Comments on: “If a trend cannot continue indefinitely, it will stop.”

By: Ken

Ken — Mon, 15 Sep 2003 22:40:45 +0000

Will it really be impossible to trim Social Security if the only alternatives are jacking up taxes or running up crushing deficits? If so, we’re screwed. But IIRC, the 18-40 demographic will outnumber the 60+ demographic in 2004. Can they be motivated to outvote them as well, to start down the road of ratcheting up retirement ages and so forth?

By: Barry

Barry — Mon, 15 Sep 2003 17:04:11 +0000

Ken, the probable results of the US defaulting on the debt would be: (1) the largest, liquid pool of low-risk securities in the world dies, destroying several billion dollars of wealth; (2) the world’s default international currency becomes worthless, taking some more wealth to dust, and hammering global commerce; (3) the US economy is knocked down to the barter level for a while, destroying businesses, impoverishing individuals, and making it rather hard to procure food, shelter and clothing, let alone anything beyond that; (4) anybody with a contractual obligation to accept dollars is immediately bankrupt; (5) the world get the living sh*t hammered out of it by actions which are clearly the direct result of US government policy – at this point, the present international situation would look like a Golden Age of Harmony. And even after some partial recovery had happened (decades?), nobody would trust US currency, debt or other government obligations for the rest of the century.

By: dsquared

dsquared — Mon, 15 Sep 2003 08:39:45 +0000

I hereby float Davies’ Two Corollaries [sp?] to Stein’s Law. 1) Unsustainable processes always carry on for longer than you think they will. 2) 1) above holds, even after allowing for 1) above

By: mindanao

mindanao — Sun, 14 Sep 2003 22:13:04 +0000

The USSR reduced inequalities to a minimum, at the price of losing civil liberties and any expectation of a better future. Nowadays the USA maintains increasing inequalities, while civil liberties and expectations of improvement are also being eliminated. It’s up to the people to realize that what they see on TV is not what they experience in real life, but it doesn’t look like that’s going to happen soon.

By: JLowe

JLowe — Sun, 14 Sep 2003 15:10:07 +0000

This discussion about the state of our finances brings to mind a conversation my spouse and I had over coffee this Sunday morning. The topic was how the United States in its current empire-building mode is beginning to resemble the former Soviet Union. Economic stagnation was one parallel with that failed empire. The others were: the paranoia and turn to ideological rigidity; lack of accountability; restrictions on flow of information and civil liberties; preoccupation with the use of military force as a policy option; and the increasing reliance on propaganda.

By: nick sweeney

nick sweeney — Sun, 14 Sep 2003 04:22:02 +0000

In response to ken, Thomas Frank, citing Krugman: ‘When the Trust Fund accumulates bonds, they are said to be worthless since they are just IOUs given by one government agency to another, all of them working under one big budget. “But when it runs deficits,” after 2016, Krugman continues, “Social Security is on its own,” a logic that effectively steals the Trust Fund from the public. And when the Treasury Secretary himself makes the claim that the Trust Fund holds “no assets,” something even more unsettling is going on: the highest financial official in the land is talking about defaulting on U.S. government bonds, something that has never happened before. Were the global financial industry to take O’Neill or the commission at their word-to believe that the Bush Administration actually puts zero value on the “good faith and credit” of the issues of the Treasury Department-the world would be thrown into a financial crisis that would make 1933 look like a mildly stormy meeting of the Junior Savers’ Club.’

By: arthur

arthur — Sun, 14 Sep 2003 04:08:40 +0000

Ken, welching on the national debt raises a serious Constitutional problem. In fact, you violated the Constitution just by raising the question. See the fourteenth Amemdment, section 4: “The validity of the public debt of the United States, authorized by law, . . . shall not be questioned.”

By: Ken

Ken — Sun, 14 Sep 2003 03:09:46 +0000

During the last deficit crisis, I recall that one argument : that since the government borrowed most of the money against itself, it should simply refuse to pay. I was much too young at the time to understand this argument with any depth. (Now, I’m just far too stupid to comprehend it.) I’m scanning Google, searching for work on the subject (and finding points both pro- and con-). I assume that this topic will re-enter the national consciousness during the 2004 elections, and at that point the ‘blogosphere will be aflutter about it… so in the meantime, anyone care to stake out territory one this subject early?

By: Keith M Ellis

Keith M Ellis — Sun, 14 Sep 2003 01:55:41 +0000

I don’t think the “starve the beast” folks want to end social security (although, yeah, they’d like to end medicare if they could). They want to kill everything else—social security’s untouchability just plays into their hands. Of course, the problem here is that in order to actually bring the accounts into balance, they actually would have to pretty eliminate all these government agencies—from the EPA to NASA to food stamps. And that’s not going to happen. Maybe they’re aiming high just so as to ensure that some of the cuts they wish for will be enacted. But, damn, is that incredibly cynical and irresponsible. I’d like to believe that future generations will see this administration’s fiscal malfeasance for what it is. But that didn’t happen with Reagan, so I’m not too hopeful.