The Great Bankrupt USA

[The Leaper]

You can doubt it all you want, but when a liberal paper like the USA TODAY is saying we are 59 trillion short to pay for liberal social programs, it just might be true.

I'm sure it is true, but like most other Americans under the age of 40, I don't expect to ever see a penny from Social Security. That is why the "shortfall" is overstated...half of that amount probably will never be paid out, and we already realize that.

[bobblehead]

Well Leaper, I guess that is my point. We are being taxed for a benefit we will never see. Now that pisses me off I guess, and I'm the type who can't understand why it doesn't bother anyone else and they keep voting for the same politicians that put us in this mess.

I kept on tape for 4 years (til my VCR ate it) Robert Reich in 1995 talking in an interview about how gov't needed to take control of 401k's because we can't trust corporations to run them. Was this guy friggin kidding!!! He took one or two examples of companies that encouraged their employees to invest in its own stock (ala enron) that went belly up and concluded that the federal gov't needed control of my 401k. He might as well have just quoted LBJ.....there is all that money sitting in 401k's and we could use that money to help fund federal programs (and bankrupt them)

The gov't pig is NEVER satisfied. Here in nevada we had a RINO governer named guinn who SUED the legislature for not voting to raise taxes...more disturbingly he won. We got a massive tax hike that guinn promised would take care of revenue needs for "a long long time". That was 4 years ago, and right now we have a real republican governor who is standing the line on no tax increases while the legislature is screaming about funding shortages and people starving and poor gov't workers possibly losing their 4% automatic raise (one of the only things spared so far)

The gov't pig will spend every dime you send them then cry poverty and take more thru any chanel they can. A poster alluded to breaking the cycle of dependancy in another thread, well let me tell you brother, we have to break the cycle of heading towards socialism unless that is the gov't you desire.

You are accepting that the gov't screwed you and you aren't even pissed, I just don't get that. I am very careful in who I vote for, and I won't ever vote for a candidate that isn't trying to head us in the right direction....often times that leaves me with no one to vote for (take mccain vs. obama for instance). I guess I post on forums like this and shoot out a lot of emails because I want america to care...I want us to elect leaders who send us in the right direction. I want gingrich back, not a hastert who directed 200 million in pork to his district so some land he bought up would inflate in value. I'm sick of the crooks in washington on both sides of the isle, and I'm sick of socialists like pelosi promising me things she won't be around to deliver...she'll only be around to spend the tax dollars collected now.

[texaspackerbacker]

I know what the Law of Diminishing Returns is, and it really doesn't pertain here.

Does it REALLY not occur to you that the ultra-left wing USA Today may have an agenda here--a motivation to skew the truth to the advantage of the libs in an election year?

The bottom line here, Bobblehead, is that this debt is NEVER GOING TO BE RETIRED. It will merely be turned over and turned over ad infinitum. Actually paying it all off would be extremely deleterious.

The "bunch of IOUs" you refer to in the SS trust fund are lttle things like T-Bills, T-Notes, government bonds, etc.--generally considered the most rock solid investments in the world.

Social Security simply is NOT going away. Why? Because it has become politically popular. I remember when I was young, Republicans ranted against Social Security, and were politically excoriated for it. Despite all of the valid criticisms, the program has one overriding positive. It protects people against human nature--the prospect of blowing your future by bad investments or irresponsible spending. Yeah, yeah, I know YOU wouldn't do that, Bobblehead, but way too many people would--and did before the program began. Anyway, there's no way either party is going to let the program die--and with the ability to borrow money so easily, it's not that difficult to maintain.

[bobblehead]

no, when i have 3 sources it doesn't occur to me that one is being disingenuous.

The law of diminishing returns does pertain where gov't spending is concerned. At a certain point the benefit stops and the negatives kick in.

I could be wrong, but the iou's in the ss trust fund aren't bonds or any other form of security. they are letters of what we are short that are not carried on the books, just like the amount we are "borrowing" from medicare and medicaid, and the amounts that gov't employees are accruing in retirement benefits each year but not collecting yet.

I agree that carrying a certain % of gnp as purpetual debt isn't a big deal, but running a yearly deficit funded by new debt and accruing a mountain of unfunded liabilities is much different. I'm gonna convince you this is a problem yet, cuz I honestly believe you are the type to keep looking and researching til the truth hits you in the face. A liberal I would expect to tell me its no big deal and drop it, but I think you might continue to claw away at the issue.

[texaspackerbacker]

The Law of Diminishing Returns in economics has to do with production and productivity. It usually applies to novelty. It's a major stretch to apply it to spending. In addition, the "Law" states that benefit CONTINUES to increase, just at a decreasing rate.

Whatever the debt instruments may be called, they still are backed by the "full faith and credit" of the United States of America--the organization that runs the printing presses.

The liabilities are NOT unfunded. They are funded by government debt instruments--the thing that backs our money supply. And the great majority of years--a strong net effect, the economic growth amount is well over the deficit amount. I believe your own figures (which you had misinterpretted) in an earlier post demonstrated that.

If you are still around 50 years from now, Bobblehead, you will probably still be making the same argument--because the situation will still be the same--a mountain of debt accumulating, but not accumulating as much as the economy is growing.

[bobblehead]

the law states that as you increase it continues to diminish and ultimately stops being a return and becomes a negative.

[texaspackerbacker]

I guess I should have posted the link the last time. As I said, this is applicable almost exclusively to PRODUCTION--with little or no application to spending, government or otherwise. Furthermore, your assertion about benefit stopping and turning negative is wrong. The Law clearly states that the benefits continue to INCREASE, albeit at a decreasing rate.

http://www.answers.com/topic/law-of-diminishing-returns?cat=biz-fin

This is consistent with what I remember from my college days.

[hoosier]

Not sure how the law of diminishing returns became such a hot topic, but wasn't it Malthus the English economist who developed this theory? Seeing as both of you seem to be advocates of this "law" (the debate being over what areas of economics the law applies to), I can't help but wonder if you're also partisans of Malthus' prediction that population growth would eventually outpace societies' production capacities leading to a catastrophic collapse of modern societies.

[texaspackerbacker]

The Malthusian Theory is something else altogether--more social than economic.

You are fairly correct that it states that when population reaches a certain degree of density (no, not the liberal kind of density), that chaos will occur. They have actually demonstrated this with ant colonies or whatever in closed boxes.

The world is a long way from that, as we haven't even seen Malthusian chaos in places like cities of Indian, Bangladesh, etc., where there is a pretty high level of population density.

[bobblehead]

I guess I should have posted the link the last time. As I said, this is applicable almost exclusively to PRODUCTION--with little or no application to spending, government or otherwise. Furthermore, your assertion about benefit stopping and turning negative is wrong. The Law clearly states that the benefits continue to INCREASE, albeit at a decreasing rate.

http://www.answers.com/topic/law-of-diminishing-returns?cat=biz-fin

This is consistent with what I remember from my college days.

You are dead correct, but you are ignoring the COST of input. Suppose you can spend a dollar on seeds for a farm and it gives you 1.50 in return, but as you drop more seed on said land the return diminishes until the crop resulting from the 20th dollar of seeds only gives you 80 cents in return. You have now crossed the zero point. YES, you are still getting a return, but its less than you put in (pick whatever market/factor you want to apply it to, engineers working on a solution, Adding one egineer might increase the speed/result of the outcome by a factor greater than his salary, but by the 10th engineer you are not likely to outweigh the cost of his salary).

So, applying to your gov't theory, yes, spending money by the gov't stimulates the economy almost indefinately, but it has to outweigh the COST of spending and at a certain point it doesn't. We used to model these equations all the time in pricing.

example: I sell widgets for $5 and I have 50 people who want them, revenue, 250. I raise the price to $7 and now 40 people want them. revenue 280. I raise the price to $8 and now 36 people want them, revenue 288. I raise the price to $9 and now 30 people want them. revenue 270, I have passed the point of returns. This isn't perfect, I'm ignoring cost of scale to produce, but you get the idea.

There is a breaking point in all economic models, if I extend your point to absurdity, why not just have the gov't borrow 1 trillion and send it out in stimulus checks, by your arguement we should outgrow the debt.

[Scott Campbell]

We used to model these equations all the time in pricing.

example: I sell widgets for $5 and I have 50 people who want them, revenue, 250. I raise the price to $7 and now 40 people want them. revenue 280. I raise the price to $8 and now 36 people want them, revenue 288. I raise the price to $9 and now 30 people want them. revenue 270, I have passed the point of returns. This isn't perfect, I'm ignoring cost of scale to produce, but you get the idea.

That's price elasticity, which is different than the law of diminishing returns.

[bobblehead]

yes, I said we used the MODEL in pricing, i didn't say it was the same technical term. The idea of a price increase losing its effective dollar return is the same idea, but the seeding of the land was ACTUAL law of diminishing returns.

When you run the equations they graph out pretty much the same way where you reach a breaking point, I used the pricing example to try and demonstrate another way benefits decrease as you push the envelope (because I am comparing it to gov't spending.)

[bobblehead]

The Law of Diminishing Returns in economics has to do with production and productivity. It usually applies to novelty. It's a major stretch to apply it to spending. In addition, the "Law" states that benefit CONTINUES to increase, just at a decreasing rate.

Whatever the debt instruments may be called, they still are backed by the "full faith and credit" of the United States of America--the organization that runs the printing presses.

The liabilities are NOT unfunded. They are funded by government debt instruments--the thing that backs our money supply. And the great majority of years--a strong net effect, the economic growth amount is well over the deficit amount. I believe your own figures (which you had misinterpretted) in an earlier post demonstrated that.

If you are still around 50 years from now, Bobblehead, you will probably still be making the same argument--because the situation will still be the same--a mountain of debt accumulating, but not accumulating as much as the economy is growing.

One last point on this...I agree, the situation will be the same...we will be raising gov't spending and lowering benefits of having a gov't. In 50 years if we do nothing other than continue to fund thru debt we will be screwed. We ARE doing things now to curb it, like cut benefits, raise the age for SS, tax SS benefits ect. Medicare is cutting out certain services/procedures, limiting tests allowed. Ultimately gov't employees who are working and assuming certain promised benefits will be told sorry, you will only recieve half your pension, and instead of the health plan we promised you we are putting you into the medicare group.

Now, I admitted above that I don't have exact numbers as a percent of GNP, but I would bet that Gov't spending, deficit, and standing debt have all increased as a percent of GNP under bush, and I have to believe thats not a good trend, cuz when it hits 100% then we are socialist.

[bobblehead]

Not sure how the law of diminishing returns became such a hot topic, but wasn't it Malthus the English economist who developed this theory? Seeing as both of you seem to be advocates of this "law" (the debate being over what areas of economics the law applies to), I can't help but wonder if you're also partisans of Malthus' prediction that population growth would eventually outpace societies' production capacities leading to a catastrophic collapse of modern societies.

assuming that technology fails to keep up with population growth it will indeed collapse us, but that is a big assumption. I have posted on another thread that, who I consider the greatest technological mind of our time, Ray Kurzweil has predicted that within 5 years solar will be cost competitive and indeed surpass that of "dirty" power with only nuclear being cheaper. he says within 20 years the EARTH will be on solar power and off other forms. These kind of things will allow us to be comfortable at very HIGH populations with space and crowding being the restrictor.

Remember there is a big difference between a prediction about production capacities and a proveable law like diminishing returns.

[MJZiggy]

Just remember that while solar is wonderful and costs only the equipment used to collect the energy, it does still require space even with Fresnel lenses.