U.S. Is Bankrupt and We Don’t Even Know It: Laurence Kotlikoff – Bloomberg

If this is true–and Kotlikoff is really only repeating what the International Monitary Fund and the Congressional Budget Office are saying–how does it affect you and me? Who owns this debt? (I believe it’s mostly Americans.) Will we pay off this debt? Or will we pass it on to our kids and grandkids? What changes in lifestyle will be required to clean this up? Are we willing to make the sacrifice?

“…the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”

The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.via U.S. Is Bankrupt and We Don’t Even Know It: Laurence Kotlikoff – Bloomberg.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s