Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: forest
The total is close to $4 Trillion owed by Congress, et. al., who left worthless IOUs in the hopper.

No, it's more like $30 trillion. Allow me to illustrate:

First Sleazo Bank collects $10 in deposits from each of 100 people ($1000 total) and gives $15 to each of 50 ($750), lending the other $250 to another branch. The next year, it takes in $20 from each of 100 people ($2000 total) and pays out $15 to each of the original depositors ($1500 total), lending another $500 to the other branch. The next year, it takes in $30 from each of 100 people ($3000) and gives $25 to each of the previous year's depositors ($2500); again $500 goes to the other "branch".

What matters is not just that the desposit branch of Sleazo Bank lent $1250 to another branch; what matters more is that the deposit branch owes $3000 to its current depositors, $1750 of which it doesn't have in any form whatsoever.

Social Security is a little more complex, to be sure, but the essential aspect is that is significantly in debt to its participants, and the only way it can ever get out of such debt is by acknowledging to current investors that they will get a negative rate of return. Of course, it's much easier to just ignore the problem and pretend that the $30T of totally unsecured (and unacknowledged) debt does not really exist.

12 posted on 07/20/2002 7:18:49 PM PDT by supercat
[ Post Reply | Private Reply | To 10 | View Replies ]


To: supercat
One thing for sure: We are being thoroughly had by Congress and the White House.
14 posted on 07/21/2002 10:03:21 AM PDT by forest
[ Post Reply | Private Reply | To 12 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson