net pv is somewhat lower when one discounts using 2% normal (risk free) return rate, making 49 trillion a mere 11 trillion, assuming all 49 trillion was needed at the end of 75th year (for discussion sake, to be conservative)
of course, the actual risk free rate may be 1% for all I know, or even zero %, can be argued.
so, to make 11 trillion digestible, the politicians must machinate to make it effectively disappear, say to bring the beast down to bite size relative to current fed debt ... to bring 49 tril down to, say 2 tril, the discount used must be ... 4.36 %,
thus absolutely guaranteeing a 4.36 less 2% inflation rate, meaning 2.36% inflation targeting, just to digest what has been promised to date
given that the workdown will not be smooth, and that the obligations continue to ACCELERATE, at a moment of crisis, surely the equation will do a discontinuity? and that is just for the fed portion, and not for the neighborhood pothole down the road, and not for the 'retired' bum on the street corner
also, remember, inflation must be already higher than 2.36 %, and significantly so, thus, for the other side of the equation, all that income counted on from the feds debt will effectively be worthless; surely that does not bode well for anyone continuing to hold dollars and dollar debt instrument?
recommendation: sell |
