Here is a useful site for digging into this sort of thing: http://www.treasurydirect.gov/tdhome.htm The only questions are how does one tell when it is starting to fall aprt and how will it play out.
So what is our inflation trading vehicle of choice? We can't all just sit around while our hard assets ride the wave up.. we'll need some cash flow..
Not as bearish and in a panic as this guy that wrote that article. Everywhere I see projections for 2050, not just 2016 like in article, for entitlements (medicare, medicaid and social security) to be about 18% of GDP. That is up from about 8% now. Not that I agree with Krugman that if current Keynsian stimulus doesn't work, we can always blame Bush, I do agree with spending now. After WWII we had a huge debt, but this was a debt that we needed to fight the war. Todays 'primary' war is the economy. This investment by the gov't will pay off in multiples when the economy expands. The programs like TARP will end up being great investments. As far as entitlements being such a large part of GDP, I question the pie chart in the article as previously mentioned, it does not take into account technology. Is it out of the question that you walk into a scanner and the computer tells you whats wrong with you? We have that now I have heard, its ridiculously expensive, like $20k. But for example, my flat screens cost me $1600 apiece in 2004, they are $85 now on Dell Outpost. Doctors are doomed in the future. There will be little need for anything but surgeons.
The feds can't let inflation much past 3 points or so. Interest on the debt is already 8 percent of the budget. By the end of this presidential term, the debt will be about 15 T, and interest about 10% of the budget. But if inflation spikes - say it triples, then we'll be forking over 30% of the budget just in interest. Then consider that much of the budget is a deficit. Say 25% is. It'll probably be more, but that's a reasonable guess. That means interest on the debt will be about 40% of "income". There's a fair amount of wiggle room. For instance, while most of our debt is financed via short term treasuries and thus is very interest sensitive, a big chunk is locked in. Also consider the implications of 15 T. There are about 300mm people in the country. If we had to pay off the debt, probably half of them wouldn't pay anything. Figure half of us would be paying the bill. 300 T/150mm equals 100k per every one of us. 100 large. 200 if you are married. Holy moly. Also, about half the debt is financed via the social security surplus. The feds have traditionally taken in more money in SS than they have paid out. So they used the excess dollars to fund massive spending - sort of like buying treasuries with it. Treasuries with no interest. But that surplus is about to stop accumulating and start draining, which means bye bye interest free loans. Every time I consider this debt, I start thinking about buying a truckload of Spam, a couple shotguns and getting out of town.
Taxes will rise. Drastically. Not just the US, Europe too. Especially for high incomes. 70% marginal income tax anyone? I don't think one can't rule it out.
The central problem with your thesis is that after WWII, there were 4x as many working aged people for each senior citizen/retired person - - now, it's just the opposite. It's an upside down, demographic pyramid. 1 person working to support the entitlement system for every 3 people soaking up medicare, social security and every other damn government program. Good luck with all that.
If deficit spending cranks up the economy sufficient to recover the debt plus interest, why haven't we been doing it all along? Actually, I guess we have. We've been doing it for generations. The borrowing and spending, anyway. Borrowing and spending to shame drunken sailors, to shame communists, to set jaw dropping records. But this time it'll work? We just didn't think big enough? How big do we have to go? Borrowing and spending is easy. If that's all it took to fix an economy, we would never have recessions. We wouldn't have poverty - and not just no poverty here, but no poverty anywhere.