“LET’S GET REAL,” PROF. KOTLIKOFF SAYS. “THE U.S. IS BANKRUPT.”
Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”
Here is an economist who speaks plainly, as the legendary straight-shooting film star Jimmy Stewart did for an earlier generation.
As former president Bill Clinton once prematurely said, the era of big government is over. In the coming years, the U.S. will almost certainly be compelled to deconstruct its welfare state.
Prof. Kotlikoff says: “The IMF is saying that, to close this fiscal gap [by taxation], would require an immediate and permanent doubling of our personal income taxes, our corporate taxes and all other federal taxes.
“America’s fiscal gap is enormous – so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems – as well as military and other discretionary spending cuts.”
Without drastic reform, Prof. Kotlikoff says, the only alternative would be a massive printing of money by the U.S. Treasury – and hyperinflation.
My thoughts: Do you really think Government (including any future administration) will “take big medicine” and enact austerity measures liable to get every politician in America thrown out of office by a public enraged by the redacting of entitlements? If not, and the government’s remaining choices are 1)default on the debt (U.S treasuries) or 2) default on the currency (devaluation of the dollar and hence of this godawful debt) do you really think you need to worry about whether Bernanke will opt for Quantitative Easing next week, next year, and beyond? Can we really dismiss the possibility of Weimar style hyperinflationary event of some sort in this country?
Hey! Two more must read pieces on what’s really going on. This affects YOU, so even if you hate financial stuff, slog through these short articles:
Investigative reporter Greg Hunter connects the dots for you:http://usawatchdog.com/mortgage-crisis-the-six-trillion-dollar-problem/
I’ve followed the research of Jim Willie since before he moved to Costa Rica to distance himself from Wall Street group think and do truly independent research. He writes the Golden Jackass newsletter which has some of the most precient, hard-hitting and trail blazing research out there. He has predicted virtually every major financial twist of the last decade before even smart folks were talking about it. His stuff scares the heck out of me. You should consider subscribing! http://www.gold-eagle.com/editorials_08/willie102010.html