Let’s see, that passing of the crisis would be in 2020? 2030?

The Congressional Budget Office says deficit will be still about what it is now in 2019. They said interest on public debt would quadruple by then. The Social Security and Medicare crisis that wasn’t supposed to hit for years has hit. Medicare is already cash flow negative and S.S. will be later this year or next.

We have falling tax revenues and consumer spending will never return to 70% of GDP. Now, think about that. If GDP was what it was with 70% Consumer Spending and GDP falls as spending falls, then what does that mean if consumers go back to 10-11% savings like they use to have and which was “normal” and 62% or so was “normal” for their portion of GDP?

It means GDP has to sink quite a bit for quite awhile as they over correct, get unemployment under control and resume “normal spending.” The Government is going to attempt to borrow and keep GDP up as much as they can. Think about this. They have added over a trillion in debt and GDP still fell 6% and government spending is part of GDP’s forumula.

This is not sustainable for as long as this crisis is going to last and even an economic recovery won’t move GDP positive in real terms as long as we are running these deficits. Any positive number would only be due to rising debt and deficit spending, not real lasting economic growth.

–Jan

Related Posts:

• The explosive rise of the U.S. budget deficit and debt burden will lead to serious inflation down the road, says billionaire and Obama supporter Warren Buffett.
• Medicare is even more a problem than social security
• Don’t count on the market going down even though our economy is not in recovery, but the crash will be worse when it comes.
• While we are in a depression, don’t confuse that with what the market will do.
• The market isn’t the economy.

Leave a comment