paying for the past
Here is an important discussion panel from the “Peter Peterson 2015 Fiscal Summit” with Lawrence B. Lindsey, President and CEO of The Lindsey Group, Former Director of the National Economic Council under President George W. Bush, and Former Governor of the Federal Reserve Board, Richard W. Fisher, Former President and CEO of Federal Reserve Bank of Dallas and Alan Greenspan, President Greenspan Associates, Former Chairman of the Federal Reserve Board.
They are talking about thefuture for the United States. Mr. Greenspan is saying the U.S. is broke and the solution is not going to be pretty. And at around 45 min into the interview Mr. Lindsey says “This is how it always ends, this is the endgame”. There are more unbelievable statements in this video like the moment they are talking about “an economic hit of 8 on the scale of 10″.
There is a lot more information contained within the video that is essential viewing. Some of the information shared I have listed below:
Lawrence B. Lindsey discussed that in order to maintain healthcare and social security costs at current levels of 4.6% of GDP by 2025 there would need to be 20% across the board tax increased in all taxes. If this doesn’t happen the government will attack healthcare and social security. He also said that the OASDI – the Social Security Trust Fund actually ran cash flow negative for three years and the balances are starting to run down and will do so within the late 2020’s. He said that the financial arrangements that the state has created are no longer sustainable. He mentioned Rome, the Ming Dynasty and Zimbabwe. He said this is how overly indebted societies end and then they move onto another arrangement.
Richard W. Fisher said that interest eats up as much as healthcare. Interest and healthcare will be half the entire budget of the United States of America. He also said there would be a real issue when interest rates go up. He also said that the American people cannot rely on social security, medicare or medicade and that with more people saving for these contingencies will suppress economic growth as people will consume less in order to save more. He also said that by 2021 there will be a Trillion dollars in interest burden on the national debt. He confirmed that between June and September for changes to start happening. He also said that Mexico has one of the best run governments. They have declared budget, their debt as a percentage of GDP is miniscule. They don’t run deficits more than 2.5%. They are liberalising their infrastructure and becoming an exporting powerhouse with a totally independent central bank.
Alan Greenspan talked about the underestimation of debt because the government is not including contingent liabilities. A contingent liability is a potential liability. For example, what would be the probability in today’s environment that JP Morgan be allowed to default? The answer is zero. This means that the whole balance sheet of JP Morgan is a contingent liability. The government has committed itself to guaranteeing everyone too big to fail and this doesn’t concern just financial institutions like Fannie and Freddie, but a whole range of non-financial institutions like GM. He also said that the government has committed itself to pensions that the United States cannot pay. He also said that there is no productivity growth over the past 24 months and that tax receipts are lower than projected. Importantly he said that a considerable amount of individual tax receipts are related to the rise in stock prices. When that comes to a halt, not when it goes down, just when it stops – that will bring pressure – a major problem. He also said that quantitative easing has done nothing and that no conceivable scenario is going to be easy. He also mentioned China and that the Chinese central bank has said don’t foreclose on loans. China can create whatever GDP it likes. Capital investment is not funded by business for profit but for political reasons. Their growth rates are essentially deciding to build something and enforcing funding. State owned enterprises being financed by state owned banks directed by the state council. China is in worse shape than we think. The renminbi is now floating, that is they are not undervalued and it’s worrying. ECB – European Central Bank has a problem more than the Federal Reserve. He said that if the Federal Reserve goes bankrupt, the sovereign credit of the US will stand behind it, but if there is a run on the ECB he’s not sure where it would go.
As Pastor Williams has talked at length about China and Europe before the US. Everything Pastor Williams has said is now being discussed by top financial people like Alan Greenspan.