Rant: The U.S. facing the largest financial collapse ever

[Tim May]

On Thursday, July 11, 2002, at 08:09  AM, Steve Furlong wrote:

> On Wednesday 10 July 2002 09:55, Trei, Peter wrote:
>
>> So, to the subject of the original question: I don't think taking up
>> US citizenship, then retiring abroad, makes a hell of a lot of
>> sense from a tax point of view, unless the Social Security payments
>> are important...
>
> I wouldn't figure SS payments into my calculations unless I were to
> retire in the next few years. As the SS crunch looms nearer, watch for
> payments to people outside the US to go on the chopping block.
>
> Not that I expect to get anything from SS myself regardless of whether I
> stay in the US. 29 years until retirement, even if the age isn't pushed
> back again.

As everyone should know by now, and probably does, the Social Security 
scheme in the U.S. is nothing more than a large Ponzi scheme. Payroll 
taxes, amounting to about 15% of income up to some level (ratcheted 
upwards every few years), go straight into the General Fund, where the 
34%-39% top tax rate funds and all of the other taxes go into.

The General Fund (not its official name...it may not have one) issues 
the SS Geheimstatssecuritatwelfarefund an "IOU" for the trillions owed 
by the General Fund to the SS G.

Those IOUs are not even computed as part of the national debt. (!!) Talk 
about using Enron accounting!

The national debt is now estimated to be around $5 trillion, or about 
$67,000 per family. But this figure fails to account for two very 
important additional indebtednesses: first, the SS IOUs, and second, the 
"unsecured liabilities" that the U.S.G. has taken on due to 50 years of 
legislation. These unsecured liabilities include the rising pensions 
costs of our enormous military forces (no separate fund established), 
the loan guarantees to hundreds of unions and private retirement funds, 
and vast amounts of indebtedness for "guarantees" made to other nations, 
other organizations.

A friend of mine was an insurance industry expert. Some years ago he 
showed me the calculations of what the _actual_ indebtedness of the U.S. 
government is, based on accepted, standard accounting practices (as 
opposed to the Ponzi scheme accounting practices most governments use).

Based on legal, contractual agreements, the national debt at the time he 
showed me the figures (circa 1990) was $20 trillion ($20 x 10^12). 
Dividing by about 100 million households in the U.S., this is $200,000 
per household.

This of course exceeds by a wide margin the entire asset value of most 
households.

We owe more than we have. Which is typical of situations where people 
pay, as but one example, to have young black girls living in their own 
places with no job and no husband, just watching "Oprah" and having more 
babies and with the costs of this destructive nonproductiveness paid for 
the Ponzi way: "Just put it on my credit card!"

Or when $9 billion a year is given to Israel/Egypt (we give Israel $5 
billion a year to keep their economy and their stalags running, so we 
cut a deal with Sadat to give almost as much to Egypt to keep their 
Swiss bank accounts filling up), we pay for it by just saying "Charge 
it!"

Charge it...some future generation will pay. Our political system is set 
up to avoid hard decisions and simply to push tough decisions further 
out into the future. This is why more than $20 trillion is now part of 
our legal obligation.

(BTW, the old chestnut that "we just owe it to ourselves, so what's the 
big deal" doesn't fly. For lots of reasons I'm sure intelligent folks 
can figure out.)

Things get much, much worse when we look at the retirement of the Baby 
Boomers, the leading edge of which is set to start collecting SS and 
other benefits in about 6-7 years (not counting folks who retired 
early). The full impact of this wave will hit around 2020, when things 
get really squirrelly.

(Things could get squirrelly even earlier, should high interest rates 
come back. The offiicial national debt of $5-6 trillion is quite a bit 
higher than the ND was in the early 80s, when 14% interest rates were a 
real problem. If we see 10-15% rates again, with a national debt of $6 
trillion, it'll be "Katie, bar the door!")

Much of the income of the high earners, the productive engineers and 
others who make up for the Doritos-eating welfare breeders, is already 
taxed doubly or even triply. (No time for a rant, but corporate earnings 
are taxed at 40-50%, when corporate income taxes and payroll and other 
taxes are added up, then the dividends and capital gains paid out are 
taxed _again_ at 30-40%. And then there are the property taxes, the 
school taxes, the energy taxes, the sales taxes, and all the rest.

In about 15-18 years things are going to get real ugly in this country. 
Each high worth taxpayer (a subset of those estimated 100 million 
taxpaying households, most of whom pay much less in taxes than high 
worth taxpayers do) will have as his share of the national debt 
something like $800,000 (by my calculations, admittedly iffy). This is 
the lump sum they would have to pay to pay the credit card bills, not 
even counting the 50% tax rates on their current incomes to fund current 
Ponzi payments.

Any way we cut it, America has been "charging it" for too long, with too 
many handouts to foreigners to buy their loyalty, with too many 
incentives for people to "go on disability" or "accept 80% early 
retirement" or just sit at home and breed.

What we haven't paid for with cumulative taxes approaching 70% of real 
earnings (ask me for details of my situation sometime), we have simply 
charged on our credit card.

The chickens will come home to roost. Just as the biggest companies, 
like Enron, K-Mart, Worldcom, are now the biggest bankruptcies in 
history, I see the odds as pretty good that the U.S. will effectively 
default on the promises it has made that it cannot possibly keep.

The U.S. empire may go down in history as the largest financial collapse 
ever.


--Tim May, Citizen-unit of of the once free United States
" The tree of liberty must be refreshed from time to time with the blood 
of patriots & tyrants. "--Thomas Jefferson, 1787