The United States is heading for bankruptcy, according to an extraordinary paper published by one of the key members of the country's central bank.A country that feels free health care for Warren Buffett just because he's over 65 is rather generous will other people's money.Higher interest rates are coming.I guess all of this is the logical outcome of the Welfare State.Anyway,would you want to be living in an old,densely populated city where large segments of the population rely on the government if the U.S. federal government has trouble raising money in the bond market?
A ballooning budget deficit and a pensions and welfare timebomb could send the economic superpower into insolvency, according to research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is already bankrupt. "To paraphrase the Oxford English Dictionary, is the United States at the end of its resources, exhausted, stripped bare, destitute, bereft, wanting in property, or wrecked in consequence of failure to pay its creditors," he asked.
According to his central analysis, "the US government is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who, in this context, are current and future generations to whom it has explicitly or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush administration this week cut its forecasts for the fiscal shortfall this year by almost a third, saying it will come in at 2.3pc of gross domestic product. This is smaller than most European countries - including the UK - which have deficits north of 3pc of GDP.
Thursday, July 13, 2006
US 'could be going bankrupt'
The Telegraph reports:
