Part of the cure might be to eliminate all social-welfare spending. I suspect that this has been part of the right-wing fanatics' plan for the last quarter century.
Then, inflation has long been a cure for debt. It takes from the middle class who are wont to hold paper assets, and gives to the equity-holders; the rich. Doug Woodard St. Catharines, Ontario, Canada On Fri, 14 Jul 2006, Kirk McLoren wrote: > http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/07/14/cnusa14.xml > > US 'could be going bankrupt' > By Edmund Conway, Economics Editor > (Filed: 14/07/2006) > > > > > > The United States is heading for bankruptcy, according to an > extraordinary paper published by one of the key members of the country's > central bank. > A ballooning budget deficit and a pensions and welfare timebomb could > send the economic superpower into insolvency, according to research by > Professor Laurence Kotlikoff for the Federal Reserve Bank of St Louis, a > leading constituent of the US Federal Reserve. > Prof Kotlikoff said that, by some measures, the US is already bankrupt. "To > paraphrase the Oxford English Dictionary, is the United States at the end of > its resources, exhausted, stripped bare, destitute, bereft, wanting in > property, or wrecked in consequence of failure to pay its creditors," he > asked. > According to his central analysis, "the US government is, indeed, bankrupt, > insofar as it will be unable to pay its creditors, who, in this context, are > current and future generations to whom it has explicitly or implicitly > promised future net payments of various kinds''. > The budget deficit in the US is not massive. The Bush administration this > week cut its forecasts for the fiscal shortfall this year by almost a third, > saying it will come in at 2.3pc of gross domestic product. This is smaller > than most European countries - including the UK - which have deficits north > of 3pc of GDP. > Prof Kotlikoff, who teaches at Boston University, says: "The proper way to > consider a country's solvency is to examine the lifetime fiscal burdens > facing current and future generations. If these burdens exceed the resources > of those generations, get close to doing so, or simply get so high as to > preclude their full collection, the country's policy will be unsustainable > and can constitute or lead to national bankruptcy. > "Does the United States fit this bill? No one knows for sure, but there are > strong reasons to believe the United States may be going broke." > Experts have calculated that the country's long-term "fiscal gap" between > all future government spending and all future receipts will widen immensely > as the Baby Boomer generation retires, and as the amount the state will have > to spend on healthcare and pensions soars. The total fiscal gap could be an > almost incomprehensible $65.9 trillion, according to a study by Professors > Gokhale and Smetters. > The figure is massive because President George W Bush has made major tax > cuts in recent years, and because the bill for Medicare, which provides > health insurance for the elderly, and Medicaid, which does likewise for the > poor, will increase greatly due to demographics. > Prof Kotlikoff said: "This figure is more than five times US GDP and almost > twice the size of national wealth. One way to wrap one's head around > $65.9trillion is to ask what fiscal adjustments are needed to eliminate this > red hole. The answers are terrifying. One solution is an immediate and > permanent doubling of personal and corporate income taxes. Another is an > immediate and permanent two-thirds cut in Social Security and Medicare > benefits. A third alternative, were it feasible, would be to immediately and > permanently cut all federal discretionary spending by 143pc." > The scenario has serious implications for the dollar. If investors lose > confidence in the US's future, and suspect the country may at some point > allow inflation to erode away its debts, they may reduce their holdings of US > Treasury bonds. > Prof Kotlikoff said: "The United States has experienced high rates of > inflation in the past and appears to be running the same type of fiscal > policies that engendered hyperinflations in 20 countries over the past > century." > Paul Ashworth, of Capital Economics, was more sanguine about the coming > retirement of the Baby Boomer generation. "For a start, the expected > deterioration in the Federal budget owes more to rising per capita spending > on health care than to changing demographics," he said. > "This can be contained if the political will is there. Similarly, the > expected increase in social security spending can be controlled by reducing > the growth rate of benefits. Expecting a fix now is probably asking too much > of short-sighted politicians who have no incentives to do so. But a fix, or > at least a succession of patches, will come when the problem becomes more > pressing." _______________________________________________ Biofuel mailing list Biofuel@sustainablelists.org http://sustainablelists.org/mailman/listinfo/biofuel_sustainablelists.org Biofuel at Journey to Forever: http://journeytoforever.org/biofuel.html Search the combined Biofuel and Biofuels-biz list archives (50,000 messages): http://www.mail-archive.com/biofuel@sustainablelists.org/
