$210 Trillion in the Hole and . . . Printing

This is good. Kotlikoff tells us that the U.S. government is insolvent. Nothing new here. This news is old. But no one cares.

In a recent written and oral testimony to the Senate Budget Committee on February 25, 2015, Kotlikoff told the committee that the U.S. is worse off than Greece.

“The U.S. has a $210 trillion “fiscal gap” and “may well be in worse fiscal shape than any developed country, including Greece,” Boston University economist Laurence Kotlikoff told members of the Senate Budget Committee in written and oral testimony on Feb. 25.

The first point I want to get across is that our nation is broke,” Kotlikoff testified. “Our nation’s broke, and it’s not broke in 75 years or 50 years or 25 years or 10 years. It’s broke today.

“Indeed, it may well be in worse fiscal shape than any developed country, including Greece,” he said.

Can’t get more blunt than that.  Question now is what will the committee do with that information?  What will politicians who hear about out insolvency do with their budgets?  I don’t know to whom this information has come as a shock but apparently it has come as a shock to those who rely on other government bulletins.  He mentions the Inform Act.  Kotlikoff continues . . .

“This declaration of national insolvency will, no doubt, shock those of you who use the officially reported federal debt as the measuring stick for what our country owes,” Kotlikoff told committee members who are considering President Obama’s proposed budget for Fiscal Year 2016.”

Gary North has the right take on this information and on the news.

“We know what is going to happen. If there is anyone in Congress who is not aware of this, he is living in a fantasy world. But, I suspect, most Congressmen really don’t understand it. They have been able to kick the can, decade after decade, and they assume that they will be able to do this in the future. Nothing bad has happened so far, so they assume that nothing bad will ever happen.

The American people know nothing of this, but if they did know anything about it, they would side with Congress. They would assume that kicking the can is an effective way to deal with unfunded liabilities.”

No politician is going to vote for cuts to his constituency.

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