Tuesday, July 21, 2009

Visualized whirled economies - some new graphs.

First, here is a chart showing the duration in months of all US Recessions that have happened since 1900. Second, a chart showing relative sizes of GDP vs Debt for each decade since the 1960s. [hat tip: leap2020.eu]

As you can see, we are in no danger of ever being able to pay off all this debt. What does this mean for us? Jewish households already have very high living expenses, but as this chart shows, steep tax increases are inevitable. There is no way to use sleight-of-hand to make this debt go away - at some point we will have to pay it all back - plus interest.

It's time to revive an old idea - a Federal balanced budget amendment to the constitution, requiring all obligations to be on the table and fully funded by current year government revenues instead of interest-bearing debt instruments.

That may mean stripping the Federal government of all fingers in all pies except the ones the Federal government is supposed to take care of, leaving everything else to the governance of individual states. Yes, class, you heard it. Time to put the hogs in Washington on a diet.

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