The Unfunded Liability Death Trap
How America Dies
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Right now I am working on the Longest piece I’ve yet written for Anarchonomicon, laying out my theory of how the next 15-20 years of history is going to play out. This is taking longer than expected, but In the midst of it I’d realized there was this short Standalone section, that I’d really REALLY like to Highlight to people:
The Death Trap
Libertarians Economists have been predicting this collapse of the federal system would happen “By About 2030” since before 2008. I remember in high school in the early 2010s listening to Ron Paul lectures and visiting USDebtClock.com, this was a hot button issue after 2008… (then of course there was no political will to do anything and everyone just stopped talking about it)
I honestly forget that everyone around me doesn’t already know this, this is so common and accepted in libertarian and economic circles, and everyone who knows it got bored of eyes glossing over when they tried to explain it (in an autistic panic) decades ago.
US Unfunded liabilities:
Social Security, Medicare, Medicaid, US Debt, and Federal employee benefits and pensions, are all basically intergenerational ponzi schemes that require constant 1950s level population growth amongst the productive tax paying middle-class to maintain By 2000 it was obvious this population growth was not happening, that population was beginning to age and collapse, and NO, the illegals at the border weren’t adequate replacements…(they weren’t adequate to prop up federal expenses in 2000 when they were still Mexican, now that they’re Guatemalan, Haitian, and Senegalese they’re almost certainly a net drain)
The Spector of Mass Boomer retirements with few to no children and grandchildren to replace them and pay for all the costs of their retirements and healthcare was maybe the slowest but most assured crisis ever to be seen in human history… Demographics is destiny.
This was a foreseen problem in 2000 when US Debt to GDP (just the portion that’s already been spent and interest has to be paid on) was 59% of GDP. Today the US Debt to GDP ratio is 122% of GDP whilst just in the past 24 years Absolute US Federal Debt (not including state or local) has grown from 5.6 trillion dollars to 34 trillion dollars (102k per citizen: man, woman, and child). just the interest that has to be paid out of your tax dollars on that debt is set to eclipse ALL US Military spending sometime this year… And by 2028 Debt to GDP will be 150% (46.4 Trillion, 132k per citizen, 12 trillion more in 4 years, with no additional spending bills) and the Interest (at current estimates) will be over 2.5 trillion dollars, over a third of all Tax Dollars brought in will be spent on just interest, because dollar confidence has collapsed and the only way to keep inflation from destroying the dollar has been to radically raise the interest rates the Federal Reserve offers.
Now all that, That catastrophic state of things, is just the debt, the money that’s been spent… The real crisis is the Unfunded liabilities, all the promises the US has made to Boomers (who dominate the vote) and others about money they’re GOING to spend.
As of now total Unfunded liabilities stand at 213 trillion dollars, $633,000 per US Citizen (Man woman, and newborn babe)… These are all dollars the US has promised to pay to someone somewhere at some point: Social Security, Medicare, Medicaid, Federal pensions, VA Benefits, etc. And cannot in any politically feasible way restructure or get out of.
If no one ever contributed another dime to social security, and in so doing was promised in turn significantly more than that dime (it’s a ponzi scheme, it loses money in proportion to and at a greater rate than the money being contributed to it (every dollar you contribute you’re promised multiple dollars in return, and your dollar is not invested, it just pays off previous contributors))… If everything froze and every young person was locked out of ever receiving Social Security, Medicare, or Medicaid, the Unfunded Liability would be $633k per every man, woman, and child… that’d be the debt a newborn American would be born with.
However because it is NOT frozen and it will not be, by 2028 that number will Rise to $837k and an ordinary household of 4 will have seen their, politically unavoidable, family obligation in future tax payments to the federal government increase by $804,000 in just 4 years.
If your response is that your family doesn’t even make 804k in 4 years and there’s no way you could ever pay that much in 4 years given its just going to increase at a faster rate the next 4 years… CONGRATULATIONS! 90% of families don’t make that much, and less than 1% of families could ever afford to pay that much in taxes in a 4 year time.
This has been slowly growing for decades, and in the late 2000s and 2010s Ron Paul types were screaming that those Benefits needed to be reformed NOW (in 2008) or they’d drown America. But of course, cutting benefits is political Anathema to boomers, so nothing was done…
Now in the next 4-8 years, there is almost certainly going to be a recession, tax receipts will collapse, and all of this will go Asymptotic. Likely these numbers are understating it because they assume good economic performance and no additional massive spending bills. And you can bet as soon as things start to go the market will crash and congress will pass a 5 trillion dollar spending bill to “Help Americans” with the crisis. And no! Passing a massive SPENDING bill to deal with a SPENDING crisis is not beyond them, they did the exact same thing during COVID, when their ruinous economic lockdown was papered over with debt spending the economy was being prevented from affording because of their lockdowns.
Sometime soon, the economic weight will become non-viable, like a broke gambler doubling his bet each time he loses, the debts will go exponential then asymptotic… and instead of a a lifetime to find a way to squeeze all that money out, there will be a crisis, and the American, probably “provisional” government at that point, will have to decide:
What is to be done…
By 2030 approximately 1 million dollars per American man, woman, and child will be promised to someone somewhere in America, that cannot be paid, and with the system collapsing they will have to be told will not be paid. Every American Man, Woman, and Child will be 1 million dollars poorer than they think… And then very suddenly they will be aware of that fact.
And basically no other country in the west, or indeed most of the world, is any better, indeed some are worse. (this is the system FDR and Truman and all your postwar progressives built and replaced pre-war Capitalism with, the “greatest generation” was indeed the worst)
Around 2030 all Americans are going to have to turn on eachother and carve that missing million out of their fellow citizen… This might be millennials becoming even greater debt slaves, this might be boomers kicked out of nursing homes to beg in the streets, this might be ethnic conflict to either make the white middle-class pay 2x the income tax forever, or a violent assault on the black inner-city to destroy the millstone of welfare America once and for all and free up millions in real estate in now usafe cities… This might take the form of a communist revolution, the confiscation of all real estate, and the forcing of Americans into work camps, this might take the form of the mass slaughter of Federal employees and IRS agents so that no federal insurance schemes can ever be paid out and no pensions because the government employees are dead… This might take the form of mass Euthanasia of cancer patients, drug addicts, and the non-working… Everyone who shows up at hospital and isn’t expected to be net profitable, axe em.
But one way or another when it gets so high that the economy has a downturn or crash: 1 or even 2 million dollars (depending on the spending bills they pass on the way down) per man, woman, and child will have to be carved out of some American somewhere… Even if you say “Just End Social Security, Medicaid, Medicare, and the VA” that’s millions individual Americans, and veterans, are owed and depending on.
This is why competition between factions of the elite suddenly seems way more high stakes… They’re the ones with money and fortune, and are obviously responcible for this state of affairs, it is them who are obviously going to be scapegoated and crushed… unless of course they can grasp power and make some other faction of the elite pay an even more horrible price.
But either way, “Liberal Democracy” the modern progressive welfare state? It’s not going to survive. By 2030 the Crisis will be very apparent, and nothing resembling the current governments will survive past 2040.
Like the Bourbon Monarchy in France or the British and French Empires after Suez they will very quickly die of their pocket books, and unlike the British Empire none of these governments have high cost imperial possessions they can just jettison and accepts a few lost decades at home. The centers of expense they can’t maintain aren’t in their far flung colonies, they’re in their capital cities, their nursing homes, their hospitals, their retirement communities, and their wounded veterans. The French and British could ditch Indochina, Algeria, Pakistan, India, and all their other expense centers to “independence”… The US and western welfare states can’t just say they’re recognizing the “independence” of their wounded veterans and elderly and cut them off…
It’s much more like the France before the revolution, where everyone who’s demanding something has to fight each other.
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Follow me on Twitter: @FromKulak
"The US and western welfare states can’t just say they’re recognizing the “independence” of their wounded veterans and elderly and cut them off"
Just watch them.
Also: this is why the MAID program exists. It's also why fentanyl is being allowed to flood the streets. Every dead useless eater is several hundred thousand in unfunded liabilities off the balance sheets.
I hope fiscal collapse will convince red states to secede, since fedgov is broke, and convince the blue states to let the red states secede, since the blue states subsidize almost 2% of a red-state person's income, on average, through the federal government.
This is primarily because blue-staters have higher incomes and so pay more income tax. But red states have such a low cost of living that red states have a higher overall standard of living and don't need the blue states.
However, when governments face this fiscal problem, they always inflate currency enough so that they can afford to pay what's left of their obligations. Of course, this will cause a collapse in confidence in the dollar, which will make imports much more expensive, and so reduce American standards of living. But exports will become more competitive.
I just noticed Kulak commented that inflating the currency would mean retirees would not get paid enough to live, so the problem remains. True. Either we ramp up the real value of transfers to retirees, or they have to live with less than they were promised.