Tuesday, June 8, 2010

Ponzi scheme

Posted by parallel

Further to Gil's piece "Two Americas: Public Workers v. Private Workers." This seems apt. From the Daily Pfennig, Chuck Butler writes:

..reading my friend, David Galland's, letter yesterday, and he addressed this whole thing in a way that only David could do... So, let me set this up for you... David discusses the forecast that the deficit will reach 100% of GDP in 2012... So, here you go... My friend, David Galland...

"Thus, in order to reverse the steady rise in its debt, the government will need to collect more revenue from the citizenry trapped under its boot heel. Err, I mean, “under its warm and protective wing.”

Ironically, on the order of 65% of all U.S. government debt is owed to the American people. Thus, in order to pay them their modest yields, the government must first lift them out of their pockets.

It is the very definition of a Ponzi scheme, with the exception that this one is legal.

Oh, I suppose that if the government actually had even the scintilla of a chance of getting ahead of its debts, it wouldn’t technically be a Ponzi scheme. However, when you add the total future obligations of the government of these United States to the nominal debt, the sum becomes an order of magnitude greater than $14 trillion – $50 trillion? $70 trillion? – so a Ponzi scheme remains the accurate description."

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