For those that thought it was bad...
It appears that you didn't fully understand the situation.

The US government is going broke (http://www.boston.com/dailyglobe2/139/oped/An_economic_menu_of_pain_+.shtml)
An economic 'menu of pain'
By Laurence J. Kotlikoff and Jeffrey Sachs, 5/19/2003
OUR GOVERNMENT is going broke. The feds face bills that are far beyond our capacity to pay -- by $44 trillion to be precise. The longer we ignore them, the bigger they get. Yet President Bush is working overtime to deepen our fiscal trap. This $44 trillion figure is not ours. Nor is it some other academics' calculation. It was produced last fall by economists and budget analysts at the US Treasury, the Federal Reserve, the Office of Management and Budget, and the Congressional Budget Office. The study was ordered by then Treasury Secretary Paul O'Neil and was slated to appear in the president's budget, released in February.

O'Neil instructed his team, led by Jagadeesh Gokhale, Federal Reserve senior economist, and Kent Smetters, then deputy assistant secretary for economic policy at the Treasury, to answer the following question: Suppose the government could, today, get its hands on all the revenue it can expect to collect in the future, but had to use it, today, to pay off all its future expenditure commitments, including debt service net of any asset income. Would the present value (the value today) of the future revenues cover the present value of the future expenditures?
The answer is no, and the fiscal gap is the $44 trillion. Now, that is big bucks by anyone's definition. It's four times current GNP and 12 times official debt. Imagine everyone in the country working for four years and handing over every penny earned to pay this bill, and you'll grasp its size.
Unfortunately, we can't ascribe the $44 trillion calculation to overly pessimistic assumptions. On the contrary, the assumptions are optimistic with respect to future longevity as well as growth in federal health expenditures, discretionary spending, and labor productivity.
Gokhale and Smetters asked a follow-up question: By how much would taxes have to be raised or expenditures cut on an immediate and permanent basis to generate, in present value, the $44 trillion? Their ''menu of pain'' is mind-boggling. Entree A is raising federal income tax collections (individual and corporate) by 69 percent. Entree B is raising payroll tax collections by 95 percent. Entree C is cutting Social Security and Medicare benefits by 56 percent. Entree D is cutting federal discretionary spending by more than 100 percent, which, of course, is not feasible. Combination platters are also available. For example, we might select quarter portions of entrees A through D. But no matter what combination we order, digesting this medicine is going to be plenty painful.
Why are the nation's fiscal affairs in such a mess? The reason is straightforward. Baby boomers are just five years from starting to collect Social Security retirement benefits and eight years from starting to collect Medicare benefits. When all 76 million boomers are retired, we'll have twice the number of elderly beneficiaries, but only 15 percent more workers to pay their benefits.
If the fiscal gap and its associated menu of pain are unfamiliar, there's a reason. You can scour the thousands of pages of the president's FY 04 budget, and you won't find the analysis. It never made it in. When Secretary O'Neill was replaced last December, the analysis was yanked from the budget.
To be clear, limiting our need to know is not just a Republican responsibility. When it came to publishing a generational accounting analysis in the FY 92 budget, President Clinton's political watchdogs overruled OMB and pulled the same trick. And bankrupting has been a collective effort of all postwar administrations, each of which has cared more about the next election than the next generation.
Our current team leader, President Bush, is doing his part. Taken together, his first tax cut and his proposed second tax cut, which is about to be passed by Congress, account for roughly a sixth of the fiscal gap. The president, an ardent believer in voodoo economics, is convinced his tax cuts will stimulate growth and dramatically raise revenues. Neither economic theory nor economic facts supports this view. In fact, the president is not only burying us in explicit and implicit debt, he's undermining the economy's future performance.
The stakes are now too high for more political games and flaky economic theories. Democrats and Republicans alike need to send our leaders a firm message: Deal responsibly with the coming generational obligations! If we don't, we can look forward to massive cuts in future Social Security and Medicare benefits, tax hikes, high inflation, and bitter political strife. Putting aside the president's latest tax cut would be an excellent start on the road to responsibility.

Laurence J. Kotlikoff is chairman of the Department of Economics at Boston University. Jeffrey Sachs is professor of economics at Columbia University.
This story ran on page A11 of the Boston Globe on 5/19/2003.

you would think someone with an MBA from harvard would be a little wiser to this situation. what does that say about our president and what does that say about an MBA from harvard?

Time to do away with the Federal Reserve.

shrubby - not a lot...
Jerrek - that article is assuming that you use up the federal reserve...

I agree with Jerrek we need to get ride of the federal reserve. Its no good the government should coin its own money rather than buying it from a private corperation run by a bunch of bankers.

Wow, Jerek and Avatar, you obviously know nothing about monetary and fiscal policy, because you can't just get rid of federal reserve.

i dont know, i think it says a lot about the capacities of bush

Originally posted by Hamlet
Wow, Jerek and Avatar, you obviously know nothing about monetary and fiscal policy, because you can't just get rid of federal reserve. Yes you can. Why can't you? It even makes a provision of that in the Constitution. The founding fathers never intended for a few rich bankers to control the economy of the country.

Get rid of the Federal Reserve, buy the $500 million in stock back, and then gain several billion dollars in assets and stuff. Set up a Senate committee to oversee the economy and let Congress make the decisions.

And boom, no more inflation.

And Jerrek gets the Nobel prize for Economics and then runs for president... :rolleyes:
Jerrek, what are your economic qualifications?

EI sparks, you dont need qualifications to talk about stuff.

But anyhow, perhaps iff jerek can cast his(?) mind back to the time when there was no federal reserve. Back when we had huge booms and busts in teh 19the century, great runs on the banks, premature foreclosures on mortgages and all sorts of nastiness. People used to lose their savings. The federal reserve was set up to help deal with this. Effectively by the beggining of hte 20th century a few rich bankers did control the economy, havent you heard of Morgan etc? And besides, wouldnt you rather the economy was in the hands of your elected representatives rather than unelected bankers?

But finally, Avatarofwoe is dead wrong about money. the gvt doesnt coin it, the banks do. They create money by lending money to people. Who then pay it back, despite this money not having had any existence before it was paid to them. Why do you think the monetarist policy was about changing interest rates to affect inflation? Because inflation is about the amount of money in the economy, and changing the interest rate affects the amount people borrow, ergo the amount of money in the economy. The borrowed money is spent into the economy as if it were real money, (which to all intents and purposes it is) and the end result is inflation. One way round it would be to have the gvt issue money that was debt free. Possibly also going back on a gold standard would help.

EI sparks, you dont need qualifications to talk about stuff.
True, but you do if you want to state "my idea is the obviously best solution" and want us to accept it without exposition.

And besides, wouldnt you rather the economy was in the hands of your elected representatives rather than unelected bankers?
*looks at Bush*
errr....

"True, but you do if you want to state "my idea is the obviously best solution" and want us to accept it without exposition"

Yup, except that i am trying to move to a position of not believing anyone, especially "experts". Or at least taking what they say with a large pinch of salt.

As for bush, well, your election process is flawed, starting with the electoral college, and as for electronic voting machines, forget it, theres too much potential for fraud. No paper trail, remember?

well guthrie here is a little lesson in constitutional law. so crack open your copy of this great document and read along. Artical 1 of the constitution outlines the legislative duties of the Legislature which consits of the house and senate. If you flip to Artical 1 Section 8.5 you will see the phrase "To coin money, regulate the Value thereof, and of foreign coin, and fix the standards of Weights and Measures;" so you see guthrie it is the job of the government as outlined by the Constitution of the United States of America to coin money and regulate its worth. not a bunch of bankers.

OK, im no american, but essentially it looks more like the gvt has abdicated its direct control over money.

"Its no good the government should coin its own money rather than buying it from a private corperation run by a bunch of bankers."

You said that, which as far as i can understand it says the gvt should buy money from bankers. Which it does, by issuing federal bonds and stuff. The rest of the time the money in the economy is made up from peoples and companies borrowing and the circulation of money around the system.

Perhaps you could tell me how your money is coined given the USA went off the gold standard in the early seventies? So how much is a dollar worth?

And perhaps you didnt read what i wrote properly. Go away and think about it.

The key notion here is debt creation and its being paid back. Go look up the increase in the money supply over the past 50 years, and the increase in debt in the USA. IN the Uk look up M0, and M4. M4 is the total money stock, M0 the total coins and notes.

What you can say is that whilst the gvt might ideally have control over the banks, any sensible person can see it doesnt. Thats one of the reasons we still have a boom bust cycle.

jerreks almost making sense. If you remember that inflation occurs because there is an increase in the money supply. Now, in many cases that happens because teh gvt prints more and more money, but in a lot of developed countries, it occurs because of the use of debt money, ie money borrowed into existence.

So teh use of money with no debt is what hte gvt should be doing, rather than relying on interest rates to control things, and letting federal debt mount up by borrowing. It is possible to reduce gvt debt, but only at vast cost to the country. See the UK in the 20's and under Mrs Thatcher in the 80's. Then we had a contracting money supply, and it f***** us, whereas everyone else carried on pumping money into the economy using the gvt debt and got on very well.

Ill reply in a few days once im back from a weekend away.

I left out a comma there i was saying that i was not good that the US gvt should buy its money from bankers. Right now American dollars are coined by the private corperation known as the Federal Reserve. The word economie decides the worth of our money as it does for all countries considering no one has any gold or silver backing their currency. See my problem is that the gvt can't just abdicate its duty to coin our money. To do that they would have to make an amendment. There can't be a use of money without debt because if the gov't has to pay for its money right there is where the debt comes into play. When a US citizen is born the gvt tkaes out a lone on them with the federal reserve which is a few hundred thousand dollars. That and giving bonds to other countries and corperations is what cause the national debt. Because the money to pay off the bonds is the money the gvt borrows from the federal reserve and then there is no money to repay the reserve. this lack of money is the debt, so if the federal reserve was to be ended the accumulation of debt would slow and possibly start to shrink. So the whole problem is the Federal Reserve.

okay you guys, i don't quite follow a lot of what you all have said, but think about when banks run out of money... that is what the federal reserve is for yes?? They give money to the banks to lend when they don't have any money left to lend. right? so if all the borrowers default on their loans the federal reserve is there with the cash.. but what happens then... money that should be going back to the banks is staying in the economy and the FR has to pump more money into banks for new borrowings and then the money flow in the economy increases

maybe this is what you guys were getting at as well but you seemed to confuse a lot of things

i think you are thinking of the FDIC which was created after the stock market crash of the 1920s. they insure the banks money to make sure that the bank always has money to give back to the people who have left their money there for good keeping. this is quite different that the federal reserve which prints american money and decides the rate of inflation.