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Originally Posted by flstf
How big of a deficit is too big before the monetary system breaks?
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Define 'break'? You can have a monitary system with a debt 100 times the nation's GDP. It won't be a very useful one.
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How much of a tax is too much before the economy fails?
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Define fails?
As you decrease the marginal incentive to produce, production tends to go down, if all other variables are held constant. All other variables are not held constant. (there are situations in which a pay, or incentive, raise results in less production)
With 100% income tax, production will still be done. Most of it may be underground, but it will still happen.
There are probably points of crisis along those lines. But the economy never shuts down, and the money system never disappears in a puff of smoke.
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Originally Posted by KMA-628
Isn't spending more than you tax overspending? You kinda lost me on this one.
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Spending more than you tax can be called overspending or it can be called undertaxing. Over/under spending and over/under taxing can be problems in and of themselves which are distinct from spending more than you tax.
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Originally Posted by KMA-628
Anyway, onto your previous question....
What I said above was that where exactly SS revenue goes means very little to me. That is because the design of the system itself is that it is self-supporting, thus, must be accounted for separately, regardless of where the funds go.
Since the program is supposed to be "pay-as-you-go", we have to make sure that the system brings in more than it spends, other wise the system becomes a liability, which is not what was intended.
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The system is not supposed to be "pay-as-you-go". There is a designed social security surplus, to pay for future social security costs, since the 1980s. It is supposed to have a surplus. It is supposed to start running a deficit starting around 2018 or so. This is what is supposed to happen.
From what I can tell, the point where it uses up it's surplus and starts having to borrow money from the rest of the federal government is so far in the future there easily could be massive demographic change by that time.