Richard Fisher, the President of the Dallas Fed stated that the Federal Government's total unfunded liabilities are approximately $99 Trillion! In other words, the projected gap between future payments social security and medicare payments promised and revenue entering the system is $99 Trillion! Even if taxes were substantially increased (to the detriment of the general economy) and payments were decreased, the system would still be deep in the red.
The least painful outcome we can hope for is to commit ourselves to following through on the payments promised, because two generations of Americans have in good faith planned around anticipated social security and medicare payments. As for those 45 years and younger, fiscal realities dictate that universal entitlements will have to be phased out. In other words, if we immediately begin a regimen of extreme austerity (higher taxes, lower spending) we may be able to preserve a limited, emergency safety net for the poorest, most deserving Americans. But, wealthy, middle class and upwardly mobile individuals must plan their retirement based on the assumption that they will receive nothing from the federal government. This means they will have to cut consumption, save money and strengthen their nuclear and extended family ties; in other words plan on living with your kids, as the elderly do in 80% of the world.
Sustaining a limited, emergency safety net will be contingent upon ceasing the subsidies towards fiscally unsustainable behaviors, such as widespread singlemotherhood and the chronically unemployed. Progressives will surely howl in protest, but the fact of the matter is we cannot continue to subsidize those who choose to produce child after child that they cannot support. And some (so called) conservatives will equally resist calls to dismantle the American Empire; but we cannot continue to build or uphold other nations, when we cannot even pay for our own. Rather than undertake the painful and unpopular steps required to defuse the unfunded liabilities time bomb, I expect our political class to continue the easy, but ultimately destructive path of printing money or what Über Douche Meister, Herr Krugman refers to as "quantitative easing."
China warns Federal Reserve over 'printing money'
The least painful outcome we can hope for is to commit ourselves to following through on the payments promised, because two generations of Americans have in good faith planned around anticipated social security and medicare payments. As for those 45 years and younger, fiscal realities dictate that universal entitlements will have to be phased out. In other words, if we immediately begin a regimen of extreme austerity (higher taxes, lower spending) we may be able to preserve a limited, emergency safety net for the poorest, most deserving Americans. But, wealthy, middle class and upwardly mobile individuals must plan their retirement based on the assumption that they will receive nothing from the federal government. This means they will have to cut consumption, save money and strengthen their nuclear and extended family ties; in other words plan on living with your kids, as the elderly do in 80% of the world.
Sustaining a limited, emergency safety net will be contingent upon ceasing the subsidies towards fiscally unsustainable behaviors, such as widespread singlemotherhood and the chronically unemployed. Progressives will surely howl in protest, but the fact of the matter is we cannot continue to subsidize those who choose to produce child after child that they cannot support. And some (so called) conservatives will equally resist calls to dismantle the American Empire; but we cannot continue to build or uphold other nations, when we cannot even pay for our own. Rather than undertake the painful and unpopular steps required to defuse the unfunded liabilities time bomb, I expect our political class to continue the easy, but ultimately destructive path of printing money or what Über Douche Meister, Herr Krugman refers to as "quantitative easing."
China warns Federal Reserve over 'printing money'
China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed's direct purchase of US Treasury bonds.
By Ambrose Evans-Pritchard
24 May 2009
Richard Fisher, president of the Dallas Federal Reserve Bank, said: "Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature."
"I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," he told the Wall Street Journal.
His recent trip to the Far East appears to have been a stark reminder that Asia's "Confucian" culture of right action does not look kindly on the insouciant policy of printing money by Anglo-Saxons.
Mr Fisher, the Fed's leading hawk, was a fierce opponent of the original decision to buy Treasury debt, fearing that it would lead to a blurring of the line between fiscal and monetary policy – and could all too easily degenerate into Argentine-style financing of uncontrolled spending.
However, he agreed that the Fed was forced to take emergency action after the financial system "literally fell apart".
US bonds sale faces market resistance 24 May 2009
Nor, he added was there much risk of inflation taking off yet. The Dallas Fed uses a "trim mean" method based on 180 prices that excludes extreme moves and is widely admired for accuracy.
"You've got some mild deflation here," he said.
The Oxford-educated Mr Fisher, an outspoken free-marketer and believer in the Schumpeterian process of "creative destruction", has been running a fervent campaign to alert Americans to the "very big hole" in unfunded pension and health-care liabilities built up by a careless political class over the years.
"We at the Dallas Fed believe the total is over $99 trillion," he said in February.
"This situation is of your own creation. When you berate your representatives or senators or presidents for the mess we are in, you are really berating yourself. You elect them," he said.
His warning comes amid growing fears that America could lose its AAA sovereign rating.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5379285/China-warns-Federal-Reserve-over-printing-money.html
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