Before you pooh-pooh the idea, read this paper by an economist with The Federal Bank of Saint Louis.

[quote]

This paper explores these views from both partial and general equilibrium perspectives.
It concludes that countries can go broke, that the U.S. is going broke, that remaining open
to foreign investment can help stave off bankruptcy, but that radical reform of U.S. fiscal
institutions is essential to secure the nation’s economic future. The paper offers three
policies to eliminate the nation’s enormous fiscal gap and avert bankruptcy. The policies
would replace the current tax system with a retail sales tax, personalize Social Security,
and move to a globally budgeted universal healthcare system implemented via individualspecific
health insurance vouchers. The radical nature of these proposals reflects the
critical nature of our time. Unless the U.S. moves quickly to fundamentally change and
restrain its fiscal behavior, its bankruptcy will become a foregone conclusion.
[\QUOTE]

http://people.bu.edu/kotlikof/Is%20t...20Bankrupt.pdf

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

Doubling of taxes? Yea that's gonna help. Geez, people get a grip! Only thing doubling of taxes would do is destroy our Nation. Who would or could pay them?

Yet the spending cuts sounds like a winner.

http://people.bu.edu/kotlikof/Is%20t...20Bankrupt.pdf

Opening paragraph, guess we could guess where he is coming from.

I guess we don't see the same Nation?

So who's going to make us pay this money back or when are we going to start paying it back?

National Debt is not the same as debts owed by individuals or even corporations.
Many are simply "forgiven".

The US will probably default the same way it did before, through inflation.

That's why the dollar is only worth 5 cents today.
So get ready for $30/gallon gas, and $1,000 weekly grocery bills. That effectively reduces the national debt as a percentage of GDP, although interest rates do go double digit for a while.

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

The Sky is falling!...UFO's have landed on the U.S. Capitol!!...Elvis is alive!!...we will start paying $20 for a gallon of milk next week!!

Ahh, so you are going to forgive the debt owed to you by the government?
It's easy, just convert your net worth to cash, and burn it. If everyone does it, the dollar will stay strong.

Other countries that issue dollar denominated debt are stuck, and they call their creditors together and say, we aren't paying our debt back unless you forgive half of it, but the US doesn't have to do that, it can just print more money to pay everyone off. Creating massive inflation, which reduces the debt in real terms.
The people holding US treasury bills are screwed, as well as the drug dealers with bails of $100 bills buried, as well as the countries using US dollars as a reserve currency. Obviously these practices stop, and the Euro becomes the worlds currency.
And the US becomes another former super power.

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

[quote=goober]Before you pooh-pooh the idea, read this paper by an economist with The Federal Bank of Saint Louis.

I fully agree that the US is near Babkrutcy.. BUT"

You also quoted the following?:
Quote:
One solution is an immediate and
permanent doubling of personal and corporate income taxes. Another is an immediate
and permanent two-thirds cut in Social Security and Medicare benefits. A third
alternative, were it feasible, would be to immediately and permanently cut all federal
discretionary spending by 143 percent.

Where did you get this, and who are your quoting. Apparently they don't know what they are talking about TO WIT: IT IS IMPOSSIBLE TO LOWER ANYTHING BY MORE THAN 100% (at that point whatever was lowered becomes "ZERO")

didnt you hear? it will be $30 for a pint of milk

[quote=doniston]
I call your attention to the authors words "were it feasible", he is pointing out that eliminating all discretionary spending would not close the gap.


The author is Laurence J. Kotlikoff,Professor of Economics, Boston University
Research Associate, the National Bureau of Economic Research. The paper is here on the authors web site. http://people.bu.edu/kotlikof/Is%20t...20Bankrupt.pdf

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

Well it may be that the US is on a path to bankruptcy but I think its tough to make the case the Euro is going to be the worlds next reserve currency. The EU has been running deficits roughly equivlant to what Bush has been running with the two largest EU economies actually running higher deficits - Germany and UK both running deficits in excess of 3% of GDP. The EU has a larger debt level than the US - 65% of GDP - while the EU is running debt in excess of 70% of GDP. To make matters worse the EU has worse demographic issues, higher unemployment, slower average economic growth rate and much larger entitlement program liabilities. This seems to me to mean the EU will go bankrupt far before the US. We will have to see what happens with China and India in the next 20-30 years - maybe one of them will be up to the task.

http://www.euractiv.com/en/euro/publ...article-154656

__________________
"Liberty is not a means to a higher political end. It is itself the highest political end - Liberty is the only object which benefits all alike, and provokes no sincere opposition - The danger is not that a particular class is unfit to govern. Every class is unfit to govern. - Power tends to corrupt, and absolute power corrupts absolutely." - Lord Action

This just proves yet again that central planning always leads to disaster. After nearly 100 years of the Federal Reserve, a fiat currency and fractional reserve banking, this is what we get. Most people seem to think that the Federal Reserve is the bulwark against economic disaster yet it turns out to be the instigation.

Perhaps this is a good thing. Perhaps as we hit hyperinflation and the government collapses, enough people will realize that socialism does not bring prosperity to all, rather it tends to concentrate power and wealth into the hands of a few.

The structural deficit is over 6%, it's masked by the Social Security Surplus.
The structural deficit for the EU is only 2.6%.
I do think the Euro will replace the dollar, unless we get another Clinton.

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

Or, as one Chinese analyst suggested a war of US vs. Europe in a bid to maintain US dollar hegemony. The analyst was recommending that China keep out of it and go with whomever is the victor. I just wish I could find that article.