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Thursday, January 26, 2006

Deficit accounting explained

Dave Pollard writing at How to Save the World has this excellent explanation of deficit accounting:
By this analogy, the 'shareholders' of the US are its taxpayers. They should be outraged that their assets are being given away, and their 'investments' (taxes paid) so badly mismanaged. Imagine if Google or Microsoft were to do this: Their shareholders would not be happy to learn that to pay off their huge debts it would be necessary to sell off priceless corporate assets at fire-sale prices to friends of management. If this was tried in the private sector there would be a hastily-convened special general meeting of shareholders and directors, and the managers would be fired and possibly charged with negligence and imprisoned.

But because no one knows what 'y' is (the real, rapidly-increasing value of all public holdings), we can't audit Bush's sell-offs to discover how cheaply these assets are being sold off -- though the discounts will eventually have to be made up by the next generation's taxpayers. And as a result we can't tell either how much is left to "drown in the bathtub". And that means we don't know how necessary it is, and will be, to cancel or privatize all government social services and programs to reduce the need for even more fire-sale sell-offs of taxpayers' property.

Settle in for a few minutes to read the full posting.
It is worth the time!
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