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overratedboy
New member
You've heard that the US has about $14.5 trillion in national debt, but this week Laurence Kotlikof, an economist and former Reagan advisor, said the US is really $211 TRILLION in debt.
His reasoning: Through entitlements that's how much we've promised to pay out, and therefore that's the real fiscal problem that needs fixing.
Sorry, this idea is just pure nonsense. The future cost of entitlement programs isn't the same as debt.
Just think about this from your perspective.
Say your 30 years old, make $100,000 per year and spend $36K per year on rent and $10K per year on food. So you spend 46K on the basics (just to be simple we're not including medical costs).
If you plan on living another 60 years, and you assume inflation of about 3% per year, then you've got future liabilities for housing and food of... $7.3 MILLION! (We ran the math on that in the simplest of spreadsheets).
So if you calculate your debt to GDP like Kotlikoff does, then you're personal debt-to-GDP stands at 73x. Are you freaking out? Of course not.
Obviously these numbers vary wildly from one person to another, but the bottom line is that comparing all future costs against a country's income for one year is a very meaningless way of looking at the issue.
There's plenty to freak out about: Misleading big numbers shouldn't be one of them.
Any idea what they can do ?
His reasoning: Through entitlements that's how much we've promised to pay out, and therefore that's the real fiscal problem that needs fixing.
Sorry, this idea is just pure nonsense. The future cost of entitlement programs isn't the same as debt.
Just think about this from your perspective.
Say your 30 years old, make $100,000 per year and spend $36K per year on rent and $10K per year on food. So you spend 46K on the basics (just to be simple we're not including medical costs).
If you plan on living another 60 years, and you assume inflation of about 3% per year, then you've got future liabilities for housing and food of... $7.3 MILLION! (We ran the math on that in the simplest of spreadsheets).
So if you calculate your debt to GDP like Kotlikoff does, then you're personal debt-to-GDP stands at 73x. Are you freaking out? Of course not.
Obviously these numbers vary wildly from one person to another, but the bottom line is that comparing all future costs against a country's income for one year is a very meaningless way of looking at the issue.
There's plenty to freak out about: Misleading big numbers shouldn't be one of them.
Any idea what they can do ?
