The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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To: dybdahl who wrote (3059)	12/22/2007 7:35:41 PM
From: Larry S.	Read Replies (2) of 71456

dybdahl, I can't resist a few comments on your discussion with Ray. The fact is that our total debt at the end of fiscal 2007 was 9.008 trillion up from 8.507 trillion at the end of 2006. It reflects a real deficit of 500.7 billion. The 206.2 billion deficit that is quoted is the Unified deficit the GW keeps telling us is headed for ZERO in a few years. The Unified or Official deficit is obtained by subtracting the so called OFF-Budget surplus and hiding the interest paid of the special treasuries in Trust Funds. The majority of the OFF-Budget surplus is surplus revenues associated with our Social Security (SS) program and this surplus will go the ZERO in few years as the Baby Boomers (BBs) retire. The surplus is the result of payroll tax increase enacted during the Reagan and Bush Sr. years and were intended to provide a fund adequate to cover the benefits of the BBs when they retire without further tax increases. Projections suggest that the surplus will be adequate to cover the bubble in SS benefits. It was a great accounting gimmick and hid the growth in the real deficit but we are now facing the day when the surplus goes away and turns negative and the redemption of the special treasuries to help pay benefits starts. The fact that our deficits aren't going to disappear, is the reason GW said all he could see in the SS Trust Fund was IOU's. The same people (including Greenspan) who were pushing the tax increases during the 80s now want to find a way putting the blame on SS rather than those who failed to control spending during the Reagan, Bush Sr., Clinton and GW years rather than accepting responsibility for excessive spending. Our solution will be inflating away the debt. We fudge (see shadowstats.com the numbers to create the illusion of substantial growth and low inflation. But it is going to catch up with us. The debasement of the our currency internationally is just one symptom of our problem I rather strongly disagree with Ray's view that we face problems and solve them. Our failure to do so is destroying the world my Grandchildren are going to be handed. Larry

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