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U.S. Government Bankruptcy Soon?
Submitted by fyl on Wed, 2010/02/03 - 16:51.
While my Budgets blog post was pretty depressing, Porter Stansberry just managed to make it look I was way on the low end. This is not from some hippie left-wing publication. This is for people who buy stocks and bonds.
What's the real per-capita number [for U.S. government debt]? My best estimate - just on the money we actually owe today - is $400,000 per taxpayer. At a reasonable (6%) rate of interest that's $24,000 each - just to pay the interest on these debts each year. How many people do you know that could afford $24,000 a year in higher taxes? How many people can afford additional debts of $400,000?
Now, these numbers don't address the possibility of an environment-caused dead end that will require massive money just to feed people and/or try to mitigate environmental damage. So, what does this have to do with Nicaragua? For me, it is one more data point that supports my plan to live here and assume that I need to be as "self-contained" (sustainable) as possible.
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If the US is bankrupt
Then the total debt owed is the last thing you have to worry about. Who buys our debt? China & Japan. They hold so much of our debt that they cant stop buying more debt even if they wanted to. The majority of their foreign investment are in US Treasury Bonds, so the minute they stop buying US debt, a massive selloff would soon follow sending all major indexes around world to the bottom causing mass panic and sending the world into an even Greater depression. Their foreign investment would be become toxic assets, worth pennies on the dollar. Add to that the fact that the US is the largest buyer for both countries and you can see how sticky the situation gets.
The article although interesting, applies general math which is not how the IRS computes taxes owed. The accounting used is so complex at times, that simply dividing the total amount owed by the number of tax payers negates the point the author is trying to make. "These people pay less than 10% of all income tax receipts. So you shouldn't count on them to repay much, if any, of these debts - they can't. " I can easily throw the following statement , 3% of the US population holds 95% of the US wealth and therefore they should pay the most taxes. The problem is that special interests and their lobbyist have made sure that these individuals/entities/corporations, get nice tax breaks for years which doesnt help the situation.
The author goes on to say that the US is bankrupt.... newsflash, last time I checked the US is not the only G20 country running a national budget in deficit. We recently saw Dubai and Greece default on their obligations and I suspect it wont stop there.
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Viva Leon....... Jodido!
China
Last year I commented to a friend who knows a lot more about international financial markets than I do about China. I told him that China couldn't afford to have the US$ drop significantly. His answer surprised me.
He said that what China has been doing is contracting with other countries to buy products in the future for a pre-agreed price in US$. While I have no verification of this, if it is true then the world rather than China has become the lender.
"Taxpayer"
The "debate" (here, below - and elsewhere) comes down to a distinction between what each citizen owes and/or what each taxpayer owes (there are many more citizens than citizens who actually pay taxes - the author's other main point). The way it is framed here by Stansberry, I, for example, do not really owe much of anything since I make less than $50k and don't really contribute much to tax rolls anyway. While the math on who really pays is likely all accurate, it is misleading to do what he does: he first rules out most people since they dont pay much anyway, but then frames his question to most people in terms of how many people these readers in turn know who can afford an extra $24k in taxes. But since most people do not make enough to pay much they likely dont know a lot of people who do pay a lot, or can afford the big extra interest-debt payment, should it come to that. While they dont tell the whole story, there is a Running Debt Clock , and a Running Population Clock - and the basic math off them fairly straightforward. It is depressing, but straightforward.
Income sources
If I'm wrong, i think your income source is US, if you didn't took the prevision to put your stocks in other market, so if US came under bankruptcy, you will also , not? and sure a lot of retired that live from that income source.
Hijacker!
Porter Stansberry, en un publication para personas que compran acciones, dice:
...Entonces, ¿qué tiene esto que ver con Nicaragua? Para mí, es uno más de puntos de datos que soporta mi plan de vivir aquí y se supone que tengo que ser como "autónomo" (sostenible) como sea posible.
Nicaragua ?
Where i mention Nicaragua ?
I understand your post and the title is clear "U.S. Government Bankruptcy Soon" , or i must understand that Government is other entity that have nothing to do with citizens ?
My questions was based in the presumption that you are a US retired .
Check yourself before posting.
Current National debt is about 34K per person in USA.
Check your facts before posting from dubious sources.
Agrees with the article
The article starts at $120,000 per taxpayer which he claims (with sources) is about 100 million. Then he explains why that isn't the total debt. Now, if you see a flaw in his arithmetic, please point to it.