Sunday, December 16, 2012


"Unfortunately, the piling of debt on top of debt can't continue to infinity. We have the locked-in, demographically driven cost increases associated with supporting the large entitlement programs of Social Security and Medicare. Then there's the hundreds of billions of dollars in bad debt bulging under the carpets in the Pension Benefit Guaranty Corporation (PBGC), the FHA, in student loans, the FDIC, etc., etc.
And sooner or later interest rates must begin to return to more normal levels (and probably well beyond). At which point the cost of servicing all the debt – currently about 6% of the US federal government's expenditures – will soar.
Simply, there is no denying that government is firmly caught in a trap from which there is no politically acceptable way to free itself. Thus, for the continuum to remain intact, expect the excess spending to continue and, in all likelihood, get worse."

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