And its ignoring the fact that US economy is always growing and the global economy is growing even faster now (so, with a weaker dollar, and growing numbers of new consumers, we’ll have more customers).

Enjoy the holidays and don’t let this report get you glum.

My point is that there is no such thing as bankruptcy or insolvency for the US government. Of course hyper inflation is terrible though very unlikely. If things were so bad why is the 10 year treasury under 5%?

Best to focus on growing the economy rather than a hunker down, all is lost position that the tabloid media and the left want you to do. If we can’t get pass the hysteria and get on with living and growing we are indeed doomed.

“The worst outcome is hyper inflation”

That’s pretty bad right there…

Poke around. Steve is a growth proponent and converted me over from following the Concord Coalition and their doomsday message.

It is not possible for the country to become insolvent as a corporation would. The worst outcome is hyper inflation.

Let’s start with a “model” of the problem. If one assumes the government is like a corporation that assumes a debt load we can then trace under what circumstances they would go insolvent and the potential manner in which to manage debt. Companies assume debt because they believe it can improve its present and future prospects with such borrowing. A corporation will assume debt over an infinite horizon if the benefit is material. Unlike a person a corporation or government does not need to zero its balance because of death. Legal entities like corporations and governments have near infinite time horizons. Thus some of the work that assumes that the balance must be paid off at some future point in time are making an inappropriate assumption.

Next we need to understand that to manage debt the economy must grow faster than the debt rate. This is critical. We currently exist in such an environment. We will close our budget deficit by Nov 2008 at the current run rate. The key is economic growth. Without growth the debt will consume us.

Next many of those forecasting insolvency fail to compare our prospects with most nations in Europe or Japan. If we are in dire straights, where are they. I know this is not much of an argument. As a matter of fact it is a terrible argument. I raise it only for context. I would welcome them to say that we are all doomed. This would permit many to see that the discussion is being dominated by those who like doom and gloom.

Let’s start with a “model” of the problem. If one assumes the government is like a corporation that assumes a debt load we can then trace under what circumstances they would go insolvant and the potential manner in which to manage debt. Companies assume debt because they beleive it can improve its present and future prospects with such borrowing. A corporation will assume debt over an infinite horizon if the benefit is material. Unlike a person a corporation or government does not need to zero its balance because of death. Legal entities like corporations and governments have near infinite time horizons. Thus some of the work that assumes that the balance must be paid off at some future point in time are making an inappropriate assumption.

Next we need to understand that to manage debt the economy must grow faster than the debt rate. This is critical. We currently exist in such an environment. We will close our budget deficit by Nov 2008 at the current run rate. The key is economic growth. Without growth the debt will consume us.

Next many of those forecasting insolvancy fail to compare our prospects with most nations in Europe or Japan. If we are in dire straights, where are they. I know this is not much of an argument. As a matter of fact it is a terrible arguement. I raise it only for context. I would welcome them to say that we are all doomed. This would permit many to see that the discussion is being dominated by those who like doom and gloom.

Let’s start with a “model” of the problem. If one assumea the government is like a corporation that assumes a debt load we can then trace under what circumstances they would go insolvant and the potential manner in which to manage debt. Companies assume debt because they beleive it can improve its present and future prospects with such borrowing. A corporation will assume debt over an infinite horizon if the benefit is material. Unlike a person a corporation or government does not need to zero its balance because of death. Legal entities like corporations and governments have near infinite time horizons. Thus some of the work that assumes that the balance must be paid off at some future point in time are making an inappropriate assumption.

Next we need to understand that to manage debt the economy must gorw faster than the debt rate. This is critical. We currently exist in such an environment. We will close our budget deficit by Nov 2008 at the current run rate. The key is economic growth. Without growth the debt will consume us.

Next many of those forecasting insolvancy fail to compare our prospects with most nations in Europe or Japan. If we are in dire straights, where are they. I know this is not much of an argument. As a matter of fact it is a terrible arguement. I raise it only for context. I would welcome them to say that we are all doomed. This would permit many to see that the discussion is being dominated by those who like doom and gloom.

You’re more economically savvy than me, but the big problem in the report seems to be social insurance liabilities, which most of us know represent promises no past or present politician meant to keep. They just left the mess for someone else to deal with. Expect the civil war to start when permanently-entitled boomers get the bad news about not getting any more government checks in a few years.

Mike