patrick.net

mell says

Entitlements should have been cut long ago

You could never ever get this pass in a Democracy, to cut entitlements. Not to mention it's bad economic policy as well.

Logan Mohtashami says

In fact I can't vote for anyone who proposes a balance budget amendment, with our demographics that is impossible to have without damaging the economy or turning back on entitlement promises.

Social security pays for itself. Everything else they can cut away. There is plenty of waste in federal system that needs to be trimmed away.

Logan Mohtashami says

Not to mention it's bad economic policy as well.

It might be bad temporarily, I see it, it's like paying credit card. If we don't pay it, we stick our children with the burden, that's unethical. Our generation should pay off the debt so our children are free.

Logan, I'm curious what your issue with Cruz is. Quigley, go ahead and answer also. I've found that I very frequently agree with your views.

I've stayed a republican even though my overall views drifted into libertarian territory 15 years ago or so. The reason being that it's nearly impossible to legislate social issues at the federal level, certainly so for conservative issues. I imagine that's the biggest objection both of you have with Cruz. But maybe there's something else I'm missing...

dodgerfanjohn says

Cruz

As Donald Trump would say, He is an Obstructionist. Plus he is a hard money freak, chaining Dollar to weighted commodities ??? really...

He is a clever politicians, I thought he ran a good campaign, but he let Trump get ahead of him with the Tea Party Voters... Look how Levin, Beck and that group have no real power with the party anymore

I like John K. A lot as a person and I think he can govern but balance amendment budget is no starter for me. Anyone who believes in math and numbers can't possible vote for anyone that believes in that

FortWayne says

Social security pays for itself.

All Mandatory Payouts will exceed government revenue based on a 3% GDP revenue model come 2024-2027, The Debt Game ended at the start of the 1920's with the population boom....

Nothing we can do about...

A list of countries that would have a debt below up well before us, so I have stopped caring about it. Out of all the math, data and number charts I have the federal debt is the one that has crossed the path of no return ...

It is what it is, I am not concern about it...

In fact I would be more concern on the economic front if we tried to pay the debt with higher taxes and less entitlement payouts, that would actually to do real damage to the economy

Logan Mohtashami says

mell says

Entitlements should have been cut long ago

You could never ever get this pass in a Democracy, to cut entitlements. Not to mention it's bad economic policy as well.

I have not seen an example of where it harmed the economy, in fact front-loading the entitlements has been causing dislocations over and over again and shortfalls and crisis. Whole municipalities or cities went bankrupt and it is one reason for the large inequality in the US. Other countries manage their finances tighter wrt pensions. Nobody says there should be none, but "guaranteed" 8% return rates for years should lead to instant indictment and imprisonment of the signing politician.

dodgerfanjohn says

Cruz

If I had to pick between Cruz or Trump, I would pick Cruz, Trump is just a horrific realty show right in front of our eyes.

Logan Mohtashami says

Nothing we can do about...

But than, wouldn't we just simply run out of credit card at some point? Realistically every credit card sooner or later declines. Tell me if I'm wrong, but doesn't this sound like "we have a train coming at us, and we have no idea how to stop it so we'll just stand and wait till it hits us?"

Logan Mohtashami says

In fact I would be more concern on the economic front if we tried to pay the debt with higher taxes and less entitlement payouts, that would actually to do real damage to the economy

Lower taxes and less entitlement payouts is the solution, adjust for the budget every year. Countries do so successfully on a 1-3 yr review cycle basis, no guarantees of appreciation beyond that.

Ironman says

OK, tell us, beside being real good at campaign promises and selling snake oil

I am not sucker to believe in Trump, just out of that thesis, If I had to pick either of the two, It would be Cruz, I would vote for none of them in real terms, so for the first time in a while, It looks like I am not voting

FortWayne says

But than, wouldn't we just simply run out of credit card at some point?

We can't run out of Dollars, just look at Japan, They can't run out of Yen.

It's a simple computer button we are pushing, It's not like we are actually printing dollars where we would need a ample supply of wood to produce to it. :-)

It's all one giant ponzi scam, live life, don't worry about things that can't be changed with any real mathematical curve

mell says

Lower taxes and less entitlement payouts is the solution, adjust for the budget every year. Countries do so successfully on a 1-3 yr review cycle basis, no guarantees of appreciation beyond that.

It's impossible to pay off the debt and with our demographics, it's impossible to grow our economy out of it nor would we tax high enough to matter.

We have 100 Trillion Dollars in Financial assets in America

We are going to be fine here... Worry about Europe instead of the U.S.

Logan Mohtashami says

It's impossible to pay off the debt and with our demographics, it's impossible to grow our economy out of it nor would we tax high enough to matter.

We have 100 Trillion Dollars in Financial assets in America

You did the math, and read the papers!

Are you sure you're a Republican?

Ironman says

He doesn't want to win because he's spent LESS money??? Really??

The consultants he initially hired a couple of years ago to focus-group this thing, and who came up with the “hate Mexicans less subtly than your opponents and blame outsiders" strategy, reported that Trump wanted a second-place finish, in order to enhance his brand without having to run in the general.

They only forgot one thing: No one ever lost money by underestimating the intelligence of the average American.

Logan Mohtashami says

It's impossible to pay off the debt

No it's not, but it's pointless since debt is savings in this system.

To pay off the debt means people have to put their savings into other vehicles.

Interest paid is the cost of debt, and look where it is now:

FortWayne says

but doesn't this sound like "we have a train coming at us, and we have no idea how to stop it so we'll just stand and wait till it hits us?"

The only train we have is money being stripped out of the working people of this country by the non-working.

I put the welfare frauds who abuse the aid we give to their kids along with fucksticks like Romney who collect income without producing any actual wealth -- goods and services that satisfy human needs and wants -- in return.

If you put say half of our national security budget in the latter category the latter far, far outweighs the former. Maybe just alone the rent-seekers are a bigger drain on the paycheck economy vs. the layabouts.

People on welfare actually raise wages, LOL, while the Romney fat cats work tirelessly to reduce their workers' wages.

Trump himself:

“Our taxes are too high. Our wages are too high. We have to compete with other countries.”

Bellingham Bill says

No it's not

I have run every single model possible, it's impossible to pay off the debt,

Since so much of it is mandatory, any recession from now on will just expand the total debt profile since so much of is mandatory

Entitlement spending goes right back into the paycheck economy.

Check your models.

Bellingham Bill says

Check your models.

It's not only just impossible you can't even bend the mathematical curve lower after...... In 2057 you could possible see the end of the light come 2076...

That's it

but still 96 years away from paying the debt off at that point

We will be lucky to have any year with a surplus until 2024-2027 time frame, after that .... game is over ....

How many years surpluses we would need to pay off the debt in total ....

Not a workable number

Just takes some monetary doubling

https://research.stlouisfed.org/fred2/series/MABMM301USM189S

and things will be great again.

We didn't really pay down our ginormous WW2 debt either, but inflation took care of it for us in the 1970s.

Bellingham Bill says

WW2 debt

This isn't WWII debt one time spending... this is 50 years of major mandatory payouts to an older aging population that isn't going away like a one time spending war event...

It's impossible, trust me, I have tried to have any model that would work and it all comes back negative, badly too

It is what it is...

Good point BB on the money doubling. Inflation is a tried and true method of screwing investors and reestablishing fiscal solvency in the face of the government being wholly owned by the owners.

On the plus side: real estate owners will see fantastic appreciation when the inflation hits the fan. And inevitable wage inflation should help the terminally indebted.

Logan Mohtashami says

have run every single model possible, it's impossible to pay off the debt,

Since so much of it is mandatory, any recession from now on will just expand the total debt profile since so much of is mandatory

Try a model with higher GDP growth and lower interest rates on gov bonds. Is there a model that is constraining these, or an assumption?

Your plot doesn't seem consistent with Bellingham bills Fred plot, unless entitlements are more than 90 % of the spending.

Logan Mohtashami says

.. this is 50 years of major mandatory payouts to an older aging population that isn't going away like a one time spending war event

50 years? Are there going to be that many boomers living to 100? I don't think so.

YesYNot says

GDP growth

YesYNot says

100?

#1 I am using a model of growth than no one actually believes, not even myself that U.S. can achieve a 3% solid GDP Model for 40 plus years starting now

Out of all the data and math models

This is not only the easiest to calculate, it's so one sided because of the mandatory nature of things that it's mathematically irrelevant, there is no model out there that can pay out the entire U.S. debt off.

Not only that, every single recession we have from now out just makes the debt bigger and bigger because of the mandatory variable of the equation. I am not even counting any expansionary or much needed direct spending

The only chance for a yearly surplus is from 2016-2019, it gets harder to get a yearly surplus and just the net interest payments alone will be a trillion $ a year in 10 years

It's a

limf (x) = Sky
x-a

on debt

the notion that America can pay off all it's debt off with a back drop of no yearly surplus for 50 years.

I mean come on guys, there is easy math and then their is very easy math.

You would need to pull off 27 years of yearly surplus to even create a model of debt pay down with net growth at higher taxes on the middle call well north of 61% effective to even breath the conversation out .

So, not only is it impossible, just the notion of it, of paying down all the debt is actually funny. It's almost a joke model, how crazy due we need to get to do something that makes no sense economically

It is what it is

Have you run a model with money printing and 70s style inflation for 5-10 years?

Logan Mohtashami says

We have 100 Trillion Dollars in Financial assets in America

We are going to be fine here... Worry about Europe instead of the U.S.

I agree with its geopolitical and demographic advantage, but the financial assets vs the debt are not a reason to be bullish. Those assets were suddenly worth not much in 2008 and they can as easily leave the US as they are entering it (even the hard-to-move houses are mostly overvalued just because of the land). The US is currently a great insurance for wealthy people around the world, but that can change. But at least I can use your unbridled optimism next time the bailouts come along to advocate against them again. Not that it will help. Why did we need those bailouts then in the first place if those 100 trillion assets were just peachy sloshing around in 2008? We heard that some here said the world was going to end! ;)

tatupu70 says

Have you run a model with money printing and 70s style inflation for 5-10 years?

Everything you can imagine ....

The real crux of it and it's the issue of the world

Old mature economies are getting older and their mandatory payouts are exploding ... We haven't even hit the growth stage yet, we are still in it's infancy

Come 2024-2057, that's when the debt actually really grows, the debt payouts to government revenue models now weren't that bad, hence why the deficit is falling the last few years, but by 2019, it's starting its baby step. We couldn't get a surplus now .... it's not going to get easier past 2024....

We are going to get better demand growth in a few years with better demographics, but ... it pales to comparisons to the mandatory payouts that will happen

It's hard to come out with a 200 Million dollar yearly surplus let alone a 21 Trillion dollar surplus over time to pay the debt off ...

Older economies can't grow as fast as they used to + they're getting older = higher government payouts..

Nature is winning this game as she won really from the population boom of the 1920's

One of the major points I always stress is that a lot models don't have any recessions from now to 2060 ... and even with that there is no way to pay the debt down or any surplus years even

Any recessions now with a lack of revenue.... just grows the total debt much higher those years,

I wish I come up with something that could even give a 0.01% chance of the debt getting paid off, that would mean massive growth... But It's not realistic

Demographics economics are the real deal this century for older mature western economies...

I'm not suggesting paying it down. I'm suggesting inflating it away.

tatupu70 says

I'm suggesting inflating it away.

We might get better inflationary factors when our young Americans come into play in the next decade.... But, we aren't in any economic mode to create inflationary factors

Even the thesis of a infrastructure repair bill in itself shows the glaring issue. We just need to fix stuff, the build out thesis for a growing population labor force just isn't big anymore, we have already gone through that mega phase already.

Logan Mohtashami says

We might get better inflationary factors when our young Americans come into play in the next decade.... But, we aren't in any economic mode to create inflationary factors

That's even better then. If you don't think we'll create inflation, just print the deficit and be done with it.

tatupu70 says

just print the deficit and be done with it.

That is the game plan, we will have deficits always and they will grow bigger and bigger....

The bigger risk would be trying to pay the debt down, that would actually create economic damage...

It's one thing if the bond market went against you but highly unlikely in America, we have the biggest economy, biggest military and the reserve currency, we own it,

Speaking of Bonds.

"One hundred years of data says this is important. Only three times in the last 100 years have corporate bond yields declined going into a recession (1925, 1945, 2001). Twice, after rising into a recession, they have remained stable and declined only after the recession was over (1920, 1974). In the remaining 12 times, corporate bond yields peaked at some point during the recession and began to decline in its latter stages."

http://community.xe.com/blog/xe-market-analysis/importance-decline-corporate-bond-yields

Yes, there will be a contested convention. And it will be ugly.

. this is 50 years of major mandatory payouts to an older aging population that isn't going away like a one time spending war event.

payouts to the boomers is going to be one helluva stimulus program this decade and next.

These trillions aren't disappearing into a black hole, they're going right into the health sector and whatever else seniors spend the money on.

real (2015 dollars) gov't social benefits per working-age person

you think that's a headwind, I think it's a tailwind wrt the labor market and economic growth

this is up 50% since 2000 and is going up 50% from here

Fed printed $1.8T to buy stupid mortgages 2010-2014.

They can print $1.8T to pay off the UST in the SSTF as they are needed to be cashed out.