Posted on 10/17/2013 3:51:25 AM PDT by Positive
If a family were to purchase a home with a $200,000 mortgage at 2.5% to be paid off in 15 years, the monthly payment would be $1333.57, or $16,003 per year.
If a government owes a debt of $17 Trillion on which it pays principle and interest at a rate of 2.5% to be paid off in 15 years, the monthly payment would be $113.35 Billion, or $1.36 Trillion per year. So after 180 monthly payments the total payoff would be $20.4 Trillion, but let’s not get too deep into the weeds.
The USA is averaging a deficit of about $1.3 Trillion a year over the last 5 years.
So in order to abolish the dept in 15 years the USA would have to balance its annual budget each and every year so as not to accumulate more debt AND cut spending by $1.36 Trillion per year…that is, reduce outlays by over $2.6 Trillion per year.
The USA now takes in about $2.5 Trillion per year, and spends approximately $3.7 Trillion. So how can one reduce outlays by $2.6 Trillion if the income is only $2.5 Trillion? Oh! Take the difference out of savings… oops got none of that stuff.
So please tell me how the USA can abolish its debt in 15 years.
Idea #1 - Raise the taxes. Well according to the US BLS the labor force is 154 Million. That includes everyone over 16 who is looking for work. In order to reach this arbitrary 15 year goal the average person in the labor force would have to pay an additional $16,883 per year in taxes. Remember that includes those who work at McDonalds and those who are unemployed (looking for work). Easy to see that this would lead to societal chaos and never succeed.
Idea #1a – Raise the taxes so that the 1%ers pay it all off. Problem with that is that after year one there would no longer be any 1%ers. That would be complicated by the fact that the 95ish%ers work for the 1%ers… So by year three there would be no tax revenues.
Idea #2 – When Janice Yellen takes over, have her institute "Super Godzilla QE" – have her create $17 Trillion out of thin air instead of Ben’s paltry $85 Billion per month.
You see creating $85 Billion per year would take almost 17 years to get to $17 Trillion and by then it would no longer be a $17 Trillion problem... it would be much bigger.
Another little problem would be that the money would be near worthless, (it is already, but the cat isn’t completely out of the bag yet). Although yesterday the Chinese made some comments that they are thinking about it.
Idea #3 – Default, declare bankruptcy – tell them “hey we have been putting forth our ‘Full Faith and Credit’ for 200 years and see where it got us? Go fish.
Problem with that is that $7 Trillion of that debt is owed to Americans… including $2.6 Trillion to Social Security. Severe depression for sure.
The Chinese have $1.3 Trillion, that’s $1 for each and every one of them, hummm. Japan $1.1 Trillion, bye bye Toyota, Nissan, Honda, Sony… trouble for all sides of the Pacific.
Well Freepers, I’m open to additional Ideas, including prayer and prepping for societal break down.
Please tell me what to do.
Sorry, couldn't resist. Very good article.
I typed "You see creating $85 Billion per year would take almost 17 years to get to $17 Trillion...
Of course it should have been "per month".
You should make sure you live in one of the states that will be seceding.
Positive, obviously you are still asleep and what you wrote was a dream right?
There is absolutely no way the fed will cut spending 2/3 from 3.7 trillion to 1.2 trillion to pay off that debt.
Hell, they can’t even balance a budget.
Hell, they can’t even pass a budget, what am I talking about.
Maybe we are both dreaming.
We all know what will happen.
The Government will continue to print like crazy, hollowing out the middle class and destroying anyone with currency savings.
And - just like every other country that has done this - the level of printing will cross an invisible line.
Beyond this line is double-digit inflation, some chance of hyperinflation and a 100% chance of the loss of reserve currency status.
Gold and Silver, other hard assets. Buy them, store them, tell no-one.
Hyper inflation is in the future.
You’re forgetting the unfunded liabilities - this puts the dollar figure at $90 trillion +.
Hyperinflation.
Collapse of the U.S. just like the Soviet Union collapsed. Not a shot was fired.
Break up of U.S. into 4 or 5 regional countries.
You can’t pay it back.
The only legal tender is Federal Reserve Notes.
The only way they come into existence is to borrow them.
Doesn’t matter what the numbers are.
Bingo, we have a winner,
not only can it never be paid back, the INTEREST REQUIRED TO EXTINGUISH said loans, DOES NOT EXIST. All Interest on Government Debt can only be paid with the blood and sweat of LABOR. This is Involuntary Servitude.
Love that word: Gimmedats.
With your permission I will also participate in that theft.
1) mint a 17 trillion dollar platnium coin - seems hairbrained but some serious thinkers have floated that idea and, I think this more likely ...
2) get the dems back into the majority in the house and then nationalize all the retirement/401k accounts. I read somewhere that those combined are worth in the area of 19 trillion, so, debt solved, in fact we'd have 2 trillion to blow on more failed promises.
You nailed it.
The gop just gave the rats a blank check and we got stabbed in the back.
The free stuff army will destroy us.
But just to be clear, all of those "Ideas" were meant to be irony.
They WON’T pass a budget. That’s different than “can’t”.
Just to be diversified, you should purchase some of a couple of other precious metals... Copper and Lead.
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