>> Younger generations will suffer, but I think older folks are the ones who will pay the highest price. Baby boomers spent their lives paying for Medicare and the SS - based on the government's promise that when they'll be old, the younger generation will be forced to pay to support them. But it looks like times are coming when younger people will have difficulties even to support themselves.
I'm not sure when the wheels officially "come off". I have seem many organizations come apart because of excessive debt and, depending upon how the cash flow needs appear, it can be a sudden impact or a death by 1000 cuts. What typically happens with businesses (and I think the model does apply in this context) is that they can survive a long time as long as there is no major crisis but when the crisis comes, that's it. In the government's case, it would just about have to be something similar to the crash of 08/09.
In the case of government, borrowing power is immense and it has the added security of knowing that foreign lenders are motivated to lend more, because a failure to do so effectively renders the existing debt worthless (back in the 80s, Citibank found itself in this position with Brazil -- where if Citibank refused to lend them money for them to pay interest on debt to Citibank, then Citibank would be in the untenable position of having to write off a lot of debt that was until that time, considered "performing").
Eventually, the music stops. I don't think it is even remotely possible we'll have the political will to repay all this debt. Too many people view it now as their entitlement to have the "goodies" and even rational, intelligent people like some who post here simply cannot see that there will have to be an end to it. |
