Must Read: Fed. Reserve Bank of St. Louis;The US is Going Bankrupt!

Is the United States bankrupt? Many would scoff at this notion. Others would argue that financial implosion is just around the corner. This paper explores these views from both partial and general equilibrium perspectives. It concludes that countries can go broke, that the United States is going broke, that remaining open to foreign investment can help stave off bankruptcy, but that radical reform of U.S. fiscal institutions is essential to secure the nation’s economic future.
The paper offers three policies to eliminate the nation’s enormous fiscal gap and avert bankruptcy: a retail sales tax, personalized Social Security, and a globally budgeted universal healthcare system.

Federal Reserve Bank of St. Louis Review, July/August 2006, 88(4), pp. 235-49.

research.stlouisfed.org... (PDF!)

Very interesting report by Professor Laurence J. Kotlikoff. Note that this is a publication by the Federal Reserve Bank of St. Louis!
The US has a future shortage of $66 TRILLION due to baby boomer retirements, and more need for social security.
Here is a small part of the article:

How are the Bush administration and Congress
planning to deal with the fiscal gap? The answer,
apparently, is to make it worse by expanding
discretionary spending while taking no direct
steps to raise receipts. The costs of hurricanes
Katrina and Rita could easily total $200 billion
over the next few years. And the main goal of the
President’s tax reform initiative will likely be to
eliminate the alternative minimum tax.

This administration’s concern with long-term
fiscal policy is typified by the way it treated the
Treasury’s original fiscal gap study. The study
was completed in the late fall of 2002 and was
slated to appear in the president’s 2003 budget
to be released in early February 2003. But when
Secretary O’Neill was ignominiously fired on
December 6, 2002, the study was immediately
censored. Indeed, Gokhale and Smetters were told
within a few days of O’Neill’s firing that the study
would not appear in the president’s budget. The
timing of these events suggests the study itself
may explain O’Neill’s ouster or at least the timing
of his ouster. Publication of the study would, no
doubt, have seriously jeopardized the passage of
the administration’s Medicare drug benefit as well
as its third tax cut.

For their part, the Democrats have studiously
avoided any public discussion of the country’s
long-term fiscal problems. Senator Kerry made
no serious proposals to reform Social Security,
Medicare, or Medicaid during the 2004 presidential
campaign. And his Democratic colleagues
in Congress have evoked Nancy Reagan’s mantra—
“Just say no!”—in response to the president’s
repeated urging to come to grips with Social
Security’s long-term financing problem.

The Democrats, of course, had eight long years
under President Clinton to reform our nation’s
most expensive social insurance programs. Their
failure to do so and the Clinton administration’s
censorship of an Office of Management and
Budget generational accounting study, which was
slated to appear in the president’s 1994 budget,
speaks volumes about the Democrats’ priorities
and their likely future leadership in dealing with
our nation’s fiscal fiasco.

The fiscal irresponsibility of both political
parties has ominous implications for our children
and grandchildren. Leaving our $65.9 trillion bill
for today’s and tomorrow’s children to pay will
roughly double their average lifetime net tax rates
(defined as the present value of taxes paid net of
transfer payments received divided by the present
value of lifetime earnings).

Read the full report here: research.stlouisfed.org... (PDF!)

The U.S. has been going "bankrupt" for years now, sadly.

Originally posted by m_w_0_8_0
The U.S. has been going "bankrupt" for years now, sadly.

That's true, experts have seen this coming for years. Sadly, both republican and democratic Senates and Presidents didn't want to take impopular measures to do something about it.

Usually these warnings and reports about the US economy come from foreign countries, because american economists don't speak out about this. Now the Rederal Reserve Bank itself is warning about it! Very interesting development!

There was a similar post a while ago and I did some research and we seem to be around the middle of the pack as far debt vs. GDP with the other industrialized G7 nations, so if we're going bankrupt you are all going bankrupt too

Aging populatarions and soaring medical costs are a problem for all modern industrialized countries, not the just the U.S. Of course there are many different solutions, just it's hard to get anything done since people on the left and right have such differing views on what exactly to do.

But I believe eventually something will be done, so I think to say "we're going bankrupt!" is a bit like chicken little saying "The sky is falling!"

Why dont you read the report first. This has nothing to do with the US trade debts.

Great find Zion - and good post!

...But again, the focus is on aging babyboomers, and no one mentions the debt incurred for the wars on Afghanistan, Iraq, etc.

The US war debt reached trillions of dollars in a few short years. Surely this debt is important?

Originally posted by djohnsto77
There was a similar post a while ago and I did some research and we seem to be around the middle of the pack as far debt vs. GDP with the other industrialized G7 nations, so if we're going bankrupt you are all going bankrupt too

Aging populatarions and soaring medical costs are a problem for all modern industrialized countries, not the just the U.S. Of course there are many different solutions, just it's hard to get anything done since people on the left and right have such differing views on what exactly to do.

But I believe eventually something will be done, so I think to say "we're going bankrupt!" is a bit like chicken little saying "The sky is falling!"

By any measure America's debt is small, SHRINKING and perfectly manageable. The key to managing a countries debt is GROWTH. Grow the economy and all will be well. How to grow the economy? CUT TAXES and REDUCE regulation. But especially CUT TAXES

Here are a couple of threads with information relevant to this discussion:

Re: The stats and graphs above:

Federal Officials Routinely Rewarded for Lying and Punished for Telling the Truth


Re: Controlling information:

Controlling the Net: International Corporations Want Joint Cybersecurity Plan with US Government

Also see:

MSN: How Washington will shape the Internet


.

America will suffer in the long run becuase it just has too much competition nowadays on the international market which is eating away at your economy but this can be managed by America what is a problem though is China and it's rapidly growing R&D sector which could slowly chip away at the one thing that America has always had going for it. Once that happens America will take another slow tumble.

But none of this will mean it will go bankrupt but America will need to alter it's spending so that it can survive. You need to live a lifestyle that you can afford. America has been living a lifestyle for the last couple of years that it cannot afford in the long run.

America needs to realise that the world is changing and America has not adapted to this thats why it is suffering today. If America realises that it is no longer in the same situation that it was a decade or more ago with a slightly weaker China and less world competition it will be able to fix it's problems but the way things are going in Iraq for America i don't think thats going to be anytime soon.

I think the main worry for Americans right now should about Israel dragging America into a war with lebanon,syria and Iran considering America is already in Iraq and Afghanistan becuase that will actually bankrupt your country which might never be able to recover from in the next decade or two.

Roger K Young of the LDS predicted this scenerio back in 1985. He wrote "In the last year of his second term, President George W. Bush, son of President George H.W. Bush, will drive the United States and the World into Bankruptcy." Roger still has a website where you can read his original prediction.

www.rogerkyoung.com...

[edit on 16-7-2006 by GrndLkNatv]

the guy might be right, we could pull ourselves out of this, but then we seem to be heading in the wrong directions. the baby boomers are mentioned as a main culprit in our economic downfall. we've known that this problem was gonna pop up for a few decades now. so, what did we do? did we put this money to work for us, hoping it will grow? na, we spent it!!! and left a bunch of IOU's. we want growth, so well, let's decrease the interest rates to the point where ain't no one in their right mind gonna invest their money in the more conservative cd's or savings accounts....we want them to invest in something with growth potential!!! our corporations!!! hey, I know, let's all invest the social security money into that...the idea that maybe the gov't (as well as the population) should be a little more restrained in the spending seems to be a foreign idea to them.

the recent bubble burst of the stock market is one of the main reasons that retirement funds are in the shape thay are in. alot of money's been lost through the stock market.

someone mentions that as long as we keep growth up, we'll be alright. but well, if the cost of the growth is greater than the benefit of it, well, seems kind of rediculous to me!! besides, look at the dynamics of the main problem mentions, the shrinking population. okay, our population is shrinking, so, when we are all old and grey, living in our nursing homes and and not working or paying taxes. who is it that will be buying all these nice new houses that are being built today, or the older ones? who will be filling all these new jobs that we are creating? 99.9999999 percent of the workers will probably working in all the nursing homes that will be needed to take care of us! (an exageration, I know)
if our population is shrinking, then it seems to reason, that sometime in the near future, we will stop growing and start shrinking a little. unneeded houses, malls, resturants, ect. ect. will be bulldozed and made into parks or surrendered back to nature to be cleansed and healed of man's contamination.

Originally posted by Zion Mainframe

The paper offers three policies to eliminate the nation’s enormous fiscal gap and avert bankruptcy: a retail sales tax, personalized Social Security, and a globally budgeted universal healthcare system.

Read the full report here: research.stlouisfed.org... (PDF!)

well, i read it, and the policies they wish to enact are in treacherous territory...

excerpt from the link (research.stlouisfed.org...)

(find this heading on page (14 of 16) at Zion Mainframe link noted above)


Eliminating the Fiscal Gap

- -> A 33 percent federal retail-sales tax rate
would generate federal revenue equal to 21 percent of GDP - -

The same figure that prevailed in 2000.
Currently, federal revenues equal 16 percent of GDP - -

So, we are talking here about a major tax hike.
But, we're also talking some major spending cuts.

First, Social Security would be paying only its accrued benefits
over time, which is trillions of dollars less than the projected
benefits, when measured in present value.

Second, we would be putting a lid on the growth of
healthcare expenditures.
Limiting excessive growth in these expenditures will, over time,
make up for the initial increase in federal healthcare spending
arising from the move to Universal coverage.

[...]

looking into that Second item; Universal coverage....we find

The healthcare system of today will be re-structured into a
Universal System called Medical Security System (MSS).
MSS will be based on vouchers,
ones individualized voucher value will be annually determined
on the medical data in a persons personal medical dossier,

~to me its' just another can of worms~ and not a solution,


[edit on 16-7-2006 by St Udio]

St. Udio - are you saying that the claim the US is going bankrupt is being used to justify a (fascist, draconian) agenda?

Ie., Maybe it is, maybe it isn't - but the suggested solutions suck?

People, companies and countries don't just go bankrupt.

Bankruptcy is either mismanagement, or a result of sabotage and or looting/theft.

Other then weapons US economy does not produce anything relevant to the world market of the 21st century, we just manage. Our national dept is over forty thousand dollars per EVERY citizen including infants, don't tell me it's nothing. If China cashes in on everything we owe them we go bust. Federal reserve will go t!ts up.

Social programs already collapsed beyond repair. Social Security is gone, Health care is gone, home ownership is gone, we are a dept society.

Just the fact that we now have 50 year mortgages clearly shoes that we are already on the path of passing our debts to our next generation.

In the 70s the average middle class family owned over 60% of their equity, now it's less then 30.

The American dream of home ownership has been completely and totally destroyed by the banking system. Even if you "buy" you still rent, especially if you didn't read the fine print on the variable mortgage. If Screech had to BEG people to buy his T-shirts to save his house, it's bad.

The realty bubble is just another means to scrape the left overs from the consumer economy after the fall of the dot bomb scam.

Education is gone, while we still produce the most PhDs, Americans comprise the minority of high tech graduates, while most international PhDs choose to return to their country of origin.

That's the reality any way you spin it all a result of corporate looting. Enron, World com is only the tip of the ice burg.

Every social and economical aspect simly shows that to be so. While savings are at the all time low, spending on luxury items is at all time high.

Inflation is at least 20% while wages are being kept on the levels of 90s.

The dollar is being floated only by the force of military and a simple fact that if it goes down it'll bring everything else down with it, and that's exactly why EU and Asia is tolerating it.

Years ago when Euro was dirt cheap a friend of mine dumped all of his saving AND a loan against his house into it and and sold when it was at $1.23. Made a killing, sold the house, invested everything in short stocks, flipped it again, moved to Spain, sold the stock back into Euro and now he's retired.

Later he said that he had enough of US "economy". Hate to say it but I'm baling to in about a month. Just tired of the never ending ripoffs.

Great synopsis iskander. Thanks.

You have voted iskander for the Way Above Top Secret award. You have one more vote left for this month.

soficrow, as far as economy it is how it is unfortunetly, thatnk for the vote.

The US has a future shortage of $66 TRILLION due to baby boomer retirements, and more need for social security.

The US went bankrupt in 1933. Why? BECAUSE OF THE FED! It has NOTHING to do with anyone's retirement or social security....More need for social security? We put that money into social security...getting it back down the road shouldn't be a problem...no rocket science there. if I put a million dollars in my safe and let it sit for 20 years...it should still be there 20 years later...correct??

Baby boomer retirements and social security....

By any measure America's debt is small, SHRINKING and perfectly manageable. The key to managing a countries debt is GROWTH. Grow the economy and all will be well. How to grow the economy? CUT TAXES and REDUCE regulation. But especially CUT TAXES

Are you kidding? Our debt is small and shrinking? It's the largest it's ever been and getting worse by the day. Are you a Rockefeller or Rothschild or something? The key to growing this economy is GET RID OF THE FED!!!!! The FED bankrupted the US by 1933....we have been in debt ever since.

As of March 2006....the US debt was at $8.2 trillion. That is small to you??

Rising debts and increasing bankruptcies are the result of Congress suspending the free coinage of metals - into money - and switching us to bank credits as our medium of exchange. These acts converted our nation from a wealth monetary system, where people created money for society's benefit through the fruits of their labor, to a monetary system, where now ....

All new money is loaned into circulation as an interest bearing debt. Since this system only creates the "principal" and never the interest, the debt is always greater than the money supply. Click here for an analogy.

This fraudulently created debt forces American citizens to borrow constantly so the system can function. Eventually, the process becomes unworkable as society, mortgaged to the hilt, can no longer afford to borrow. This debt creates extreme stress for us as we struggle to meet impossible money obligations. The results are: a constantly rising cost-of-living, layoffs, family breakdown, increased drug and alcohol use, an increase in crime and a general moral breakdown. Because of the MOTIVE behind this system, we also have corruption in government, a failing (failed) education system, social tension and a justice system at war with the people it is supposed to serve.

source: www.wealth4freedom.com...

Our debt is small and shrinking....

[edit on 21-7-2006 by Excitable_Boy]

The US has gone bankrupt many times in the past. It's loans from groups like the Rothchilds and large banks that saved the goverment from losing control.

The US has gone bankrupt many times in the past. It's loans from groups like the Rothchilds and large banks that saved the goverment from losing control.

WHAT? The Rothschilds, Warburgs, Lehman Brothers, Lazard Brothers, Kuhn Loeb, Israel Moses Seif, Goldman Sachs and the Chase Manhattan bank own the FED (it is privately owned) and have caused the downfall of the US. The Rothschilds saved the government? The Rothschilds and the others mentioned OWN the government. They OWN the world. They caused the stock market crash of 1929. And the horrible crap that went on for the next ten years is their fault as well.

You know when income tax started? In 1913 right after the FED was started. Our income tax goes right to the FED....which is privately owned.

You want to know about the FED?? The TRUTH?? Check out this thread: www.abovetopsecret.com...

This is a very interesting thread and again i see that iskander is right on for the most part. America does however produce some necessary things for the world other than weapons but those are mostly related to agriculture. We have pretty much sold off our entire manufacturing infrastructure so that the chinese/indians/insert third world country name here can make it for us at a cheaper cost. Most of those savings are then passed on to anyone other than the consumer though.

We let illegals run rampant in our country driving down the average paying wage, while paying for their medical bills, incarceration, etc, etc on the tax payer's dime. If you speak out about any of this you are labeled as a racist or branded a non-patriot. Congress makes laws based on which lobbying firm pays them more and not based on what the people want. None of them have any spine and will not stand up to the worst example of incompetency, arrogance, and intelligence in the history of U.S. presidents. None of my fellow citizens really seem to care too much that this is allowed to go on, as long as they get their SUV, 2.5 kids, and 400k house in the burbs.

This country is done my friends...DONE. It's only a matter of time and anyone with any kind of insight can see it happening in slo-mo like a trainwreck that you are helpless to prevent.

I for one am going to enjoy myself before it happens, and it WILL happen rest assured. I am traveling more, i am going to get my pilot's license which is something that i've always wanted to do. I'm not suffering from end-of-the-world psychosis. I can see the writing on the wall and i'm pretty sure that anyone who is in tune with their inner voice can see it too.