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Author: telegraph Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 60036  
Subject: Re: Surowiecki on Soc Sec, Medicare Date: 2/4/2013 8:01 PM
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skye:"To address your question, there are only two reasons US bonds might not get paid back

1) The cost of debt service becomes so large we don't have money to pay. "

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If we look at what interest rates have been...I recall 15% 30 year treasury bonds.

If we look at 16 trillion now, and soon to be 20 trillion...and figure out that at 15% interest rates....it would take more money that the entire tax system brings in.....

you obviously have a problem

At historical rates of 5%.....on 20 trillion...that would make just the interest alone...more than any other program. It would either require taxes be raised across the board by 25%......

or a gigantic cut of 50% in Medicare and SS programs, right? And still that wouldn't be enough because you would have to cut just about every other thing 50% as well.

We only take in 2.7 trillion in taxes.

If you can't afford a trillion in interest, no one is going to loan you any money at any interest rate you can afford! That's at a measly 5% interest rate!

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skye:"That theoretically could happen, but right now the cost of debt service--while large in terms of dollars--isn't particularly large in historical terms. "


Zero is a nice number, but it isn't going to stay at zero for long. At some point, it will rise to 3-4-5%.

Meanwhile, the value of the dollar has dropped 30% under Obama. the result of zero interest rates. Intentionally devalued dollar. Your money is 'worth less'.

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skye:"For example, the cost of debt service was proportionately much higher when Reagan was president."

Yeah....years of CArter and his failed policies left us with 13-15% interest rates!

Of course, with that high interest rates....you got to pay a lot of interest!..

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skye:"We paid our debts just fine back then so there is no reason to think we can't do it now or in the future. "

You got a spare $133,300 or so to pay YOUR SHARE back? I didn't think so. Bet your kids and their grandkids won't either.

THe debt will never be paid back. We'll simply pay the interest on it until we no longer can afford to do so....

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skye:" As a percentage, from now until 2022 debt service never even reaches Ronald Reagan levels."

But in Reagan level interest rates, at it easily will!

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skye:" It is more amusing than anything. But their complete and even joyous ignorance of the foundations the nation was built on and their attempts to destroy the institutions that made this nation great"

What? A bloated government? YOu realize the government now employs more people than there were in the entire country in 1776?

The country was built on states rights and a VERY limited federal government given only certain limited functions.

IT wasn't called the Nanny States of America....

or One Nation under a SOcialist.
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