Alan Greenspan says economy will start to fade ‘very dramatically’ because of entitlement burden

CNBC ^ | April, 12, 2019 | Jeff Cox

[Aquamarine]

Economic growth won’t last as the U.S. labors under the burden of growing entitlement programs and weakness around the world, former Federal Reserve Chairman Alan Greenspan told CNBC.

The long-time central bank chief repeated his warnings about the weight that Social Security, Medicare and other programs are having on what have been otherwise solid gains over the past few years.

“I think the real problem is over the long run, we’ve got this significant continued drain coming from entitlements, which are basically draining capital investment dollar for dollar,” he told CNBC’s Sara Eisen during a “Squawk on the Street ” interview.

“Without any major change in entitlements, entitlements are going to rise. Why? Because the population is aging. There’s no way to reverse that, and the politics of it are awful, as you well know,” Greenspan added.

While he said the economy looks “reasonably good” in the short run, he expects that over the longer term, growth “fades very dramatically.”.......

[cba123]

Not very quickly.

Just last year, we set the largest trade deficit with China in all recorded history.

Between any two nations.

Ever.

[blondiegoodbadugly]

That’s for saying what I thought.

[JudgemAll]

Add to that Obamacare which is virtual ticket to stop working and worrying.

[Paul R.]

This brings up an interesting series of questions. Maybe someone on FR has the figures:

What was actual US total industrial output for 2018 (or, if not available yet for 2018, then, 2017), in dollars, adjusted for inflation if appropriate.

It’d also be interesting to see individual figures for industrial exports to our top 10 export markets (countries).

Then, what were US total industrial imports in dollars for the same year?

And again, it’d be interesting to see figures for US industrial exports to our top 10 export markets (countries).

It might also be useful to see similar figures for agriculture (including raw lumber and such) not included above.

[Boomer]

Paying the interest on our national debt might have some effect on the financial burden of the national treasury as well.

I don’t know if it can ever be paid off at this point but at least it can be made to not increase.

[kearnyirish2]

On a related note, NJ just passed “right-to-die” legislation; this is their solution to the ageing population. Remember the discussion about “death panels” with ObamaCare? They are here; take the poison or we’ll bankrupt you - and you’ll leave nothing to your heirs.

[yldstrk]

Slam the borders shut. We do not need a million new low level workers every year. I was in the store yesterday and a spanish lady in front of me in line couldn’t understand the question “What is your zip code?” Ridiculous.

[kearnyirish2]

Our elites are concerned about what happens to that store if that import wasn’t in line in front of you; why do you think they’re importing them? We have no shortage of workers; with our low birthrate, they view it as a shortage of CONSUMERS.

[yldstrk]

Our elites are concerned about what happens to that store if that import wasn’t in line in front of you; why do you think they’re importing them? We have no shortage of workers; with our low birthrate, they view it as a shortage of CONSUMERS.
*****************

Consumers can consume in Mexico, Guatemala and all the other places they are rushing in from.

[HighSierra5]

I thought Greenspan died awhile back. He sure looks dead. Wanna ruin your appetite? Just think of him having sex with his wife.

[sphinx]

That would be the hard working taxpayer who helped build the country and actually paid into Medicare and Social Security.

Yes: the hard working taxpayer who helped build the country and actually paid into Medicare and Social Security … while never bothering to demand that the programs were fully funded (for Social Security) or sustainable (for both). We are all participants in a generational conspiracy to kick the can down the road. Some of us have been arguing for reform for many years. Others have gone along willingly with the Ponzi scheme. But we are all in the same boat. Our children and grandchildren will be entirely within their rights to cut us off. Sooner or later, they will. The only real question is whether they will manage to do this before we drive into the ditch.

[Dr. Ursus]

Medicare for all will take care of that.First,we make granny comfortable and then.........!

[RonnG]

‘Our children and grandchildren will be entirely within their rights to cut us off’

Isn’t this the generation demanding free college for all,free Medicare for all, and legalized dope?

[nathanbedford]

Here are the reasonable solutions offered up by FReepers on this thread:

1 deport aliens

2 bring back offshore production

3 get control of our runaway entitlements system

4 implement welfare work requirements

5 disparage the messenger

6. Welfare put a stop to illegals draining our system

7 investigate SSI claims

8 look into people receiving benefits were not supposed to

9 put everything into a separate funds and exclude Congress

10 stop buying from China

11 eliminate goldplated retirements

12 eliminate and criminalize all welfare payments

13 eliminate abortions

14 support Trump's reelection 17 eliminate Obama care

18 if the debt cannot be decreased do not let it increase

19 slam the borders shut

20. Disparage the messenger's wife

There is not one of these solutions with which I disagree. There is not one of the solutions that I believe has a chance of being enacted before the deluge. After the deluge all manner of ill-conceived solutions will not only be tried but they will be imposed. When the deluge comes, count on it, tyranny comes with it.

Those on these threads who oppose Article V constitutional solution for this terrible dilemma ought to consider how much of their liberties they will retain after the deluge? After the reckoning, the least of our worries will be about a "runaway" convention of the states which was certified to pass a balanced budget amendment. Many who oppose the solution provided for in the Constitution will exclaim, why oh why did we not believe that a runaway convention could be halted by only 13 state legislatures out of 99 state legislatures? Why did we stubbornly refused to consider the arithmetic?

why were we more worried about petty and fanciful fears than about our salvation?

Meanwhile, we should ask ourselves, why are we incapable of enacting anyone of these reasonable solutions? We should ask, is there anything but insanity which prompts us to believe that repeating over and over what has failed, will produce a legislative epiphany before the deluge?

Please see this reply of a few weeks ago which does not bow to the short-attention-span but does consider why the system is utterly broken and will not enact any of the solutions listed above:

Tax cuts and cheap labor are not going to win hearts and minds of a frightened generation who have been cheated out of their birthright.

You are absolutely right. The politician who votes tax cuts and facilitates cheap labor by open borders and imprudent trade deals is not concerned about the lost birthright of a generation because they reckon the bankruptcy is a generation off into the future or, if not one whole generation away at least one election away.

As long as we allow voting, radical change is coming.

Right again. Radical change is as inexorably certain as death. When the voters might ultimately bring that change down upon themselves will almost certainly be in the wake of real social disintegration or at least a very painful financial episode. We have exchanged thoughts, or least I have visited my thoughts upon you, concerning the artificial world in which we currently exist, a world of scarcity which falsely appears to us to be a world of abundance because of the peculiar position of the United States as a superpower, the world's largest economy, the world's reserve currency, culminating in an ability to borrow almost into infinity without immediate symptoms of inflation because of the very cheap labor coming from globalization and immigration and abundant cheap goods coming from ultimately lethal trade practices.

I think the problem is deeper than politicians validating open borders and free trade, in fact, I no longer think it is productive to blame politicians for doing what politicians do any more than it is sensible to blame scorpions for behaving like scorpions. Why? Because I believe that the people ultimately get what they want and, biblically, what they deserve. A politician who does not pander to the short term clamors of the electorate, no matter how foolhardy the consequences, will soon be out of business. The business of politicians is to be elected.

I contend that we actually live not in the world of abundance but in a world of scarcity. Our resources are too scarce to admit as Kamala Harris does in one breath that we should have the equivalent of open borders and no enforcement by ICE and in the next breath demand that health care be free for all illegal immigrants. As Milton Friedman said, you cannot have open borders in a welfare state. But our current situation deceives us and leads politicians like Harris to indulge in fantasies. She can do this because, as the reserve currency of the world and as the still surviving economic superpower, we simply print money when we want more socialism. There is no reckoning. Yet when one is undeceived by the bubble, one comes to realize that we cannot live at our current standard without borrowing $1 trillion a year. We have no political will to live at a less opulent standard because we have no sense of scarcity.

Whom then do we blame? The electorate? Are they to blame for not recognizing the bubble? Are they the blame for listening to the Pied Piper's of globalization, crony capitalism, social welfarism? Are they morally responsible for failing to internalize that the music cannot play on? Margaret Thatcher's axiom, socialism is great until you run out of other people's money, does not seem to apply to our immediate environment because so long as we can borrow 1 trillion dollars a year there is no running out of money. Therefore, the politicians find themselves in a race to the bottom, if they do not pander to the short term desires of an electorate conditioned to live in this bubble, they are voted out of business in favor of the politician who will sell favors like the Mayflower Mdm.

After all, the electorate is in a race to the bottom as well. If a manager of a capitalist enterprise does not go offshore, if he does not hire illegal immigrants, if he does not lobby the government to commit crony capitalism, he too will be out of business. Is the dead-end hamburger flipper to blame for turning to politics as the other door to an economic future slammed in his face?

Oh, the reckoning will surely come. The waves of globalization, immigration, automation, and trillion dollar deficits cannot go on so they will not go on.

How do we get ourselves into this fix? The founders understood human nature and did everything within their power and within the considerable genius of their foresight to create structural barriers to human nature. Checks and balances and separation of powers, all dependent upon the rule of law have been eroded over time until we reached the nadir in this mayoral race in Chicago where there is no two-party contest, therefore, there is no separation of powers. We have a one-party state and that inevitably leads to the kind of corruption that brought down the Soviet Union.

So I do not think it was one particular mistake on one particular issue that has brought us to this perilous state. Rather I think it is the erosion of the moral values upon which our founders were also relying that over time have come adrift from the Constitution and its checks and balances which otherwise might have saved us from ourselves.

This implies the decline of our epistemology, our theology, our understanding of what is good and decent and proper. I have often pointed to The Frankfurt School as an obvious turning point in the history of modern thought with profound political and social implications. Indeed, the idea of The Frankfurt School was to affect politics by changing the social culture. Clearly, it has succeeded to a point that would satisfy even the likes of George Soros.

In the years on these threads that I have been writing in support of than Article V approach to restoring the Constitution by the means provided in the Constitution to become an instrument in keeping with the Founder's understanding, I have always conditioned my hope on the understanding that no amendment of any consequence was possible absent some sort of great dislocation. Although you and I differ on the wisdom of an Article V approach, we both believe that a reckoning is coming.

With the reckoning must come an agonizing reappraisal, a come to Jesus moment on a national level. This must be a bottom-up not a top-down moral realignment. No one with even a limited glimpse of history can be confident of that outcome.

[kearnyirish2]

Of course - but they won’t be artificially preserving a neighborhood/town/county/state up here, would they?

They are imported to stave off the natural selection outcome of expensive socialist sh!tholes; external wealth transfers (from American taxpayers everywhere) are funneled into the dying locale’s housing market, public school system, stores, etc. - so we don’t have ghost towns. Ghost towns arose during the Gold Rush when there was no reason for them anymore (the local gold was tapped out); these are 21st century variations of the same theme.

[rlmorel]

[cdcdawg]

The GOP will probably take Greenspan’s concerns as a reason to make a 375 point entitlement reform plan the centerpiece of their 2020 election strategy.

[Alas Babylon!]

He should have a serious talk with his wife.

She keeps supporting the ones who not only eagerly gave out these entitlements, but are chomping at the bit for round two, Socialism. Followed by the Hunger Games.

[kearnyirish2]

“10 stop buying from China”

While I agree with this wholeheartedly, the fact is we had a brief (in the context of history) time where we could choose cheap Red Chinese junk or better-made, more expensive American goods. Today the manufacturers of the latter are shuttered up, and the cheap disposable junk of the former is the only option on the shelf.

[nathanbedford]

Evidently, I can't count.