Hap 0206. Thanks for your reply, you make some good and valid points.
What immediately springs to mind are the assets this country has.
They can be $50 Trillion or $500 Trillion but do little to help the countries cash flow problem or future and unpayable unfunded liabilities.
Glacier and Yosemite may be nearly priceless but we'll never use them as collateral for loans and they produce essentially no cash flow.
Our military may be mighty, wonderful, even necessary but it is a cash eating liability for the most part that contributes little to the productivity of the country. Yes, new technologies are developed that migrate to private industry but the best that can be said is that the more than $1/2 Trillion we invest in the military gives a very poor return on investment in terms of future productivity and cash flows from that money spent. It does little to spin off future cash flows to help us pay our bills present and future.
$13 trillion is our current accumulated debt requiring interest payments to service which will continue to eat a greater share of national resources as the deficit rises by another $trillion plus each year and the interest grows and compounds higher.
Our country is not in a position to "grow our way out, nor is it likely to be able to do that.
Whether deflation occurs or not, a serious crunch is coming and there is going to be significant wailing and weeping.
Our democracy has evolved to the point where it's gotten nearly impossible to pass serious legislation that involves pain and we will have to take the serious pain voluntarily or the markets will eventually impose serious pain whether we like it or not.
Social Security, Medicare, Medicaid, and the military are the big issues that will have to be tackled. They are the gorillas in the room and snipping minor programs around the edges will do almost nothing.
Serious SS, Medicare, Medicaid reform [cutting of promised and expected future benefits] is almost unthinkable for a congress constantly running scared of being targeted and thrown out.
Yet, those cuts will have to occur.
Just imagine the uproar if the country sat down, crunched the numbers and passed legislation that would raise taxes and cut benefits enough to close the current $4 Billion per day shortfall.
There would be rioting in the streets in some places and every member of congress or senate voting for it would have a very big target on his back come re-election time.
Our political system now operates on largely crisis mentality when it comes to the big and important issues [that involve big pain]. The mode of operation has been to wait until the crisis hits, then do something about it.
There are some issues where that doesn't work well.
Sort of like trying to buckle the seat belt when the front of the car is first hitting the big concrete barrier.
Much of the pain will be felt by those over age 55 and that group is huge and getting bigger.
These are folks that are experienced, feel they have worked hard and put in their time and they have time and savvy to get involved they feel their benefits are threatened.
AARP will go nuts at the slightest reduce benefits to Seniors policy proposed. Seniors have real clout and know how to use it.
Yet, this country can not go on in la la land as it has been expecting others to fund the huge difference between what we take in and spend.
The laws of large numbers being added to and compounded will eventually force our hand and there is going to be huge backlash when that time comes.
We really are not a lot different than Greece other than we can print money, have the mightiest military.
We can do things Greece can't so the markets are finally and effectively clamping down on their [Greece] ways of largess without enough revenue to back it.
With the worlds Reserve Currency we are not yet faced with reckoning but we propose that our unique Reserve Currency status only allows us to defer the pain until a later date and allows us to get in over our neck even deeper.
What it does not do is solve the underlying problem which is in may ways similar to that faced by Greece [and individual families that keep borrowing to fund a lifestyle not supportable by current incoming cash flow].
It can go on for a while but finally, the jig is up.
Thanks, Fabian
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To show how hard SS reform is....One of the obvious partial solutions is to apply a means test in order to receive benefits.
Example-simplistic. Some one is still getting over $100K in income while retired and of SS age then no SS benefits.
They don't need them, the country can not afford to pay them.
SS was not originally designed to fund everyone's retirement. It needs to go back to it's original mission which was closer to a supplement for those who really needed it for various reasons which includes, they did not save. Doesn't seem right of course but its the kind of choices that will need to be made.
We can't pay everyone and fund their medial costs blank check style to the tune we said we would.
Just try to get that simple and common sense one [means test] through the legislative process.
Good luck.!
