There are several equations to the simultaneous equation problem, the common solution to all the equations simultaneously is the 'null' set
Equation 1: annual deficit, dictated for the important part by entitlements that shall go exponential, unfundable except by printing; if attempt to fund by tax would impact GDP even more than already impacted
Equation 2: accumulated deficit (aka total debt and off-balance sheet obligations) that is mathematically unpayable given GDP limitations except by printing, and all currently held at low low low financing rate
Equation 3: baby boomers' median and average nav, and the dead hand of demographics, ethnic and inter generational, whereby taxing the young to support the old shall be an increasing problem, thus requiring the tee up of more printing
Say GDP is between 14-15 tril
Interest rate on sovereign debt is between 1 and 2 percent
Accumulated federal debt is 14-15 tril
Accumulated federal obligations is between 150-200 tril
First wave of baby boomers reaching earlier planned retirement and counting on distributions out of the accumulated federal obligations, and out of annual deficits
Should interest rate rise, the gaming blows up, because then printing is required to pay interest, or still more borrowings at ever higher interest rate
Must print, at ever faster rate, and after that, print some more
The bad news? This time things are different.
The good news? We know what they must do in the end-game, and are allowed to front run their end-game. |
