor future Social Security payments are funded right now. But they both have funding arranged for the future, and that is taxes that will need to be collected eventually, or else those debts (whether they be debt from borrowing money with the promise to pay it back or debt from simply promising someone money as a so-called entitlement) will have to be repudiated.

[erowe1]

Also, it's worth pointing out that the professor in the video is only counting what's left of the liabilities in promised future spending after you already subtract expected future revenue. So, according to him, it's $200 Trillion, even after you figure in the money the government officially plans to steal from taxpayers that it has no right to (of course, the very fact that those debts exist is proof that the government unofficially plans to steal the rest as well, one way or another).

I would say that, since that taxpayer money isn't the government's to steal to begin with, those future expected tax revenues really shouldn't even count that against the debt. Stealing money (both with taxes that are already officially planned for the future and taxes that are not officially planned), either through explicit taxes or through the inflation tax of printing money, or else repudiating those debts, are the only options. So, given my outlook, the debt is probably many hundreds of trillions of dollars even more than the professor in the video is saying.

[Zippyjuan]

How many years is he figuring that the spending goes on for? The more years you include the higher you can claim the "unfunded debt" is. I could greatly lower that projection by making the calculation to cover the next ten years or make it hugely bigger by counting the next 1000 years. It is not really a useful number. Economic projections long into the future are often quite wrong. I would agree that there are things we need to address and two of them will be the costs of Social Security and interest on the debt. Both will continue to take larger and larger chunks of the budget into the future.

[erowe1]

How many years is he figuring that the spending goes on for?

I don't know. I assume all of them. It looks to me like he's giving the total unfunded liabilities. I don't see why he would cut it off and say that some amount of liabilities for payments promised after such and such a year don't count.

After all, how far into the future does the other part of the government's debt go--the $13 Trillion that seems to be the only part of the debt you consider debt? That debt extends infinitely into the future, and will remain debt that is owed until the government either steals money to pay it or repudiates it. Same thing with our unfunded liabilities.

You say you could make it hugely bigger by going out 1,000 years. How is that? Is there some unfunded liability that our government has for 1,000 years from now? And if there is, why shouldn't it be included, and why would you assume that this professor didn't include it?

[erowe1]

Incidentally, there's nothing new about what this guy is saying. Critics of government accounting have been saying the same thing for a long time. I don't know how he came up with $200 Trillion, which is the highest claim I've seen.

Here are a few other places that talk about it, just from what came up on a quick Google search:
http://www.pgpf.org/about/nationaldebt/
http://www.lewrockwell.com/walker/walker34.html
http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm
http://www.ncpa.org/pub/ba662

Note how they say that these liabilities are for the infinite horizon, not just some limited number of years.

And again, these are just talking about unfunded liabilities, where a certain revenue based on government theft is already assumed. They really should assume zero revenue, since that assumed revenue is not the government's money to promise away any more than any future new taxes to pay these unfunded liabilities will be.

[HOLLYWOOD]

I posted this a long time ago... I even posted the chart showing the $202 TRILLION in Derivatives. I just cannot find it with the search function. :(

We Beat those "YAHOO's" and Universities by Months! ;)

[Zippyjuan]

I don't know. I assume all of them. It looks to me like he's giving the total unfunded liabilities.

If it includes "all years" then the shortall should be infinity- unless one forsees that things will eventually get paid for at some point in the future. At that point, it would cease to grow. Interest on the debt alone will continue to exist as long as the debt exists so if you want to include every year we have interest on the debt, that would be an infinite number of years and dollars unless the debt is canceled. paid off, or defaulted on.

[Zippyjuan]

I posted this a long time ago... I even posted the chart showing the $202 TRILLION in Derivatives. I just cannot find it with the search function. :(

We Beat those "YAHOO's" and Universities by Months! ;)

It isn't talking about derivatives but government spending.

[HOLLYWOOD]

It isn't talking about derivatives but government spending.


It's with my post on the Derivatives chart... I meant.

But here's one that's just as good: http://www.ronpaulforums.com/showthread.php?p=2690007




Paul Farrell points out the ugly truth about profligacy, American style:

1. Federal government debt … $14.3 trillion
2. Treasury and Fed cheap-money policies … $23.7 trillion
3. Social Security’s rising debt … $40 trillion
4. Medicare’s unfunded debt … $60 trillion
5. Annual health-care costs … $2.5 trillion
6. Secretive global derivatives trading … $604 trillion
7. Population growth of 50% vs. Peak Oil demands … $30 trillion
8. U.S. dollar losing as reserve currency … $20 trillion
9. Global real estate losses … $15 trillion
10. Foreign trade and ownership … $5 trillion
11. State and local budget and pension shortfalls … $3.5 trillion
12. Corporate pensions plus 401(k) plans … $3.2 trillion
13. Consumer card debt … $2.5 trillion
14. Lobbyists annual costs … $1.4 trillion

Killer list. Thank you Paul.

>

Source:

Buffett defends Goldman, joins greed Conspiracy
Paul B. Farrell
MarketWatch, May 11, 2010

[/URL]http://www.marketwatch.com/story/buf...acy-2010-05-11 (http://www.marketwatch.com/story/buffett-defends-goldman-joins-greed-conspiracy-2010-05-11)

[URL]http://www.ritholtz.com/blog/2010/05...versus-greece/ (http://www.ritholtz.com/blog/2010/05/debt-america-versus-greece/)

[erowe1]

If it includes "all years" then the shortall should be infinity- unless one forsees that things will eventually get paid for at some point in the future.

Well, yes, there have to be all kinds of assumptions about future revenues, lifespans, rates of population growth, GDP growth, and all sorts of other things, for all these calculations. And for you to claim that the shortfall would be infinity, you must also have calculated that result based on your own assumptions of all those things. Did you actually do that?

Also, I'm not really sure what counts as a liability. People who have not yet entered the work force and have not yet paid into Social Security have not been promised any future Social Security payments. So in my opinion any claim of what the government's future liabilities are should only count actual liabilities of money that someone has already been promised. But I'm not sure if that's what all these economists are using. They may be including expected future liabilities of people who haven't yet entered the work force, and thus haven't been promised any future money, but whom they expect will still do that, and then their calculations are based on whatever assumptions they need to account for.