Dear US Citizen, Congratulations! Our country has reached a new financing milestone of $8 trillion dollars to underwrite the last 25 years of prosperity. Through the magic of global capital markets, we have devised a way to spend our tax revenue before we even collect it from ourselves. It is almost like getting someone else to pay a third of our income taxes for us. Almost exactly. Just think of it like getting a great mortgage on a house: we get to live in it now, but we pay for it later. If we signed a standard 30-year mortage on our national loan at 6% interest, our payments would be $600 billion per year, about what we spend on our military. If you make $100K per year, the monthly payment for your share is about $700. But no worries: rather than asking you to pay your share now, we have worked out an arrangement with our creditors to send the bill to your children after you are dead. Over the last few years, our trusted allies in Asia have graciously extended us an advance on a full year's worth of US income tax revenue. The interest payments to China and Japan are about $50 billion per year. That is more than we invest in basic science research, but at least we spent the loan money wisely. Didn't we? Anyway, since we can borrow enough to cover the payments, it doesn't really matter. Does it? Perhaps $25,000 for every man, woman, and child is too much debt to carry. But if we play it right we will only have to pay back 75 cents on the dollar. We borrowed the other 25 cents (two trillion dollars total) from ourselves: American workers! To get the money, we just had to promise that we would pay ourselves a minimal income if we live past age 70. Actually, we did not really ask, we just started deducting the loan from your paychecks in 1986. We called it "Social Security Reform". The only trouble is that we are scheduled to start paying that part back in 2018. That is why it is so important to reform Social Security again now. Hey, they are just paper IOUs, right? If we fail to pay the money back, what are we going to do, sue ourselves? The best part is that we are still loaning ourselves $500 million per day! It is enough to cover the payments on the money we already owe ourselves. Are you confused? Do not worry yourself about it. We will take care of everything. Just enjoy the ride, and keep those dollars flowing! That is the beauty of Democracy: if we all pretend together, there is no limit to what we can believe. Very truly yours, Uncle Sam |