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Politics : Just the Facts, Ma'am: A Compendium of Liberal Fiction -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (65898)	5/2/2008 2:33:44 PM
From: Lazarus_Long	Read Replies (1) \| Respond to of 90947

1 - Congress CAN kill Social Security at will. It won't, but it can. Congress can decide to spend $0.00 on national defense too. How likely is that? 2 - If you can't kill them at will, the proper answer is still "no". Likely, even near certain (or totally certain for that matter) future spending isn't current debt. Then what is that payment stream paying off? If there were no debt, you wouldn't be making it, right? And if likely future spending was debt, than our national debt would be in the quadrillions, or maybe orders of magnitude more than that depending on future inflation, and how long you think the US government will continue. Not so. It's the PRESENT value of an annuity. If the amount an annuity pays out over one period (presumably 1 month in the case of SS) is A, then the present value P is P = A[ ( 1 - ( 1+i ) )^(-n) ]/i where n is the number of periods paid out over. That's the present value of the debt. But we don't have to pay it all NOW. It is a "loan" from the future and we only need to make the loan payments, not a balloon payment. If Congress had not constantly increased the size of P, we would have no problem making the payments and the system would continue stablely. But they have. As it currently stands, the gov't is bankrupt. But gov't control the printing presses- -they don't go bankrupt unless they want to. They just print the money needed to make the payments to the insurees. Eventually this will cause inflation- -but since the amounts and percentages in the gov't-mandated tax laws are not indexed to inflation, and since the gov't computes its own inflation figures, that fact simply makes it easier for the gov't to pay this debt. Your granny may suffer, but odds are your granny has no idea what is being done to her. Good thing the interest on this "debt" is 0%.* I suspect the actual rate might be negative because of the decreasing value of the currency. But it would still be a positive value in the above formula because it takes no account of inflated dollars.