The scary actual U.S. government debt

Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”

Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble – far worse than the Washington-based lender of last resort has previously acknowledged. “The U.S. fiscal gap is huge,” the IMF asserted in a June report. “Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.”
This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF’s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling – and possibly worse than appalling.
Prof. Kotlikoff says: “The IMF is saying that, to close this fiscal gap [by taxation], would require an immediate and permanent doubling of our personal income taxes, our corporate taxes and all other federal taxes.
“America’s fiscal gap is enormous – so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems – as well as military and other discretionary spending cuts.”

He cites earlier calculations by the Congressional Budget Office (CBO) that concluded that the United States would need to increase tax revenue by 12 percentage points of GDP to bring revenue into line with spending commitments. But the CBO calculations assumed that the growth of government programs (including Medicare) would be cut by one-third in the short term and by two-thirds in the long term. This assumption, Prof. Kotlikoff notes, is politically implausible – if not politically impossible.

One way or another, the fiscal gap must be closed. If not, the country’s spending will forever exceed its revenue growth, and no one’s real debt can increase faster than his real income forever.

Prof. Kotlikoff uses “fiscal gap,” not the accumulation of deficits, to define public debt. The fiscal gap is the difference between a government’s projected revenue (expressed in today’s dollar value) and its projected spending (also expressed in today’s dollar value). By this measure, the United States is in worse shape than Greece.

Prof. Kotlikoff is a noted economist. He is a research associate at the U.S. National Bureau of Economic Research. He is a former senior economist with then-president Ronald Reagan’s Council of Economic Advisers. He has served as a consultant with governments around the world. He is the author (or co-author) of 14 books: Jimmy Stewart Is Dead (2010), his most recent book, explains his recommendations for reform.

He says the U.S. cannot end its fiscal crisis by increasing taxes. He opposes further stimulus spending because it will simply increase the debt. But he does suggest reforms that would help – most of which would require a significant withering away of the state. He proposes that the government give every person an annual voucher for health care, provided that the total cost not exceed 10 per cent of GDP. (U.S. health care now consumes 16 per cent of GDP.) He suggests the replacement of all current federal taxes with a single consumption tax of 18 per cent. He calls for government-sponsored personal retirement accounts, with the government making contributions only for the poor, the unemployed and people with disabilities.
Without drastic reform, Prof. Kotlikoff says, the only alternative would be a massive printing of money by the U.S. Treasury – and hyperinflation.

As former president Bill Clinton once prematurely said, the era of big government is over. In the coming years, the U.S. will almost certainly be compelled to deconstruct its welfare state.

Prof. Kotlikoff doesn’t trust government accounting, or government regulation. The official vocabulary (deficit, debt, transfer payment, tax, borrowing), he says, is vulnerable to official manipulation and off-the-books deceit. He calls it “Enron accounting.” He also calls it a lie. Here is an economist who speaks plainly, as the legendary straight-shooting film star Jimmy Stewart did for an earlier generation.

But Prof. Kotlikoff’s economic genre isn’t the Western. It’s the horror story – “and scarier,” one reviewer of his book suggests, than Stephen King.

Cato: Bernanke is Not Printing Enough Money

A commentary on monetary policy that can only be described as coming out of the playbook of Zimbabwe's Robert Mugabe has been published on the pages of the Cato Institute. The conclusion of the commentary is that Fed chairman Ben Bernanke, who has over a trillion dollars sitting in excess reserves that can come flying into the economy at any time, and who promises a new round of trillion dollar money printing, is not inflating enough.

I kid you not.

Using Milton Friedman as cover, despite the fact that Friedman was very weak on monetary policy, the piece, written by David Beckworth and William Ruger, states:

Had he been alive, Friedman would have been shocked to see the Fed in late 2008 and early 2009 allow nominal income, as measured by nominal GDP, to experience its sharpest downturn since the Great Depression. He would also be amazed to learn that nominal GDP forecasts are once more headed down.

Given these developments, Friedman would likely be calling on the Fed again to do a better job stabilizing nominal income...were Friedman alive today, he would balk at the notion that the Fed is out of ammunition. He would remind us that in the early-to-mid-1930s, when the economic environment was far worse and short-term interest rates were near the zero bound, monetary policy easily generated a recovery. Therefore, the Fed could do likewise today.

Friedman would likely make the case today for more aggressive monetary action. It is time for "Helicopter Ben" to earn his nickname.

Publishing this kind of regime nonsense makes one wonder just what the Koch funded Cato Institute is all about. Lew Rockwell appears to have nailed it:

This is yet another example of how the Koch Brothers operate. While their ideological institutions on public campuses or Capitol Hill operate under a veneer of libertarianism or even Austrian economics, the actual policies they push expand the State: massive money printing (for the big banks and big companies), school vouchers (to deliver private schools into the hands of government), the Ownership Society (every person a homeowner through Greenspan’s housing bubble), Social Security Privatization (a new layer of forced savings on top of the present SS taxes, to benefit Wall Street), etc. Is it any wonder that the Kochs have never, in 28 years, invited Ron Paul—the only public official for honest money—to their annual monetary conference, but instead invite and hail the central bankers who can do the plutocrats so much good?

Let's get a few things straight about Milton Friedman, when it came to government licensing of businesses and individuals and when it came to price controls, Friedman could argue with the best of them.

Yet, he was nowhere near the consistent thinker that Ludwig von Mises was. Friedman failed to ground his economics in proper methodology and clearly never understood Hayek's great book on methodology, The Counter Revolution of Science.

And he had no clue about the business cycle. This is clear because he would never have called for Fed money printing, ever, if he understood how such printing distorted the capital structure.

That Cato would allow such a piece to be printed, which hails Friedman's money printing advocacy, indicates that they themselves don't get the business cycle or there are other motives which are ranked higher than economic truth.

As Stephan Kinsella has pointed out, this habit of straying from fundamental libertarian principles is not a one time phenomena for Cato. He lists 17 other cases.

Bottom line: Any organization that is promoting money printing, especially at a time like the present when commodity prices are soaring, is far from a friend of liberty.  Money printing pure and simple is theft and gives an edge to those who get the money first. It is most damaging to those on fixed income, like the elderly. Among the beneficiaries are the banking elite and those who hold vast quantities of commodities, such as oil. It's about the evil rich getting more rich and more evil. Beware those that are friends of inflation.

The Great IMF Fire-Sale of the UK has Begun

The British Government is about to sell off over half of all UK Forests that are currently under the control of the Forestry Commission to private corporations as the asset-stripping of the UK is begun on behalf of the International Monetary Fund and the Big Six Beast Banks.

Caroline Spelman, the environment secretary, has just announced plans to sell around half of our forests to the mega-corporations – that is 150,000 hectares of prime woodland – as well as numerous other properties. The New Forest, Sherwood Forest, and the Forest of Dean could be targeted for sale.
The Sunday Telegraph provided a map of which forests are owned by the state through the Forestry Commission:


The vast majority of these forests are in Wales, West Scotland and the North East of England.
Most of these forests will be sold off to housing developers, timber merchants, power generators and Centre-Parcs Ltd for golf courses and holiday camps. Our right of access to these forests will be severely curtailed, and we will have lost a great natural resource that can never be bought back for the People.

As we have already stated, this selling off of prime forestry land is part of the mass looting that will occur by the IMF on behalf of the Big Six Beast Banks and Mega-Corporations.

During the IMF Riots in Greece, the Greek government was busy selling off several islands to the same bankers who deliberately bankrupted Greece in the first place, so it comes as no surprise that similar things are being done here. What does come as a surprise is that this IMF Fire-Sale is occurring even before the British people have had their IMF Austerity Riots.

Then there is the issue of the UN’s Agenda 21 – how they plan to push the vast majority of people into big cities and out of the countryside so that the people will be far easier to control as the One World Government takes over. Once crushed within cities, living standards will go down remarkably and access to land for us will be at a premium. We will become more and more reliant on mega-corporations to supply our food and other resources, which puts us in danger of manufactured scarcity and mass starvation, because we will not have independent means of growing our own food as more and more public land within the cities will be sold off for dormitory-style housing projects under Agenda 21.

In the United States they are already trying to make it illegal to grow your own food through S510, and it is only a matter of time before the Communitarian European Union Dictatorship follows suit. This is to be done through Codex Alimentarius under the World Trade Organisation.

Meanwhile, rioting in the streets will not do any good for us as the IMF, World Bank, and United Nations are hell-bent on bankrupting the people so that we will not be able to effectively resist the One World Government being put in place for the benefit of the Globalist Elites and the Mega-Corporations. The government wants us to riot so that they can crack down hard on us and then use the riots as an excuse to implement even more of the New World Order Control Grid around us.

Targeted peaceful protests are the only means to fight against the IMF Fire-Sale of our forests, which means all us old anti-bypass protesters and Tree-Pixies (tree-squatters) are going to have to come out of retirement to show the younger ones how it is done, while we have the means of peaceful protest still available to us. This is not just about preventing our criminal government from selling the national silver, this is also about our civil liberties as the deliberate economic collapse gathers pace in order to put people into poverty and under more government control. This is a fight against neo-feudalism, a fight for our very lives.