Brookings Institute: Romney Tax plan raises taxes on 95% (major issue)

[stockholmer]

25. I think that the US can keep on racking up massive debt, and thus keep the game going for at least

Last edited Thu Aug 2, 2012, 01:47 PM - Edit history (1)

10 plus years. Using very simple math, if the US GDP is 15 trillion per year, I could see the current situation being maintained even with a 30 to 35 trillion dollar federal debt, although this is utterly dependent on a ZIRP regime of financial repression being enforced. Just a an uptick to, say 5 or 7% in Fed's baseline rate would (even at todays 16 trillion debt) mean well over 1 trillion per year payments in debt service alone. At that point, the global bond market will flay the USA alive, as a 'flight to safety' will no longer be the historical default position of US dollars and treasuries.

This (ability to keep the ponzi scheme of debt going) is due to one main fact; the US dollar is enforced as the world's reserve currency (especially through it's petrol dollar linkage) via its empiric gunboat diplomacy. Another thing that drives the trillions in hot money into US treasuries and dollars is a 'beggar-thy-neighbor' policy that emanates out the global banking system via The City of London and Wall Street.

The 800-pound gorillas in the room are Medicare, (not Social Security) which has close to 100 trillion in unfunded liabilities, and the total notional value of global derivatives, which is well over 1 quadrillion. These derivatives, should they even suffer a 10% failure rate (or 100 to 125 trillion dollars) will be sorely pushed to be made whole (see AIG in 2008/2009) for the benefits of the private banksters, whilst the debt load is dumped onto the globe's citizens. This is the essence of neo-feudalism.

This all said, a Ryan-style regime of austerity will hasten the fall, as will a failure to break the clock of the private bank's network of global systemic control (including their national and supra-national central banks ie. the Fed, ECB, BoC, IMF, BoE, World Bank, the BIS, etc), and a removal of the profit motive for healthcare in the US via a single-payer scheme.