The Debt of our nation

[kev374]

A good video even though explained by a dreary sounding voice 🙂 It is a good explanation of what we are up against to those who don’t understand the situation well…

[no_such_reality]

IMHO, it’s time to do anyway with the phrase “Mandatory” programs.

[Jazzman]

Interesting! Thanks for posting.

“End of the Road” by Tim Delmastro doesn’t follow the accounting route in much detail, but explains the spiraling debt and deficit in terms of fiat currencies. Old hat for this forum, but I’m sure will still make one or two re-think their gold positions. How much faith we can put in these predictions I don’t know, as there were no counter arguments put forward. That to me is always suspect. I am not an economist, but you don’t have to be one to know by now that bubbles don’t solve debt problems, they seem to make them worse.

Another major problem is explaining the problem, which you need to do if you’re going to provide a fix. “We’re in debt up to our eye balls, the US economy will crash, taxes must go up, and costs must be slashed”. So everyone gets it, but you are still left with a divided government and special interests. Introduce a parliamentary system?

How likely is a depression just after a major recession? Probably low, but the likelihood of a major (economic) event happening that could tip the balance in the next ten years is probably high.

Preview here. Full version on Netflix.
http://www.youtube.com/watch?v=pfVljXu_eeo

[livinincali]

[quote=Jazzman]
Another major problem is explaining the problem, which you need to do if you’re going to provide a fix. “We’re in debt up to our eye balls, the US economy will crash, taxes must go up, and costs must be slashed”. So everyone gets it, but you are still left with a divided government and special interests. Introduce a parliamentary system?
[/quote]

Best case is probably something like Greece. Default on most of the former obligations and balance the budget via tax hikes and spending cuts. You go into a pretty deep depression but democracy is maintained and eventually things clear up and we grow again. In essence everything becomes pay as you go. Can’t pay for that level of service now than it won’t be available.

Worst case is some kind of hyper inflationary event caused by the government trying to print those promises. That would likely be followed by some kind of revolution where we end up with some kind of dictator that appeals to the masses or the states splinter off.

I figure whatever happens CA will probably go hard core socialist whether it’s with the nation as a whole or by itself.

[Jazzman]

Or perhaps falling off the fiscal cliff, until wings sprout.

[The-Shoveler]

It would not take hyperinflation to resolve our debt, just 7-10% for 5 to 10 years.
(the above is a requirement for CalPers (and a lot of other plans) to continue to be funded BTW, repealing prop 13 may help for a few years but bottom line CalPers projects 7% return on income indefinitely into the future so you will eventually go BK anyway)

The Problem is that’s just not something a large part of the population transitioning to fixed income wants to hear. (Can you say Japan!!)

Interest rates, YES the Fed can control that even in the face of inflation IMO.
I think they have proved they can keep rates exactly where they want no matter what.

[Author]

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