Video instructions and help with filling out and completing Will Form 5495 Liabilities

Instructions and Help about Will Form 5495 Liabilities

Music myths about the government debt myth number one the government owes 20 trillion dollars how much is 20 trillion dollars suppose you go to Germany and in Germany you go to every town in every town you visit every store and in every store you look at every shelf and grab everything that is for sale the amount of money you spend will not be twenty trillion dollars if you go to Germany and then to France and you go to every town and within every town you go to every store and every store you look at every shelf and you buy everything you still will not have spent twenty trillion dollars you can go to England and while you're there you can go to the North countries and buy everything that's for sale and you still will not have spent twenty trillion dollars in fact to spend twenty trillion dollars you have to go to every country in Europe visit every town in every town go to every store in every store look on every shelf and buy everything and then you will have spent about 20 trillion dollars but the myth is that this is how much money the government owes it turns out that there's more called unfunded obligations unfunded obligations is money the federal government has promised but which it does not and will not have the money to pay largely this consists of promises of retirement and medical benefits if you would take the present value of all the future promises of retirement and medical benefits the government has made and subtract from that the amount of money that's in the government's Social Security and Medicare trust funds and then subtract from that the amount of money the federal government anticipates collecting under the current law from future Social Security and Medicare taxes you'll still have an amount of money left over that the government does not have and that's the unfunded obligations an amount of money the government has promised which it does not and will not have the money to pay estimates of unfunded obligations vary from the astronomical to the unbelievable on the low end people have estimated on obligations to be about 80 trillion dollars on the high end 200 trillion so this means that the federal government's total financial obligations range somewhere from one hundred to two hundred and twenty trillion dollars let's say roughly speaking the federal government owes about a hundred and fifty trillion dollars myth number two the government owes 150 trillion dollars well it turns out there's more to it there are federal agencies that don't appear on the federal government's budget they're government-sponsored enterprises like Fannie Mae and Freddie Mac that don't appear on the government's financial statements and they owe another eight trillion dollars there's then state and local governments that collectively owe about three trillion dollars and have another five trillion in their own unfunded obligations so when we put it all together the total u.s. governmental financial obligations total about 165 trillion dollars myth number three government borrowed from the Social Security trust fund isn't really debt because we owe it to ourselves well it turns out there is no ourselves here the trust fund belongs to current and future retirees so when people retire and the government does not have the money that has promised them one of two things must happen either the government must increase taxes on future workers to pay for the Social Security and Medicare obligations it has promised or the government has to cut the promised Social Security and Medicare benefits that had promised to retirees either way someone must pay myth number four the government can't go bankrupt this is technically true because the government promised to pay back a certain number of dollar bills and so as the government starts to run out of money it can simply print more thereby satisfying its obligation but while that's technically true it's effectively false because when the government prints money it erodes the purchasing power of dollars thereby creating inflation for example suppose you have a bunch of people and these people buy things they buy things from Walmart from it and Ford and in buying these things they give these businesses money in return they receive goods and services from these businesses the ratio of the dollars they pay to the goods and services they receive we call prices so we have the average price of a hamburger the average price of a pair of shoes the average price of a car now if the government were to print enough money to double the money supply we would have twice as many dollar bills floating around but the same amount of goods and services all that would happen is the prices of these goods and services themselves would double so with twice as many dollar bills a hamburger now goes from a price of $4 to a price of eight the car goes from $30,000 to a price of $60,000 and one of the prices that will double is people's wages interestingly you're left with the following under scenario one without the government printing money let's suppose you earn $50,000 a year and the price of a hamburger shoes in a car things you would buy are four thirty and thirty thousand and then along comes the government and prints lots of money and in printing the money it doubles all the prices including your income so now in scenario two you're earning twice as much as you were before one hundred thousand dollars but the prices of the things you buy have all doubled as well and so if I ask you are you better off in scenario one or scenario two the answer is you're the same in both it doesn't matter to you whether you're earning $50,000 and a car cost 3000 or whether you're earning $100,000 in a