I just muddled my way through this guy's report . Basically he says we are on the verge of Bankruptcy. he was hired by the Fed, OK I know there are some really smart people on this site, is this guy spot on or is there a strong argument against him. If this is a fact then I would think banana republic here we come, thoughts please. Tia Steve http://www.research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf http://www.research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf:confused:
I think it depends on how you view. Let me see if I can explain. A few months back we the US stopped tracking the amount of USD in circulation, hmm suspicious I say. We have record defecits, record tax cuts, over budget for the Iraq war, but we have a printing press to just print more dough without the ability to track the amounts printed. Hmm wish I could do that in my basement! My Canadian mentor says the USD will become the middle American Peso! LMAO, thats funny.
If the dollar becomes the peso than everyone holding dollar denominated paper will be screwed? China Japan etc Won't are markies collapse?
I will be slow and orchestrated over time it won't happen overnight. That said I believe if the Euro were to hit 1.35 that would hurt the Euro Zone big time. It's anyone's guess, I am not an economist by trade
I always love these posts and discussions. It was only 4 years ago or so and we were all worried about deflation. The U.S. was running a surplus in the late 90's and the Euro was about .80 to the dollar. Now five years later the U.S. is going to be a third world nation and a truck load of dollars are going to be necessary to buy a loaf of bread. I gotta tell ya, it's worth a chuckle or two. There have been more jobs created in this "jobless" recovery of the last 3 years than Europe has created in the last decade. There's a reason for dollar denomination. Sure we could dry up the money supply jacking interest rates through the roof in a year and become just like Europe, a strengthening currency and an economy that grows at 2% per year and double digit unemployment. You don't think that there are countries out there that manipulate their currencies and keep them artificially low so their products stay cheap in the market place? China would never do anything like that, would they? Japan wouldn't be engaged in protectionist policies regarding lending and who can and can't own businesses which has kept their economy in a decade long recession? There's much more to currency valuation other than deficits, interest rates and how much money is printed.
This is interesting: "The set the government doesn't talk about is the audited financial statement produced by the government's accountants following standard accounting rules. It reports a more ominous financial picture: a $760 billion deficit for 2005. If Social Security and Medicare were included â as the board that sets accounting rules is considering â the federal deficit would have been $3.5 trillion. Congress has written its own accounting rules â which would be illegal for a corporation to use because they ignore important costs such as the growing expense of retirement benefits for civil servants and military personnel." http://www.usatoday.com/printedition/news/20060803/1a_coverart03.art_dom.htm
look back to reports from 1996-1999 -- anyone urging caution on stocks was jeered and mocked as an anti-capitalism extremist and overall badguy. lots of chuckling at the luddites who didn't get it. there may be some good arguments supporting the creation of gigantic, and accelerating, debts and deficits -- but stating that the scheme hasn't collapsed yet is not a basis to prove that it cannot happen, or even that it's not imminent.
well, the very first para says: "The paper offers three policies to eliminate the nation's enormous fiscal gap and avert bankruptcy: a retail sales tax, personalized Social Security, and a globally budgeted universal healthcare system." doesn't sound too unachievable, does it??