Thursday, October 28, 2010

Let's Get Real "The U.S. is Bankrupt"

Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”

Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble – far worse than the Washington-based lender of last resort has previously acknowledged. “The U.S. fiscal gap is huge,” the IMF asserted in a June report. “Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.”

This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF’s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling – and possibly worse than appalling.

Prof. Kotlikoff says: “The IMF is saying that, to close this fiscal gap [by taxation], would require an immediate and permanent doubling of our personal income taxes, our corporate taxes and all other federal taxes.

“America’s fiscal gap is enormous – so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems – as well as military and other discretionary spending cuts.”

He cites earlier calculations by the Congressional Budget Office (CBO) that concluded that the United States would need to increase tax revenue by 12 percentage points of GDP to bring revenue into line with spending commitments. But the CBO calculations assumed that the growth of government programs (including Medicare) would be cut by one-third in the short term and by two-thirds in the long term. This assumption, Prof. Kotlikoff notes, is politically implausible – if not politically impossible.

One way or another, the fiscal gap must be closed. If not, the country’s spending will forever exceed its revenue growth, and no one’s real debt can increase faster than his real income forever.

9 comments:

  1. "Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”

    bankrupt Ponzi economy is true.

    But..

    His figures , on government official debt @60% of current GDP seem to be way off base?

    The CIA world hand book says:

    https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
    GDP (purchasing power parity)
    This entry gives the gross domestic product (GDP) or value of all final goods and services produced within a nation in a given year. A nation's GDP at purchasing power parity (PPP) exchange rates is the sum value of all goods and services produced in the country valued at prices prevailing in the United States…. ..US GDP =$14.26 trillion (2009 est.)

    The minimum figure $13.5 –trillion is a lot more than “6o%” of that last years official GDP figure!

    GDP figures are generally an accounting nonsense dreamed up by economists and said by them to be a scientific measure.

    Yet, for example the 1.5 trillion dollar government deficit spending this year ,debt creation by printing money ,will be added in to the GDP Total ,as the counterfeit money is spent or handed out as bailouts.
    As if this is was “production” of wealth.

    The more Ben prints the more GD”P” grows !

    Tax revenues as are falling, un- employment is growing , but any dole money issue will be counted as GD “P”.
    America is a services based economy , a bankrupt de-industrialized Ponzi economy ,that pre crisis was running on foreign supplied credit .
    And that foreign supplied credit/debts, was of course counted in as American GDP
    !

    ReplyDelete
  2. I don't think much of these projection based evaluations. Today I am debt free and own my home and have money in the bank. But using these kinds of methodologies I am really a couple hundred thousand in debt. I project that the gas I will buy in the next 20 years will cost $15,000. I project that as I get older my medical bills will climb drmatically and I will have to pay about $50k. Then there is the insurance on my car at $450 a year; another $9000. Damn! I'm really $500K in debt!!

    ReplyDelete
  3. I am debt free and I own my home. If every person in the country were also debt free and owned their homes, we would be in pretty good shape. It's not going to happen, but it's a nice thought.

    I could have home owners insurance (responsible citizen) and my neighbor does not (irresponsible bankers, liars, governments). One day his house burns and takes mine with it. So sorry he says as we're standing in the ash pile of what was once our homes. Naturally he has no money and a burnt to the ground, house. Because of his lack of responsibility, my home is gone. The moral of the story is, no matter how responsible you are, no matter how closely you follow the rules, you can still lose everything.

    > I am debt free

    > The federal government continues to spend money they don't have

    > State governments continue to spend money they don't have

    > Perhaps someday soon, the state you live in will become a colony of China

    > I'm debt free and responsible.

    ReplyDelete
  4. Get real, the US has plenty of money. Printed as needed. We have lots and lots of money. Just ask Barry, he loves spending it!

    ReplyDelete
  5. " And no one's real debt can increase faster than real income forever "

    Wanna bet ?

    Welcome to Ponzi - Fiat 101 and I keep on saying it and apparently the well educated people writing these humurous little articles of injecture and inuenduo just don't get it.

    We are a world economy - there is a reason China still gobbles up our debt obligations.

    As long as the people of the world THINK the almighty dollar is worth a dollar guess what
    assholes !

    It's worth a fucking dollar ! And I don't give a shit if you just printed a Quantillion of the bastards so long as some dumb ass in Azeristain will bust his nuts 16 hours a day to get one;

    We're safe

    ReplyDelete
  6. Is that a comment from Sam the money printer or by the "economist" Klugman?
    The comment, just like klugman got , deserves a noble prize in economic fantasy!


    Well anyway that’s also the American strong dollar forever dream ,as asserted by a more arrogant than Sam 4.27
    And as also asserted by Ben at the Fed, those that THINK that they can print money to infinity and the strong dollar hegemony will last forever.
    That a dollar will retain its value because the world will continue to THINK it has a strong value and that anybody that does not agree with that arrogant opinion are 'guess what assholes".
    Do you think it makes your own opinions “tougher” , more “realist”, by using what you think is non pointy headed non academic ,Joe SP superior language style ?
    Well guess what arrogant amerikan "Asshole" yourself?
    In case you have not noticed , the strong dollar hegemony system is already dead .

    That precisely is WHY the US has been forced to turn to the printing press as a last ditch effort to try and keep the dollar system in play to save the ponzi economy .

    You say"We are a world economy - there is a reason China still gobbles up our debt obligations."
    But havent you noticed the Chinese have cut back on buying Treasuries and the Fed is now the big Buyer of american debt today ?
    QE2 is on the way for that!
    The Ponzi died because the credit markets/ foreign investment supply to america died in 2008 because foreigners and American investors would no longer invest in american property assets and dud bond paper that they THOUGHT was not capable of giving a real strong dollar value return.
    For example for Freddie And Fannie mortgage bonds.

    So, Its now too late for this old propaganda , the Great Ponzi economy based on the dollar hegemony system is already dead.

    Bleat all you like about what you THINK the dollar is worth in “Azeristan” and that this will last forever ..
    'It's worth a fucking dollar ! And I don't give a shit if you just printed a Quantillion of the bastards so long as some dumb ass in Azeristain will bust his nuts 16 hours a day to get one;"
    Until they wont!
    Until they THINK, and find in everyday practice , that with all the money printing the American dollar will not be worth a rats toilet paper tomorrow.

    It is true of all fiat currencies thatthey only have value because of a confidence, that the money you get today will be worth the same tomorrow.
    While two thirds of actual printed dollars circulate as currency outside of America it could in the past be seen as a convenient store of wealth a standard of value in countries that may not have their own strong internal currency. This actual ,on the ground in the markets circulation helped to create confidence the dollar as the world standard of value.

    But .its not really some "dumb ass in Azeristan" Americans need to worry about, but The Fed counterfeiters gang and about the "Dumb assed" Chinese and other international elites are finally waking up and will stop exchanging their cheap labor products for paper and expecting that by investing their savings in Treasuries as vendor financing for US consumers they can make a real world value profit.
    The Fed has been devaluing the "strong dollar" for years and now has turned to the printing press in a desperate attempt to prop up the Ponzi by printing profits .It will be a never ending process as America tries to inflate away the cost of its debts.
    This excess money supply of printed paper is bound to lead to inflation with too many worthless dollars chasing after real commodity value, not only in dumbassed "Azeristan"and China ,but in Dumbassed america too.
    So that even in America itself it will not matter what people THINK their ‘strong “ dollar is worth internationally that matters , but the on the ground ,retail facts in America that a devalued dollar even in America will buy less in real world value .

    ReplyDelete
  7. Is that a comment above from Sam the money printer ,or by the "economist" Klugman?
    The comment, just like klugman got , deserves a noble prize in economic fantasy!

    Well anyway that’s also the American strong dollar forever dream ,as asserted by a more arrogant than Sam 4.27
    It is true of all fiat currencies that they only have value because of a confidence, that the money you get today will be worth the same in exchange tomorrow.
    And as also asserted by Ben at the Fed, those that THINK that they can print money to infinity and that the strong dollar hegemony will last forever.
    That a dollar will retain its value because the world will continue to THINK it has a strong value and that anybody that does not agree with that arrogant opinion are 'guess what assholes".
    Do you think that by using your idea of Joe six pack superior language style
    it makes your own opinions “tougher” , more “realist”and “patriot” plus ?
    Well guess what arrogant American "Asshole" yourself?
    In case you have not noticed, the strong dollar hegemony system is already killed from excess debt money printing .

    That precisely is WHY the US has been forced to turn to the printing press as a last ditch effort to try and keep the dollar system in play to save the Ponzi economy .
    The Ponzi died because the credit markets/ foreign investment supply to America died in 2008 because foreigners and American investors would no longer invest in overvalued American property assets or dud bond paper that they THOUGHT was not capable of giving a real value return.
    For example ,for Freddie And Fannie, mortgage bonds.

    So, Its now too late for this old strong dollar “patriotic”propaganda .
    While two thirds of actual printed dollars circulate as currency outside of America it could in the strong dollar past be seen as a convenient store of wealth ,a standard of value in countries that may not have their own strong internal currency.
    This actual, on the ground in the markets world circulation ,helped to create confidence in the dollar as the world standard of value. That is history.
    Bleat all you like about what you THINK the dollar is worth in “Azeristan” and that this will last forever .

    'It's worth a fucking dollar ! And I don't give a shit if you just printed a Quantillion of the bastards so long as some dumb ass in Azeristain will bust his nuts 16 hours a day to get one;"
    Until they don’t!
    Until they THINK, and find out in everyday practice , that with all the money printing ,the American dollar will not be worth a rats toilet paper tomorrow.


    But .its not really some "dumb ass in Azeristan" Americans need to worry about, but The Fed counterfeiters gang and about the "Dumb ass" Chinese and other international elites are finally waking up and will stop exchanging their cheap labor products for paper and expecting that by investing their savings in Treasuries as vendor financing for US consumers they can make a real world value profit.
    The Fed has been devaluing the "strong dollar" for years and now has turned to the printing press in a desperate attempt to prop up the Ponzi by printing profits .It will be a never ending process as America tries to inflate away the cost of its debts.
    This excess money supply of printed paper is bound to lead to inflation with too many worthless dollars chasing after real commodity value, not only in dumb ass "Azeristan"and China ,but in Dumb ass America too.
    So that even in America itself it will not matter what people THINK their ‘strong “ dollar is worth internationally that matters , but the on the ground retail fact in America that a devalued dollar even in America will buy less in real world value .

    Thus while a fiat currency depends on confidence in its future value ,confidence is lost in practice in the real world markets national and international , when its confidence in its value is inflated away.

    ReplyDelete
  8. How much is a quantillion? You mean quintillion? It seems like they might try to print an omegillion. We'll be safe.

    You retard. What are you 17?

    ReplyDelete
  9. What's all the fuss? The USA is bankrupt but so is everyone else.

    The dollar is fiat but so are all currencies.

    What are we gonna do - foreclose on each other?

    We are bailing each other out and having arguments about socialism/capitalism.

    The trouble is that money has become too abstract. Wealth is divorced from production.

    ReplyDelete

Everyone is encouraged to participate with civilized comments.