Quote:
Originally Posted by Lucas McCain
Tiny, I don't think you know the actual definition of what a Ponzi scheme is after reading your last post but whatever, it doesn't really matter with all of the nonsense in this forum... at least you were right about Madoff running one so one out of two isn't that bad. LOL
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A Ponzi scheme is "an investment operation that pays returns to its investors from the money of new investors, rather than from profit earned through legitimate business activities." If the federal government continues running budget deficits of 6.5% of GDP it cannot generate the "profit" (government revenues less government expenditures) to repay investors in its debt. And in fact the federal debt held by the public as a % of GDP will continue to grow. The federal government will have to find new investors to replace those who don't roll over treasury instruments at maturity, just like Bernie had to find new suckers when investors in his fund cashed out.
Not only that, but the feds will need more money from investors to fund the deficits. Yes, the federal government is kind of like a Ponzi scheme operator whose lifestyle becomes more and more extravagant. He started out buying a Cadillac and a place in Plano with investor money, and now he's got a garage full of Ferraris and a house in Preston Hollow.
Government has the ability to increase taxes and reduce spending. But will it, sufficient to be able to pay back debtors out of government revenues? That's a rhetorical question.
Edit for above: If you just want attaboys from posters who believe like you do please consider posting in the NYT comments section instead of pushing here to have opposing views relegated to the sand box or deemed off topic.
