When people say we are broke, the problem is not current cash flow. It’s not that we can’t pay our bills. We can always print or borrow money to do that. That’s what we’ve been doing since the New Deal.
The problem is that in, say, 10 years, we will–on our current trajectory–be paying out more in benefits than we earn as a nation. As he points out later in the piece, what can’t go on, will stop.
Now, I don’t know and really don’t care exactly how numbers like $200 trillion in unfunded liabilities are calculated. What they are doing is multiplying an annual deficit by an arbitrary number of years. The important fact is that we will be spending more than we take in, and doing it year after year after year for decades. When the interest is added in–and the rates we have to pay will continue to increase as we add debt, if the notes aren’t bought by the Fed, which can be inflationary, depending on how they do it.–we will at some point have to go into draconian taxes, or massive inflation. This is the rough process by which Argentina imploded, albeit over a much shorter number of years. You can live well on credit for a time, sometimes a long time, but bills come due.
Social Security is and always has been not just an “intergenerational Ponzi scheme”, as Reagan called it, but one which had as a principle intent the socialization of retirement in particular, and private savings in general.
The net is that we have to radically alter our trajectory. Not only that, but in my view we need to implement something like my plan, which could be viewed as democratized, planned hyperinflation. We need to get the house in order. We need to relocalize our economic and political life, then load up the financial guns, and slay the dragon, once and for all. It can be done. It’s a question of will and knowledge. Knowledge will feed will, so the more truth we see floating around, the more likely our story will have a happy ending for the foreseeable future.