Tuesday, June 24, 2008
Last week Dallas Federal Reserve Board President, Richard Fisher, priced the present payoff for Social Security, Medicaid and Medicare at $99.2 trillion. This staggering total slipped through the big media outlets almost without comment. One has the sense that no one in America-or the world-believes that we will be able to meet our obligations, but that’s not Mr. Fisher’s main concern. He’s worried that our government will succumb to the temptation that apparently every government before us has, which is to ‘monetize’ the obligation, or reduce the actual burden by printing more money. Fisher notes that:
‘We know from centuries of evidence in countless economies, from ancient Rome to today’s Zimbabwe, that running the printing press to pay off today’s bills leads to much worse problems later on. The inflation that results from the flood of money into the economy turns out to be far worse than the fiscal pain those countries hoped to avoid … Inflation is a sinister beast that, if uncaged, devours savings, erodes consumers’ purchasing power, decimates returns on capital, undermines the reliability of financial accounting, distracts the attention of corporate management, undercuts employment growth and real wages, and debases the currency.’Richard Fisher, Dallas Fed Reserve President and CEO http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm
When asked the naive question, “Will will Social Security and Medicare have enough money to give me my benefits when I retire?”, the answer is a resounding, “Yes!-provided that we can come up with another $100 trillion over the next few years.” Which is to say “No-it is beyond the realm of the possible.”
Added to the unscalable mountain It is unlikely that the US taxpayer will ever be able to , while addressing ongoing budget shortfalls (currently $10 trillion) as well as unfunded liabilities at every other level of government.