Posted on 03/13/2017 9:23:16 AM PDT by Sean_Anthony
That's 370 percent of GDP, but hey, why change anything we're doing?
Exceptional work here from economics writer George Melloan, a one-time member of the Wall Street Journal editorial board and an one of the few who really understands the role currency, interest rates and the Federal Reserve plan in setting the nation’s fiscal course.
But within a piece that deals with a fair amount of esoterica, Melloan almost matter-of-factly gives us a jaw-dropping fact: This nation is absolutely drowning in debt:
Without progressivism it would be a lot smaller.
But we can reassure our impoverished posterity that we cared so very much and meant well!
Drain the swamp. Cut FedGov workforce by at least 75%. Cut entitlements at least 50%, and start by cutting off ALL illegal aliens.
US Unfunded Liabilities is $105 TRILLION. See bottom panel in the link.
The federal workforce is bloated and there is massive redundancy across many of the federal agencies. Lots of room for cutting.
I’ve heard figures that go all the way up to over $200 Trillion. How are these numbers arrived at?
Its the different between all your current bills (monthly utilities, credit cards, car payment, etc) -vs- the actual amount you PROMISE to pay for other things. (Your house total mortgage, Your children’s colleges coming up in the future, the next car you will be buying when this one dies, etc)
As I said on a previous thread, the $60 billion paid on the debt just don’t cut it.
The hair-pulling about the national debt is interesting, as there are very few, if any, actual “symptoms” that the debt is currently hurting us.
Traditionally, in Keynesian economics, deficits were reflected in rising interest rages (virtually zero), higher labor costs (low), commodities prices rising (not silver, gold, or most of the metals), food prices skyrocketing (here we see a small amount of price increase, not much), and fuel prices rising (no. About where they were 8 years ago).
I have worked on a hypothesis for some time to explain this, and it has to do with astronomically rising productivity that is NOT being captured in real-world values. One example: the cell phone. Traditionally the way of measuring the increased productivity of a phone is to compare it to a previous generation for price, speed, ease of use, whatever. Well, a cell phone bears no resemblance whatsoever to a phone of 1970. It’s not even a phone. It’s a GPS, game device, computer, e-mail service, stereo, camera, on and on.
The proper way, in this instance, to measure a cell phone’s added value would be to line up every single one of the products that USED to do those functions and price the gains over each, then add the gains together.
Hold on. I’m getting back to debt.
It’s not just phones. A car now is a sound system, has it’s own GPS, some have TVs, some have cameras-—replicating many of the things a phone does. On-board computers, as pesky as they are, keep fuel costs down, improve safety, and help watch maintenance.
So here’s the point. In every single area of life, from grocery stores to hospitals, computers in the last 25 years have so geometrically expanded the productivity of devices that traditional valuations just could not keep pace.
Remember econ 101? What’s inflation? “Too many dollars chasing too few goods.” Well, we have had, for several years I maintain, massive deflation with “too many/too high-quality goods chasing too few dollars.” The valuations are wrong. The market hasn’t begun to catch up to these real valuations.
Our national debt is still measured in 1900s standards. Just for one example, any gold the US holds is measured in dollars of the year it was purchased. Same with real estate.
If the feds chose to correctly market value our land alone, the US would have a massive surplus. “Yeah, but you can’t sell the Washington Monument.” No, but you can sell overpriced office buildings in DC and move to less expensive facilities at the savings of hundreds of millions of dollars. You can sell fed land in the West that it has no business owning.
In short, the reason there are no symptoms of debt-disease is because the debt in REAL valuations is still not up to American assets, let alone valuations of productivity.
QE-1, 2, through 100 haven’t made a dent in this because we are still trying to catch up to 25 years of the money supply failing to keep up with productivity.
Just my hypothesis. Not very popular around here.
“...Lots of room for cutting.”
Why make any cuts when we can just print more money? ;-)
And that is not all of it.
Other than the impossibility of any of that happening, sounds like a great plan!
I would submit to you that the reason we can keep half of the canaries flying about in the cabin is because of the Petrodollar. Whatever weakens that threatens the whole thing.
Which is why I’ve joked that if there ever was an alternate energy source that was truly economical to use to come along that Congress, the Democrats in particular, would rush to outlaw or restrict it.
Because the Petrodollar is the only thing maintaining the illusion that liberalism in this country is viable
Maybe, but that doesn’t account for the lack of inflation anywhere. It’s contra Friedman at every level.
One assertion I’ve heard is that we likely should be in a deflationary meltdown. Basically: on this side of us is Scylia, on that side Charybdis, with us waiting to see which one we finally draw too close to.
But I’m actually not attached to that.
You make a good counterpoint! :)
The Fed money printing machine saves the government from having to raise our taxes to pay for things. The powers that be have been content to let the Fed print “prosperity” for them and to pay for our foreign adventures. But what they don’t want to talk about is the massive $20 Trillion debt and $105 Trillion in unfunded liabilities that are hanging over us like the sword of Damocles.
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