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This is the "haha" factor for you! Government *prints* money. As much as they want. And US is probably one of the worst countries in that regard. IT just hasn't cought up with them yet.

Money is viewed as a money supply. M1, M2 and M3. US doesn't even publish M3 money supply!!!

For more information about M1,M2 and M3 money supplies,
    http://economics.about.com/cs/money/a/money_supply .htm
    http://research.stlouisfed.org/fred2/data/M3SL.txt
    http://research.stlouisfed.org/fred2/data/M2SL.txt
    http://research.stlouisfed.org/
    http://research.stlouisfed.org/fred2/series/M2

Regardless, money supply is increasing now faster than before. How? Gov't is printing money. It is preferable that the money supply is representative of some real value, but it is not. US has been running a huge trade deficit now for a number of years, yet the currency has not devalued as much as needed. The reason is that other countries like China and Japan are storing their USD and not buying stuff with it. So it should be clear that money just represents a perceived value, not a real value.

When gov't "borrows" money, it may mean A LOT of things. In the US, they just transfered the money from the retirement plan (whatever it is called - social security?) which is currently overpaid, and spend the money. Now that they'll need to dip into the retirement funds, well, there's nothing in that "account" so they'll just move it from elsewhere. To get money you can issue bonds, increase taxes or just print money. The problem with printing money is inflation (devaluation of the fiat (or paper only, like USD) currency). They more you print, the less a single unit is worth. So essentially inflation caused by money printing is exactly the same as a flat tax.. Right now the inflation in the US could be lowered by slowing down of the money printing. *But* US can't do that because they have to pay for the deficits. So instead of increasing taxes, they just print money. The result is exactly the same (less purchasing power for people), but when you increase taxes the politicians get blamed, but when they print money the "economy" gets blamed. Another problem with printing money is that countries that hold huge amount of USD will start to see their stockpile decrease in value. So they will start to spend. And this will drive inflation in the US.

The US economy may be nearing a tipping point where the USD will be devalued by as much as 50%. For example, USD lost 30% with respect to CND (Canadian $) in the last 2 or 3 years. It used to be 1.6 CND/USD, but now it is 1.12 CND/USD. If a US person got a CND savings account that got them NO return at all (0% interest rate) they would have gained 43% in 2-3 years. An investment of 100,000 USD to canadian currency would result in 160,000 CND. Today, 160,000 CND is worth about 143,000 USD. This is all because of devaluation of USD due to US trade deficit. And the US trade deficit is NOT yet accounted for because China and Japan hold over 1 trillion USD!! They spend that, and USD is devalued further.

The GP probably described the tax system as best as one possibly can. You are just a little ignorant that the value of fiat currencies is arbitrary.

PS. Gov't does actually need to *print* money. They just punch in a number and that's how much money is lend out. It only takes a fraction of a second to create another billion and thereby decrease the value of current money.

CONCLUSION

There are 77 million baby boomers now ranging from age 41 to age 59. All are hoping to collect tens of thousands of dollars in pension and healthcare benefits from the next generation. These claimants aren't going away. In three years, the oldest boomers will be eligible for early Social Security benefits. In six years, the boomer vanguard will start collecting Medicare. Our nation has done nothing to prepare for this onslaught of obligation. Instead, it has continued to focus on a completely meaningless fiscal metric--"the" federal deficit--censored and studiously ignored long-term fiscal analyses that are scientifically coherent, and dramatically expanded the benefit levels being explicitly or implicitly promised to the baby boomers.

Countries can and do go bankrupt. The United States, with its $65.9 trillion fiscal gap, seems clearly headed down that path. The country needs to stop shooting itself in the foot. It needs to adopt generational accounting as its standard method of budgeting and fiscal analysis, and it needs to adopt fundamental tax, Social Security, and healthcare reforms that will redeem our children's future.

(emphasis added)

He complains about how 1-2% annual inflation has been devaluing our savings

Where the hell are you pulling that 2% inflation figure from? Inflation is a monetary phenomena (ie. to inflate the money supply):

M2 M3

had we been on a gold standard, the money supply would have experienced 50% deflation in five years, matching the 1929-1933 10% annual deflation that caused the Great Depression.

You're right, better to hyperinflate into oblivion like the Weimar republic.

He complains about how 1-2% annual inflation has been devaluing our savings

Where the hell are you pulling that 2% inflation figure from? Inflation is a monetary phenomena (ie. to inflate the money supply):

M2 M3

had we been on a gold standard, the money supply would have experienced 50% deflation in five years, matching the 1929-1933 10% annual deflation that caused the Great Depression.

You're right, better to hyperinflate into oblivion like the Weimar republic.

In fact, we build our houses out of bricks, while Americans rebuild their wooden houses every year after the hurricane season!

Here's (pdf) a tidbit. HTML version

Believe me, Kolitkoff is not alone in his predictions, though of course the US could take action to forestall the bankruptcy and reneging on its debts.

Look to Anjan Thakor (Olin School of Business) to discuss Kotlikoff's paper in the next Federal Reserve Bank of St. Louis Review.

So assuming that you are 20 and retiring at 75, every dollar you invest now is about $200 at retirement (or, seen another way it is $20 per year at retirement)

Considering the state of the US economy, the demographics of the US population (hint: it's aging fast) and, perhaps most important to this discussion, this publication (warning: .pdf) by the St. Louis Federal Reserve Bank, that $200US at retirement might have the same purchasing power as that $1US now.

YMMV.

So assuming that you are 20 and retiring at 75, every dollar you invest now is about $200 at retirement (or, seen another way it is $20 per year at retirement)

Considering the state of the US economy, the demographics of the US population (hint: it's aging fast) and, perhaps most important to this discussion, this publication (warning: .pdf) by the St. Louis Federal Reserve Bank, that $200US at retirement might have the same purchasing power as that $1US now.

YMMV.

http://research.stlouisfed.org/fred2/series/WM3NS/ 28

Late 80s M3 figure: 3000
Current M3 figure: 10,000

Price in that time: tripled.

Interesting, eh?

Also, we're not looking into the 90 other ways to create oil other than drilling. There are enough sources of oil, as far as my research goes. Unfortunately this is a hard debate for me, I pay over US$1000 a year for certain newsletters and I can't openly share some of the information. The market backs me up by keeping the price of oil consistent with the supply of money.

Check oil prices per gallon versus the following graph:

http://research.stlouisfed.org/fred2/series/WM3NS/ 28

As the Fed inflates the currency (legal counterfeiting) prices rise. Gas has also had sideways manipulations in additional boutique fuels without licensing additional refineries, and some additional tax burdens inside and outside of this country. War also puts an added supply pressure on the oil we're currently pulling out of the earth, but I see no end to the new discoveries of wells I read about every week. Dig deeper, you'll find more. Leave dry wells alone, they'll regenerate.

...and about a 3% GDP growth rate. Pretty mediocre by U.S. standards, really; we haven't had an unemployment rate as high as yours since about 1985, and moreover, our GDP growth rate tends to average around 3-3.5% per year. We employ more people more often and tend to grow faster all the while.

Nevertheless, compare Finland with current figures for:

* Germany -- a 10.6% unemployment rate presently, and rising, along with a mere 1.7% GDP growth rate.

* Norway -- 4.3% unemployment, 3.3% GDP growth.

* Sweden -- 5.6% unemployment rate, 3.6% GDP growth.

* U.S. -- 5.5% unemployment, 4.4% GDP growth.

* U.K. -- 4.8% unemployment, 3.2% GDP growth.

* Switzerland -- 3.4% unemployment, 1.8% GDP growth.

* Japan -- 4.7% unemployment, 2.9% GDP growth.

* Hong Kong -- 6.7% unemployment, and a torrid 7.9% GDP growth.

All figures taken from the CIA World Factbook (of course, place your own value on stats coming from the same U.S. government agency that overthrows democratic nations, lies on-demand, and kills people on a whim)...

...or, from the carter era, stagflation: when the economy is stagnant but prices *still* rise. i learned about that real-time in my high school economics classes in the late '70s...

the prime rate for loans is currently around 4.5%. do you know what it was in 1980? 20%! 20% prime rate, plus inflation, plus stagnant economy. i remember trying to get a job after high school back then - *very* demoralizing. employers were nakedly contemptuous of job applicants because so many of them swarmed like flies around every job opening.

it can get a lot worse than it is now.

Labor force participation rate way down.

I find that last chart very interesting. If you expand it to a 60-year view, you see that the "Civilian Participation Rate" is still higher than it ever was before the late 1980's, and much higher that it was in 1960. What changed in the late 60's to make civilian participation climb so much? And what's the difference between the participation rate and the employment-population ratio?

For a really good chart, take a look at the historical unemployment rate. It's not nearly as bad as it was in 1982, but it's never been as good as it was in 1952.

Labor force participation rate way down.

I find that last chart very interesting. If you expand it to a 60-year view, you see that the "Civilian Participation Rate" is still higher than it ever was before the late 1980's, and much higher that it was in 1960. What changed in the late 60's to make civilian participation climb so much? And what's the difference between the participation rate and the employment-population ratio?

For a really good chart, take a look at the historical unemployment rate. It's not nearly as bad as it was in 1982, but it's never been as good as it was in 1952.

Labor force participation rate way down.

I find that last chart very interesting. If you expand it to a 60-year view, you see that the "Civilian Participation Rate" is still higher than it ever was before the late 1980's, and much higher that it was in 1960. What changed in the late 60's to make civilian participation climb so much? And what's the difference between the participation rate and the employment-population ratio?

For a really good chart, take a look at the historical unemployment rate. It's not nearly as bad as it was in 1982, but it's never been as good as it was in 1952.

Duration of unemployment ...
way up , near record

and

Labor force participation rate way down.

Bottom line : Bush is jobs fuck up.

Something you Conservo-Libertarian econo idiots will only understand when Bush and Cheney lose their jobs.

Duration of unemployment ...
way up , near record

and

Labor force participation rate way down.

Bottom line : Bush is jobs fuck up.

Something you Conservo-Libertarian econo idiots will only understand when Bush and Cheney lose their jobs.

St. Louis Federal Reserve Data

This the real "unemployment" measure. It's down to the rate in 1980s; after a decade of mass immigration and as the echo-baby boom enters the work force. The Bush administration does not count "contractors" who can't get new contracts and people who haven't found a job in more than 6 months.Nice use of selective data.

Please try the 56-year-view instead of the 5-year-view you posted.

For those not willing to look, job force participation peaked at about 67.5% in 1999 or so (it's about 66% now). But it's been on a pretty steady rise from 58% or so since 1948. And FWIW, job-force participation probably rose since 1948 because of increasing number of women in the workforce. Please note that there are a lot of factors that effect job force participation ("baby-boom echo" having kids, more moms deciding to stay at home, etc). The parent poster blithely blames this on Bush, after selecting the data he wants to prove his point.

Uh. 2 other points: Dukakis was a governor.
How is his voting record comparable with Senator Kerry?

Kerry was Dukakis's Lieutenant Governer, IIRC. And Kerry's the the most liberal Senator.

Also, It's John Edwards who's gonna kick draft-dodger Bush/Cheney's ass.

He'd better decide to win at least one primary before the convention, then. Coming in a close second in one out of every 18 or so isn't going to work.

St. Louis Federal Reserve Data

This the real "unemployment" measure. It's down to the rate in 1980s; after a decade of mass immigration and as the echo-baby boom enters the work force. The Bush administration does not count "contractors" who can't get new contracts and people who haven't found a job in more than 6 months.Nice use of selective data.

Please try the 56-year-view instead of the 5-year-view you posted.

For those not willing to look, job force participation peaked at about 67.5% in 1999 or so (it's about 66% now). But it's been on a pretty steady rise from 58% or so since 1948. And FWIW, job-force participation probably rose since 1948 because of increasing number of women in the workforce. Please note that there are a lot of factors that effect job force participation ("baby-boom echo" having kids, more moms deciding to stay at home, etc). The parent poster blithely blames this on Bush, after selecting the data he wants to prove his point.

Uh. 2 other points: Dukakis was a governor.
How is his voting record comparable with Senator Kerry?

Kerry was Dukakis's Lieutenant Governer, IIRC. And Kerry's the the most liberal Senator.

Also, It's John Edwards who's gonna kick draft-dodger Bush/Cheney's ass.

He'd better decide to win at least one primary before the convention, then. Coming in a close second in one out of every 18 or so isn't going to work.

nothing but anecdotal "evidence"

Evidence for dramatic decline in labor force participation:


St. Louis Federal Reserve Data"

This the real "unemployment" measure. It's down
to the rate in 1980s; after a decade of mass immigration and as the echo-baby boom enters the work force. The Bush administration does not count "contractors" who can't get new contracts and people who haven't found a job in more than 6 months.

Uh. 2 other points: Dukakis was a governor.
How is his voting record comparable with Senator Kerry? Also, It's John Edwards who's gonna kick draft-dodger Bush/Cheney's ass.

" Unless prime > 1 (which it never is), your prime^(prime^prime) calculation tends towards zero."

Wow, someone really ought to tell the Fed about this. Apparently, they seem to think that the prime rate is currently at 4.00%.

Slightly more research seems to indicate that the Fed has been wrong about the Prime rate since their creation. Historical lows as reported by the Board of Governors of the Federal Reserve System (which are obviously either wrong or lying as per your comment) appear to dip no lower than 1.5%, but do seem to go as high as 21%. Thank goodness we have you here to spot-check jokes for correct information and then provide appropriate misinformation.

"Don't quit your dayjob. Unless you're in finance - then quit right away! :)"

Yes, funny man, you've given 'irony' an entirely new meaning.

...everything here costs 10 times more (rent, food, clothing, etc...) than it does in India and China

All we need is a weaker US dollar against Indian Rupees.

Maybe this trend is in progress?

Anyone know if the government levies a tax on software imports?

Here's a site that has a number of other employment indicators one can peruse:

Fred II

One popular alternative to main "unemployment number" is the Help Wanted Index

Here's a site that has a number of other employment indicators one can peruse:

Fred II

One popular alternative to main "unemployment number" is the Help Wanted Index

Most of the rich are entrepreneurs, and most have earned their wealth. Inheritance accounts for about 8 percent of the net worth of these households in the aggregate. More than half have never inherited anything, and inherited wealth is less than 10 percent of total wealth for more than two-thirds of those who have.