Why so green and lonely? Everything's going to be alright, just you wait and see.

Sunday, February 19, 2006

Feynman on Deficits

In 2005 Maclean's magazine published an article entitled Is America Going Broke? which (not surprisingly) presents a bleak outlook on America's ability to ever ever ever (...ever) pull itself out of debt:
[David] Walker's department projects that, under the current tax rates, interest costs on the skyrocketing national debt would be about half of all government tax revenues by 2031. Ten years later, the cost of servicing the debt will exceed all government revenues.
"The U.S. government is effectively bankrupt," [Kotlikoff] wrote. The available options to close the fiscal gap? Hike income taxes by 78 per cent; slash Social Security and Medicare benefits by more than half; or eliminate all other discretionary spending.
"That," he concludes, "is America's menu of pain."
Reminds me of an old Richard Feynman quote from way back when deficits were first becoming "astronomical":
There are 1011 stars in the galaxy. That used to be a huge number. But it's only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers.
Given the Reagonomics policy that deficits-are-A-okay and can always be reversed once the economy is sufficiently st-st-stimulated (tee hee), I wonder if these same attitudes can be successfully applied to our personal finances. Wait a minute, now I remember: Americans are applying these same principles to personal finance, with $7,200 in average household credit card debt (see Stats Attack 1).


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