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THE NATIONAL DEBT THAT NOBODY WANTS TO READ ABOUT

10/29/2013

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Posted by John May
Oct. 29th, 2013

Why, you may ask, would anyone want to read about the national debt?  For one thing, the numbers are too big to understand.  What for example is a trillion? (I’m pretty sure it’s a million million, with twelve zeroes.)  Most articles on the national debt focus on the $17 trillion US Treasury debt and ignore the present value of promised benefits of Social Security, Medicare and Federal employee retirement costs, for a total of $86 trillion.

One way to grasp the heft of that number is to compare it to the entire American economy. The total of every transaction done in America in a year is around $16 trillion, so that the US liability of $86 trillion is five times the size of the economy.  There are about 155 million people employed, which works out to a burden of over a half million dollars for each worker.

The probability is zero that that the repayment money will be taxed away from earners of income and owners of assets.  Taxation will probably be the source of less than half of the debt; the major portion will be dealt with by cheapening the dollar through an acceleration of inflation. This is a predictable pattern of human behavior because it enables spending now in return for a pretense of repayment later, similar to borrowing plums and repaying with prunes.  One familiar observation is that  at the time of the Civil War, you could buy a hand made suit of men’s clothing in New York City once of gold, then $25,  and now, a century later, you still can, with gold at $1300. The price of suits did not change…only the dollar did.

In the table below, see the pattern of receipts as compared with federal spending;

Year    Receipts(Portion of GDP)    Expenditures (Portion of GDP)
1960    18%
                                    18%
1970    18%
                                    20%
1980    19%
                                    22%
1990    19%
                                    23%
2000    21%
                                    19%
2009    16%
                                    26%
2010    17%
                                    27%

Source: justfacts.com

Now, see where YOUR tax dollars have been going.

                                Portion of Total Federal Spending (years)
Category                1960    1970    1980    1990    2000    2010
Social Spending     23%    35%      47%    45%     56%    
61%
National Defense    56%    44%      28%    27%     20%     22%
General Gov't. &
Debt Service
          14%     12%      16%     21%     18%    11%
Economic Affairs

& Infrastructure       7%       9%      8%        5%        6%    4%
Public Order &

Safety                    0%        0%     1%        1%        1%    2%

Source: justfacts.com


John May spent the first half of his life in New York and the other half in California. He has worked in the finance industry for over 50 years as an analyst on Wall Street, pension fund manager, investment adviser and speechwriter.

He began writing for fun and performing at open mics in Long Beach, California in 2007. Favorite topics for the poet, known locally as “Jack,” include romance, war, economics, politics, philosophy and comedy.

Jack and wife Peggy have been married for over 50 years; they have two children, Jacqueline and John, who have a total of five more



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