Certain people I know who like to dwell on financial doom and gloom will love this article.
Deficit doesn’t matter?
Posted by happycrow on August 15, 2007
http://happycrow.wordpress.com/2007/08/15/deficit-doesnt-matter/
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JimDesu
/ August 15, 2007Here’s the difference: the baby boomers have voted themselves benefits vastly in excess of what is actually possible. The cynical view is that these benefits are designed specifically to tear down our social programs — many people aren’t worried about them specifically because it isn’t possible to fulfill these promises. Did the baby boomers screw over the next two generations: yup. The new tag-line, believe it or not, is “don’t trust anyone under 50″.
These programs will fail, and, unlike other macro-economic issues, we are free to let them fail. Therefore they don’t matter as much as the issues which aren’t optional.
(Not to say there won’t be doom & gloom when the boomers’ gifts to themselves drag the economy to a grinding halt, but that’s what elections are for. And bullets.)
convivialdingo
/ August 15, 2007I prefer to imagine guillotines myself..
Yes, all that AND don’t forget a possibility of a world-wide inflation crash as we print money to cover this insanity.
JimDesu
/ August 15, 2007No kidding. Even more interesting given this week’s flight to cash.
Happycrow
/ August 16, 2007I don’t know about a great flight to cash… I know I certainly have flown to it. Can’t wait for the semester to start up so I can get that mortgage paid down on the fast again…. with these clowns making financial policy in fantasyland, I’m scared as hell to hold debt.
JimDesu
/ August 16, 2007Exactly. That’s how the whole thing starts….
JimDesu
/ August 16, 2007I think recent explanation was pretty darn good:
http://canada.theoildrum.com/node/2871?nocomments
happycrow
/ August 17, 2007Oh. Well, if *that’s* all it is, we’ll be fine….
Now, about repackaged risk… that’s right on the money. I worked in a bank that did precisely this for years, and we *knew* we were screwing over half the people who bought our debt packages… so long as it didn’t stay on *our* liability sheet, we didn’t care…
JimDesu
/ August 17, 2007All they need to do to fix it is disallow the use of debt instruments as collateral, and that’d fix things REAL QUICK. But then again, since the Social Security system is currently funded by treasury obligations (the cash being periodically “swapped out” for these by Congress), the boomers probably wouldn’t allow it.
Alex
/ August 17, 2007I read the article, twice….and it seems to me that these costs are driven by how much pharmaceuticals and medical care costs.
So – make these two things cheaper and the deficit is no longer so large. At least that makes sense to me anyway. And further, its not like this “deficit” is just money disappearing into thin air – it does go somewhere. So maybe as the medical insurance industry and pharmaceutical industry make staggering profits in years to come at the expense of a huge US govt. deficit – then one could just tax those profits right back into the treasury to reach an equilibrium state. I don’t know if there really is such a thing as “the law of conservation of capital” but it certainly seems like that not all of that money will be just wiped out.
I know I’m being simplistic about this and I’m only touching the two most expensive benefits. Social security is another issue altogether which I think will not be available to those currently ages 40 and under when they reach retirement age, which will probably be 75-80 in the next 20 years.