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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: rich evans who wrote (7342)	5/16/2006 11:26:28 PM
From: Hawkmoon	Respond to of 33421

Right now US explicit debt is about 9 Trillian. But 1/2 of that is owed to SS trust fund so is really not explicit, marketable and more like a future unfunded liability . And interesting point about the SSTF. Most people rallied in favor of the tax surpluses of the '90s, due primarily to increased FICA tax revenue (SS taxes). They claimed they were paying down the deficit and all was good.. What they DIDN'T say was that what they were REALLY DOING was paying down the PUBLIC DEBT, and transferring it to the intergovernmental side in part, and the REST of the FICA tax revenue was being applied to the government budget and an IOU thrown into the SSTF for future generations to pay. Which is why I am still in favor of preventing FICA surpluse and authorizing people to dedicate that surplus to private pension/401K plans. The SSTF should NEVER be permitted to run a surplus as it only increases the National Debt on the intergoverntal holdings ledger, while giving Congress more money to spend. Btw, it's great to hang with people WHO UNDERSTAND that the national debt as compared to GDP and, now, National Assets, is not nearly as great as many other countries. It's not a "good thing", but it's not nearly as severe as some of the "chicken littles" would have us believe. I say hold. In effect they have invested that much in US bonds, mostly shorter term and roll it over all the time. They could invest in other things as well in US with their dollars. They have and could buy stocks, companies, real estate etc. All these assets they can invest in and that is why the articles looking at assets is in my judgment correct. Part of the problem for these nations who are generating excess dollars from exports to the US, is that they don't want to cause their own currencies to strengthen. And they really don't have anything that pays the same return as US Government debt, and certainly very few investments with comparable security. So to prevent losing their currency advantage, which would dissipate were they to take their profits and re-invest them in their own domestic debt instruments, or stagnant economies, would cause their currencies to rise. It is very gratifying to have great people around who can help me to understand these complicated macro-economic issues. Hawk