Deficits Do Matter: Economist Sees More Inflation, Higher Taxes, Less Benefits

A very Schiffian analysis of the macro sit.

I'd like to hear from Kotlikoff on the unfunded liabilities.

It is plain old common sense. No one can continue to spend more than they make forever. In the case of our country, it will work only so long as the economy and inflation grows, and our creditors (Islam and China) accept our credit. We will soon have to devalue the dollar to pay the debt with cheap dollars and that will cause a drammatic economic crash within the next 5 to 10 years. Yuk it up while you can!!

Again, another useless interview. This is all OLD news. If you are going to interview someone on these issues, at least interview real experts who warned about this a few years ago like David Walker. Do yourself a favor and get a copy of "America's Financial Apocalypse: How to Profit from the Next Great Depression" by Mike Stathis.

This is not news, it's a statment of 'an inconvenient truth'... It boils down to the fact that you can't spend (or import) more than you make (or export) for long. If you're a government, you can do it for a bit longer than an individual, by printing (or electronically creating) more money...or by playing slight of hand games with the books. But sooner or later the fiat dollars must devalue, as that's the only way to erase the mounting debt. Relax, though... Nobody will let the bottom fall out before the election. After the election, the new administration gets to let things go bad, while blaming the previous administration (An American tradition).

AT WHAT POINT DOES AMERICA GO BROKE AND FILE FOR BANKRUPCY

Pay for baby boomer entitlements, work harder for hand me down debt? hmmmm. can I quote Arnold Swazenegger? "I don't play dat game..."

let me pile on. Something to think about as far as the "revised GDP" for Q2. GDP includes Govt spending, has seasonal adjustments AND was bouyed by exports, many of which were made in Mexico by U.S. corporations, cross the border as finished goods and leave port from the U.S.. This does not benefit the U.S. workforce at all, or provide Americans income! We need to start concentrating on not buying from big corporations as much as possible. Govt spending: we are at record deficit, record national debt. Imagine if the govt was not belching out spending at blinding pace just to prop up GDP (among other things). Seasonal adjustments: who the h-ee-double hockey sticks knows what is done here? Do you really believe govt data from a govt that has been politicized to the bone and is really just an inept propaganda machine? Common sense alone says this does not end well, and with the culmination of the magnitude and number of factors here I think even the propagandists will start getting pretty desperate before long.

I honestly think that within my lifetime, immigrating out of the U.S. may be a very viable option.

It didn't start with Cheney but in the Clinton era we were going in the right direction paying down the debt. Our dollar was strong and because of that our stock market was strong attracting a lot of foreign investment. In the Bush/Cheney era, they looted the treasury and spent like Drunken sailors and crashed our dollar. Now we have inflation, something we thought we'd licked. Most that say this problem is universal are really making excuses for Bush/Cheney. Bush and republicans spent 5 trillion dollars on nothing more than war and pork.

The comments do not discuss the current deficits as a percent of GDP, which are not out of line with historic levels. Also the lower dollar has resulted in an increase of manufacturing exports. Exports grew by over 13% in the second quarter. The lower dollar is a legitimate path to help rebuild the manufacturing sector. The long term cost of mandated spending certainly is a crisis as noted in the piece.

The off budget spending has been increasing rapidly. With $53BILLION in debt obligations the Govt spending office is out of control. As P.J.O'Rourke has said, "if you think health care is expensive now, wait until it is free." The U.S.Post Ofice will compete by losing money on overnight packages to maintain market share. Who could buy stock in that company? and on and on. . . Old info about something that only gets worse.

When you throw M3 back into the mix we have clearly been in recession since quarter 3 2006. Thro non-core GDP back into the fold and you will see that inflation has already outpaced the worst forcasts. The political decisions made by the FRC to drop interest rates have prolonged this recession by at least three years. Losses at Fannie and Freddie alone will top 750 billion (conservatively). What we need is honesty.

The comments do not discuss the current deficits as a percent of GDP, which are not out of line with historic levels. Also the lower dollar has resulted in an increase of manufacturing exports. Exports grew by over 13% in the second quarter. The lower dollar is a legitimate path to help rebuild the manufacturing sector. The long term cost of mandated spending certainly is a crisis as noted in the piece.

Our deficits re a direct result of our imigration policy, we're importing poverty & defict spendng to the tune of millions of tax parasites every year. Deficits are a symptom of our immigration policy, immgirants have also played a huge role in our sub-prime meltdown, skyrocketing healthcare costs and unaffordabel housing, and for the greenies they're also the single biggest source of greenhouse gas growth both here and in the EU.

all is well....we have a sharp, cap a bible conservative, pretty faced vice-presidential candidate for mccain. now we got us an election that may just lift the American spirits...which we sorely need. all we fear is fear itself...we can solve these problems and we will....

We need to understand what we're talking about when we speak of deficits. We're talking BUDGET deficits and I think we all need to get a grip. This is about properly setting the budget and staying as close to it as possible. Unforeseen events can exceed budgets and taking the case of previous administrations, if you budget accurately, you can blow the budget with unforeseen circumstances but if you sand-bag, you'll potentially have a budget surplus. We need to stop fixating on prior administrations "surplus" and call it what it really is, sand-bagging and when you cut things like defense, security, intelligence, etc, you can set a budget based on past expense with these things being in place then realize at the end of your administration that you've got a "surplus" because you've cut in areas you probably shouldn't have. Then, it's the next administration that has to deal with these issues, particularly when they impact National Security and when you try to right the ship, you end up spending what should have been spent previously but now you're looked at as exceeding budget with a deficit. It's all in the setting of the budget and we need to stop looking at the surface and realize that its not the President or Vice president that affects budget but what congress puts into motion in terms of spending that drives budgets over or under. Again, which party is in control of congress today?????? Look at who voted FOR spending in congress and I believe most everyone will be shocked to realize the truth. I wonder if the media will ever post anything like this.

Typical right wing explanation. The Republicans have plundered the treasury for 8 years, have destroyed the economy, and now want the middle class to take it on the chin and pay for their bad decisions. They ignore the fact that the U.S. is a consumer based economy and if the middle class continues to decline, the U.S. will continue to decline. The middle class has paid enough. Time for the Insurance companies, the oil companies, the banks, the pharmaceuticals, and the military industrial complex to tighten their belts. The solution to our economic problems come with the solution to our energy problems and the health care system. The type of infrastructural spending needed to fix the energy problem will revitalize the U.S. economy with real productivity, not the crap that has been fed us for the last 8 years. Getting the insurance companies out of health care will provide an immediate cost benefit in excess of our current deficit. I am always amazed that right wing economists never take into account the effect of real investment in the economy. This is what pulled the U.S. out of the republican created great depression and the republican created S&L debacle. It will pull us out of the current republican created housing recession. The real key to the future is not to let anyone espousing right or left wing ideologies back into any position of power. Both are wrong and both create disasters.

Under the first neo con president Richard Nixon, who was influenced by the biggest non-nationalist Henry Kissenger, the last trade surplus was eradicated, and we quickly became major importer. At the same time Nixon took us off the gold standard which was linked to the dollar.At that time the dollar was actually worth the equivilent of some portion of gold. All of a sudden the dolar became paper only subject to the printing press. It took a while and then under Carter those too many dollars came to a head, and inflation was out of control. When Reagan took over he simply revamped inflation statistics taking out fuel, housing, and those items devined as "long one time" items. Overnight inflation came down, as the factors that created inflation were eliminated. Soon with "inflation" under control the tax reduction was implemented. Here's the problem inflation still exists, if the same statistics used under Carter were still in place. How to deal with inflation raise interest rates, or print less money, or raise taxes. If you don't do this the currency is worth less Here we are today with more money printed, less taxes, and lower interest rates, and the dollar is worthless. [yes it rises against other currencies sometimes not because our situation is better but other countries get worse] Now all that money in other countries hands must be either reinvested back in America, but with low yields, higher true inflation, and shaky financial institutions, thats not going to happen. Instead they will buy our copporations, our commodities, agriculture, and assets, even our ports, and national defence companies. So look at exports increasing but it will be what made America strong. Look for continued "true" inflation as we priint more money, while we're flooded with old money. This is not your Fathers economics anymore. We're headed for rough times ahead.

Under the first neo con president Richard Nixon, who was influenced by the biggest non-nationalist Henry Kissenger, the last trade surplus was eradicated, and we quickly became major importer. At the same time Nixon took us off the gold standard which was linked to the dollar.At that time the dollar was actually worth the equivilent of some portion of gold. All of a sudden the dolar became paper only subject to the printing press. It took a while and then under Carter those too many dollars came to a head, and inflation was out of control. When Reagan took over he simply revamped inflation statistics taking out fuel, housing, and those items devined as "long one time" items. Overnight inflation came down, as the factors that created inflation were eliminated. Soon with "inflation" under control the tax reduction was implemented. Here's the problem inflation still exists, if the same statistics used under Carter were still in place. How to deal with inflation raise interest rates, or print less money, or raise taxes. If you don't do this the currency is worth less Here we are today with more money printed, less taxes, and lower interest rates, and the dollar is worthless. [yes it rises against other currencies sometimes not because our situation is better but other countries get worse] Now all that money in other countries hands must be either reinvested back in America, but with low yields, higher true inflation, and shaky financial institutions, thats not going to happen. Instead they will buy our copporations, our commodities, agriculture, and assets, even our ports, and national defence companies. So look at exports increasing but it will be what made America strong. Look for continued "true" inflation as we priint more money, while we're flooded with old money. This is not your Fathers economics anymore. We're headed for rough times ahead.