United States of America Bankrupt? What The Federal Reserve Bank of St. Louis Has To Say

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Saw this at The Oil Drum (see blogroll). http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf

Warning there’s some math in that pdf. It’s safe to skim right by. If they yank it before you can download, it let me know. I’ve got a copy.

One more warning. I’m not an economist. This just confirms what I’ve been sensing with my (economics-wise) untrained mind.

The article says that using generational accounting, the US is going bankrupt. To the tune of 65.9 TRILLION dollars. Five times GDP! Twice our total National Wealth! The details are horrific. From Drug Plans to Medicare to Wars to Rebuilding NO. It’s all adding up with no way to pay it off without making some fundamental changes.

(What’s generational accounting? The lifetime fiscal burdens facing current and future generations. If fiscal policy creates a burden that is so high the resources of the current or future generation can’t meet them you get insolvency.)

Further, the author points out that our current fiscal policies follow the same pattern as the 20 or so countries that have experienced hyperinflation over the past century.

So, how are you going to prepare? Don’t forget to account for high energy costs with associated trickle down impacts on food supply and other basics of life from Peak Oil, climate change, and possible short term disruptions due to pandemics.

Got food? Clean water? Fuel efficient way to get from point A to point B? Know your neighbors?

It’s going to be an interesting ride.

If you’re interested in further reading, and were both great.