Korean Job Discussion Forums

[KimchiNinja]

Every couple years I recalculate the Net Present Value (NPV) of the US Government, for fun. This calc represents the value today of their future income and expenses. Using their 2013 financial statements I calculated it as --> *negative* $133 trillion USD.

US Gov Financial Statements
http://fms.treas.gov/fr/index.html

What is the trend? In 2002 Gokhale and Smetters calculated it at $(44)T, and in 2005 at $(63)T. I attempted to make my rather basic model mirror their core assumptions. To me $(133)T eight years later passes the reasonableness test, given what has happened. Just eyeballing it, I'd say $(200)T by 2020.

Gokhale & Smetters Analysis
http://www.philadelphiafed.org/research-and-data/events/2005/fed-policy-forum/papers/smetters-assessing_the_federal_government.pdf

[Squire]

Intellectual disputation

[KimchiNinja]

[radcon]

So how are you positioning yourself financially for the impending doom?

[KimchiNinja]

[Titus]

The USA can not go bankrupt because she issues her own currency.

[Kuros]

Yup. Impending insolvency is a problem.

Nevertheless, Obama "compromised" and he and the Republicans extended much of the Bush tax cuts. Also, military cuts remain modest and minimal. Banks must continue to get their subsidies, of course.

There's no money for unemployment or food stamps, though.

[KimchiNinja]

[Titus]

130T isn't a gap. It is the majority of aggregate money supply. Given the system as it is USG needs to go into debt to expand the money supply. There would be a more humane way of doing things, but we're not blessed to live under such a system.

As the private economy accelerates the deficit will decrease in # terms and the debt will decrease in real terms. This can go on for a long time.

The majority of workers are seeing and will continue to see their standard of living decrease, but that doesn't really matter as the economy doesn't need them anyway. Paradoxically, "the economy" can improve while as the same time the average standard of living decreases. In fact, corporate profits will increase as labor costs decrease, leading to more investment in productivity etc.

The risk to USG is in the dollar losing reserve status, a civilization ending war with Russia, a major oil shock, natural disaster, etc. These things we can not predict. Absent a sufficient shock the majority will enjoy the slow grind down.

The USA will not default.

[KimchiNinja]

[KimchiNinja]

Fed Scrutiny of Leveraged Loans Grows Along With Bubble Concern
http://www.bloomberg.com/news/2014-10-01/fed-scrutiny-of-leveraged-loans-grows-along-with-bubble-concern.html

The fed (the bubble maker of all bubble makers) policing the bubble makers.

What's funny is that these potential bubbles are forming because of Fed actions. Fed tries to hold interest rates low, so bankers go chasing yields (high risk leveraged loans), the bankers create a bubble because there is no punishment if bets go bad, the bubble pops, and the govt will need to bail them out again, with money they don't have, and the gap will widen further. But if they let rates rise the gap widens because they have to pay massive interest to China.

Check mate Janet.

[lithium]

[Kuros]

[KimchiNinja]

Meh, republicans and democrats -- these chumps are equally bankrupt.

[GENO123]