CYNICONOMICS |

This is the second article in a series I’ve called “7 Fallacies About the Lengths of Things.” I’m answering seven questions in the diagram below, choosing from the possible answers on the right-hand side. In this article, I’ll consider the risk that government debt rises so high that an eventual default or restructuring becomes a certainty. Later, I’ll evaluate the amount of time that we have to fix our debt problem before we reach that point. In other words: “How Long Until it’s Too Late?” In my opinion, this is the most important question that we face in today’s economy.

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People often misstate the dimensions of things, and lengths can be especially prone to exaggeration. But fortunately, we have ways of revealing exaggerations. We just need to find the right data and the best way to look at it, which is the idea behind this series of articles.

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This is my sixth word association in a series of articles called “Seven Deadly Sins of the Government Debt Debate.” I’ve been cataloging the many ways that government budget projections mask the true severity of our debt problem. And I’ve added the competitive element of a word match. Well okay, there’s not much competition involved, but have a look at the diagram below and see if you can match the seven “sins” on the right to the seven topics on the left. In this article, I’ll suggest a match for topic #6: “Behind-the-scenes decisions.” It’s not necessary to see my first five matches to follow this one, but here’s a one sentence summary of each to give you the general idea:

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This is the fifth of a series of articles I’ve called “7 Deadly Sins of the Government Debt Debate.” You don’t need to read the other four to follow this one, but if you were to go here, here, here or here, you’d find that we’re playing word games. In the diagram below, see if you can match the “sins” on the right to the topics on the left. The earlier articles matched the first four topics to the sin that fit best. The discussion here covers topic #5: Net Government Debt.

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In this article, I’ll reveal the fourth of the seven sins introduced in “7 Deadly Sins of the Government Debt Debate – #1” (sin #1) and continued here and here (sins #2 and #3). In case you missed the first three installments, the diagram below shows how the articles tie together. Seven “sins” are listed in the column on the right, seven topics on the left, and we’re playing word match with the two columns. Because I’d like to establish trust, we’re using the honor system. If you’d like, you could skip to the end of the article to see my answer. But you’d feel bad about yourself afterwards. The discussion covers topic #4: Entitlement Program Accounting.

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Over the past few weeks, the Ivory Tower wing of the “kick the can consensus” has been busy sharing their upbeat interpretations of the CBO’s latest debt projections. Paul Krugman wasted no time declaring that the projections were “distinctly not alarming” in an article that ended with the assertion that “kicking the can down the road … is the responsible thing to do.” And Krugman’s not alone. Anyone scanning op-eds and blogs has seen a story that the CBO gave an all clear for more fiscal stimulus, or at least delayed restraint. But Brad Delong’s approach was the most detailed of those that I came across.

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In this article, I’ll reveal the third of the seven sins introduced in “7 Deadly Sins of the Government Debt Debate – #1” (sin #1) and continued here (sin #2). In case you missed the first two installments, I’m channeling my inner elementary school student and doing this word match style. Seven “sins” are listed in the right-hand column of the diagram below, seven topics in the left-hand column, and we’re playing word match with the two columns. The discussion here covers topic #3, pension fund accounting, and I’ll disclose my answer at the end.

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Here’s a post that was inspired by an excellent article on the Federal Reserve by Eric Parnell, published Friday on Seeking Alpha. And in particular, a question that was asked in comments that followed the article. The questioner suggested that we shouldn’t be too fast to criticize Ben Bernanke and asked: “What would you do?” To be fair, he also Continue reading →

This is the second installment of the word match challenge that I introduced in 7 Deadly Sins of the Government Debt Debate – #1. The idea is to match the seven “sins” in the right-hand column below to the seven topics on the left.  In this article, I’ll ask if you agree with my answer for topic #2: “Unexpected Events.”  But before I give you that answer, I’ll share new research showing that the current debate on debt reduction fails to consider one of the biggest impediments that we face.

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You may have seen that the CBO updated their ten year budget projections yesterday.  Here are a few observations about its economic assumptions:

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