The Debt Crisis Is More Serious Than Imagined.

Some people have envisaged the debt problem of the United States. Back in the 90s of last century, the United States was rapidly reducing its liabilities. At that time, there were fears that too little government debt would cause any trouble. Without two wars in the future, no tax relief policies implemented in 2001 and 2003, and no real economic bubble, and no subsequent economic crisis, the US fiscal position must be very good. If there is any trouble, it is the political chaos in Washington. As long as the Republicans and Democrats divide their political disagreements from those of fiscal expenditure, taxes and debt ceiling, everything will return to normal and all problems can be solved.

But this is not the case. Let's take a closer look at the national debt. It is very inappropriate to measure the economic situation of a country with treasury bonds, because it only focuses on the past and is a small part of all government debts. If the expected revenue and expenditure of a country are accurately assessed in the next few generations, the result will be even worse.

The finance proposed by the Congressional Budget Office Gap Measuring method is a more reasonable way of calculation. It is more accurate and more alarming than national debt. Kotlikoff of Boston University expanded this analysis from 2085 to infinity, thus avoiding the problem of coordinate selection. Finally, through the net present value of all expected expenditures minus the net present value of expected revenue, the fiscal gap calculated by Kotlikoff is US $211 trillion.

This means that we have been in the wrong way for so many years. Even in 90s of last century, when Washington cheered for debt reduction, the government was already heavily indebted by the fiscal gap approach. We have given the elderly too much welfare protection, so that the post-war baby boom generation has too many obligations, and 15 years later, they will also retire. The trend of aging is overwhelming. The American society is at a turning point. The elderly can fight for more rights for themselves, so that the younger generation can shoulder more obligations, while the rights enjoyed by the elderly can not be duplicated in the younger generation. Kotlikoff is worried that the United States will become the next Argentina. Argentina is once one of the richest countries in the world, but because of its poor management for a century, it has become a lower middle income country.

Economists at JP Morgan chase say that the worsening US fiscal (not just a decline in the level of bonds) is likely to raise the interest rate of US Treasury bonds by 0.6 to 0.7 percentage points. This means that the US government will pay more than $100 billion interest expense per year, which will be deducted from the purchase of other goods and services.

The national debt clock is set up very well, which let us know the current situation of the United States. Congress in the 80s budget The chairman of the committee, Bill Frenzel, said that such borrowers knew how much money they had loaned and how much money they wanted to withdraw. In contrast, the fiscal gap reflects the difference between expected expenditure and income, although this figure looks disheartened, but we have to change it because the current trend is unsustainable. The earlier the change, the more relaxed the process. Starting from 70 miles Slow down It won't end up hitting the wall.