Oh Look, Truth!


Oh oh, now he went and did it.

Blinder on CNBC just pointed out the obvious – if you stop the deficit spending (because you refuse to raise the debt ceiling) GDP contracts on a dollar for dollar basis, which is about 6% — instantly.

This of course means that GDP is overstated by that very same 6% compared against actual private demand, and what’s worse is that it’s perpetually being overstated.

This is an exponential function which is why our debt is expanding at an ever-increasing rate.

We can’t keep doing that forever.  Everyone admits that.  But the longer we keep doing it the more it’s going to suck when we stop doing it.

And this means you must stop doing it now, because tomorrow it will be worse, and the day after that even more so, and on and on and on.

The payroll tax cut (now expired) moved the Social Security exhaustion date to 2033, supposedly.  I called it as 2019 assuming the tax cut remained in place but now that’s gone I figured we might make it to 2025 or thereabouts.  A pair of professors now believes it’s 2031.

To stop this we would have to either index the program’s retirement age, immediately cut benefits or increase the tax 2.7% additionally.

Yes, that’s on top of the 2% tax increase you already got on the 1st of January.

But again, when you get down to the bottom line nobody is yet facing down the real issue — the exponential expansion of medical costs.  Until that is addressed nothing else matters because you will never, ever grow the economy at a constant and never-interrupted 5, 6, 7, 8, 9 or more percent a year — and the record from 1980 to today suggests that you need that number to be in excess of 9%.

Worse, for that growth rate to be real it must be in excess of debt increase in the system as a whole.

That has simply never happened in the history of America.


Either take on the medical monopolies or shut your pie holes gentlemen.

Shut Your Pie Hole

The Market-Ticker

Discussion (registration required to post)