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To: blam

Whether his prediction will come true or not I don’t know. US governance has been grossly defective for a long time, mainly because of the decadence of its leadership class (and by that I don’t mean it’s politicians).

However, he uses a different mode of calculation of national debt than is normal. He includes future monies owing or, rather, implied future spending on certain programs like Social Security and Medicare. That is not actual financial debt, money owing on actual loans, which is under 1/10th of his number. That is bad in itself as debt is now = gdp.

But focusing on SS and Medicare as “debt” is fallacious. Most government spending is “necessary” and is going to continue into the future as it is all, practically speaking, already committed, so why isn’t it all “debt”? Definitions and wording don’t matter to economic analysis, spending is spending.

His calculation is not the correct way to do a long term income-expense analysis. A better way is to use a net increase, expense-income, over a given time, that is, taking the deficit, not the debt, and projecting it out. He would be making a necessary but improbable assumption of a straight line projection, but that’s par for the course in these things.

Even so he would end up with a much smaller number than his assumed value of US assets. And that too is a thorny question. Valuing assets is not at all straightforward. Personally I would use a present value of US GDP discounted for x years at y% interest. We can argue over appropriate values of x and y.


19 posted on 06/10/2022 4:56:22 PM PDT by buwaya (Strategic imperatives )
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To: buwaya
Thanks.

Everything is okay then?

23 posted on 06/10/2022 5:14:55 PM PDT by blam
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To: buwaya

In addition, the gdp is a terrible measure of US productivity. It was created during an industrial economy, and doesn’t recognize the value of, for example, data, software, IP, etc.

Not suited to the Information Age.

Still, that’s no excuse for the govt running up the national debt so politians can buy votes.


25 posted on 06/10/2022 5:29:18 PM PDT by MV=PY (The Magic Question: Who's paying for it?)
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