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Have we guaranteed that the next several generations of Americans will have a much lower standard of living than they did in the year 2000?

Was American prosperity over the past 32 years an illusion/delusion? Reagan tripled the debt which started out at $930 billion; it doubled under George W. Bush, and ballooned under Obama to $17 trillion. Between principal and interest that is a “gift” from Uncle Sam of $7000/year for the “average” family of four. Obviously, much of that money didn't go to families; it went to financial institutions.

Credit card debt exploded in past decades, artificially inflating the economy by bringing future purchases and taxes on those purchases to the present so that when the future is here we are not buying those items.

Pensions, retirement packages and health care were promised but under funded; neither the recent wars nor care for the wounded were funded. Americans have coasted on our infrastructure for the past 40 years taking out far more than we put back in; our infrastructure earns a D+ from the American Society of Civil Engineers who indicate that it will take $3.6 trillion by 2020 to bring it up to par.

Social security will be solvent by adjusting the cost of living allowance and a slight increase in the retirement age; however, the average boomer couple and their parents will take out of Medicare $220,000-$300,000 more than they put in.

The head of Medicare indicated that promised benefits are in the tens of trillions of dollars. The next generations will pay vastly increasing taxes during their working lives into Medicare, probably a minimum of $1000/year more than they now pay, experience benefit cuts or a combination of both of them.

Our creature comforts made possible by our debt “party” and deferral of obligations, will be paid for by subsequent generations, not us. In 2020 interest on the debt alone will be $10,000/year for a family of four.

The average graduate from college emerges with $27,000 in debt; many cannot find jobs in their fields. Effectively, the average graduate has "bought" an expensive car without getting the car.

  • Jun 13 2013: Pat that may well be true But I have a copy of his essay On Wages Adding eighty million or whatever workers would seem to be important and unimaginable 200 years ago. Also, everyone also quotes Adam Smith. but he also wrote about the evil of men. Remember that Herbert Hoover's response to the Great Depression was based on their idea of classical economics. There are a number of things going on and the gestalt doesn't weem too good to me. Probably we are coming from about the same place. These old guys were talking about trade using sailing ships. something I don't know a great deal about but a Tech Dinghy is something I could easily turtle. Thanks.
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      Jun 13 2013: Adam Smith was ambiguous. Hoover introduced the Smoot Hawley act so he clearly did not subscribe to Ricardo.

      What people don't understand is the economy fixes itself if people like FDR and the FED do not interfere.
      • Jun 14 2013: Okay Pat you always make good points but we both believe I assume that the next generations face harder lives. Just today I talked to severl young people who did all the right things and owe fortunes in student loans. I do worry about their futures.
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          Jun 14 2013: The high cost of education is a consequence of government meddling. It is an unintended consequence where ever the government gets involved they produce the opposite of the intended effect. In other words where more money is made available the price goes up.

          This does not have to be a permanent thing but it probably will be as it was with the great depression. Trying to change people's mind is hard as that scarce resource has been so perverted by this culture.
      • Jun 15 2013: When I was I physics t.a. I felt most my students found physics boring , but more than that they found me boring. The average American isn't interested in physics, chemistry, biology, engineering, ag stuff etc. Malthus understood limited resources, but being an optimist he recognized moral restraint for people if we are all indeed sentient life forms. Some of us I'm nnot sure about.
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          Jun 15 2013: the consequences will not be boring nor pleasant, as my grandma used to say we are in for a rude awakening.
      • Jul 1 2013: Pat:
        I wish you had clarified what makes you think that the "economy fixes itself" . I see few examples of that. Unless you mean that the"economy" has little or nothing to do with the population, especially in the realm of employment. There seems nothing in the logic of business that they have any obligation to provide employment, and under modern condiitons, given all the cheaper alternatives, little incentive to do so. And in the future, even less
        Or do you mean that the untrammeled business world, if allowed to go full blast, would be ready and able to be taxed at a Nordic level to support the society that gives it its Charter and protection?
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          Jul 1 2013: You are economically illiterate, you do not understand.

          Either read basic economics by Thomas Sowell or at least visit the Mises website, they know more about this than I ever will.
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    • Jun 11 2013: I applaud your optimistic outlook!---but,

      1)Longer lives = more expensive health care particularly when you factor in the cost of yet-to-be created new diagnostic tools; just look at the cost of a genetic test for breast cancer--$4,000/test just to see if you might get cancer which doesn't even cover the cost of treatment,

      2)We have been pursuing alternative energy for 40 years with minimal success; solar will only become reasonable if we can decrease the cost of installation. As pointed out to me by a post member, solar cells are cheap, installation expensive,

      3)I've heard a lot of conservative critics of high-speed rail transport as not cost effective; I live in the country and will not be impacted by mass transit,

      4)On line education will clearly cut down costs; however, it does nothing for those graduates who have $27,000 in debt,

      5)The RATE of debt increase is being reduced; I seriously doubt that Obama will balance the budget any time soon. Bringing down the deficit will not prevent the average family of four having to kick in $10,000/year to pay off interest on the debt by the year 2020,

      6)Let's see just how high the stock market is when the Fed stops infusing $1 trillion/year into the economy.
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        • Jun 11 2013: I hope you are right!
        • Jun 19 2013: Like Richard, I also say that I hope you are right. However, I seriously doubt that your prediction will hold true.
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    Jul 8 2013: .
    Don't worry!
    The "much lower standard of living" will be in the field of invalid (harmful) happiness.
  • Jul 1 2013: LaMar: Speaking of bad decisions, how could building more railroads be a good one?! Passenger trains didn't even pay a hundred years ago, before we had cars and roads. It is basically unsound, and inconvenient, except for the NYC subway..
    And maybe you haven't noticed it, but the population is getting sicker faster than the"Healthcare" is improving.
    I don't know what you think about the "Federal Reserve System". a private Cartel of Bankers , who run the best Sweetheart Racket in the World, but what makes you think the "Economy" is improving? Certainly not the additonal wealth coming in to people who work. The Dow average, perhaps? The "GDP" is such a screwed up measure of the economy , that it is not much help. Prisons, and all their accoutrements, are counted as Productive. The TSA is counted as Productive. The IRS is too. As well as Derivatives, and other outright scams.
  • Jul 1 2013: What is really happening is that the Industrial Revolution, about 300 or so years old, is speeding toward a resolution ,of sorts. In other words, we are all going to be out of a "Job". Which I might remind everyone, was the whole point of the I.R. , to replace human labor with steam power , machinery, etc. Now robots and AI. So we are soon going to be in the position that Wealthy Families have always been in: I.e. what are we going to do about all our "unemployed" relatives.? People have a tendency to take up self destructive habits if they are too bored. The answer has always been "Nepotism", i.e. create "interesting " jobs for them , like NGOs, artistic ventures, etc. Without the slightest regard for "Efficiency", usefulness, or any other consideration short of damage.
    Needless to say , this is going to require some serious re-thinking of values on everyone's part.
    It has become apparent to thinking people that our present economic arrangements, owner ship of "Wealth", etc. are drastically dysfunctional. For instance, the whole Middle Class in the US is being wiped out, or at least being drastically impoverished. There is nothing much in the cards likely to save them. All this time , the "Economy" is said to be constantly "improving", Productivity going up and up , but it has less and less relevance to actual people. Henry Ford figured this all out about 1911, but our Wall St. geniuses continue to believe that inventing absurd .financial scams constitutes "productivity" , without apparently noticing that it all depends on being able to get the rapidly diminishing class of taxpayers to backstop their casino.
  • Jul 1 2013: Us decline, though obvious and distressing, is not inevitable or irreversible.
    US prosperity was basically enabled by cheap power, coal and oil. Energy is directly convertible into money, and many useful projects. Now we can forsee the end of this particular party, but luckily there is a practical substitute. During the Cold War , the US invented and demonstrated a different form of nuiclear fission for use as an aircraft engine. Called the Liquid Fluoride Thorium Reactor (LFTR), this type of power plant has no solid fuel rods, high pressure, water , steam , or explosions.. It is passively failsafe, can use Uranium LWR waste as fuel, and is carbon free, the Thorium fuel is cheap and widespread. It is 200 times more efficient than LWRs, and the waste problem is drasticallly reduced. Its big drawback was that it couldn't produce nuclear bombs, so it was defunded and forgotten, 40 years ago. The Chinese, less foolish than the US it seems, is continuing its development right now, having borrowed the no longer Secret technology from the Oak Ridge National Lab.
  • Jun 18 2013: I just watched an interview on today's CNBC TV, A professor of Economics from Harvard; Niall Ferguson, was saying that the present U S economic policy is not so friendly to economic growth. So it is probably going nowhere but down. He also said that there are ways to improvement, but clearly we are not even started to that direction yet.
    Now let me discuss the cause of this trend of lowering standard of living in the macroeconomic view point.
    First of all, our government policy on economic stimulus is to increase consumption according to some old economic theory. But all the other conditions imposed by the government are discouragement of production by environment restrictions, corporate tax system, education on science and engineering skills and increase the workers' pension and welfare, even reduced working hours, such that we are losing even more competitive edge to foreign countries. Under that kind of condition, to increase consumption by economic stimulus will not improve economic growth due to foreign competition because of their edge on wage scales. To add oil on the fire, the government attempt to pour more money on welfare payment to the poor including the people who is capable to work but now wouldn't bother to seek jobs anyway. And the gov also increase the minimum wages too. All these were built on raising government debt, which is going to bite us back sooner or later. Moreover, because of the weak economy, even college graduates couldn't find jobs. Now when so many people are not working productively. either involuntarily (no jobs available) or voluntarily (due to welfare support), how can we maintain our standard of living except borrow more money to import more foreign goods.
    In other word, the little economic growth we are having now is only due to the nearly 6 trillion $ debt which bought the temporary relief. It is just like a large family which borrowed large amount of money to maintain the facade of prosperity, but it surely can't last forever
  • Jun 16 2013: Pat I agree but we can only be Cassandras There are very few white hats out there As for Bubba When the bubbles start bursting they will notice for a little while.
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    Jun 13 2013: There are certainly some indicators that would point to a lower standard. The key her is what is "a lower standard". The new work week hours established by Obamacare is now 30 hours, down from 40 hours, with no rise in the hourly rate. To ensure that would not be violated employers have re-set the hours to 25 per week. By any measure that is a reduction in income. We still have not addressed the Carter / Clinton mandates that banks loan to unqualified applicants for housing. We are continuing to build larger and less efficient government and spending is rampant with no concerns to any regulation or balance. Talk is that we would add 80 million to the labor force .... at 25 hours a week determine the value of that. If green was the answer industry would be all over it. The millions Obama gave was taken with a laugh and we got nothing in return.

    The cost of ownership of houses, cars, recreational vehicles, and the "extras" we now enjoy will most likey cease. Politicians have ensured their future ... they opted out of Obamacare and have only the best medical for life ... total retirement and full pay after two terms ... and exempt themselves from the same laws they write for us .... they are the elite and no longer serve the people.

    That sound awfully negative ... sorry. We are on the very edge of recession and depression ... that should in itself answer the question you pose.

    I wish you well. Bob.
  • Jun 12 2013: What has happened is the usual type thing and was predictable from Ricardo and Econ 101? More workers, outsourcing, and more imports What would one expect from classical economics or Econ101? We would expect the same from the physical sciences and biology. Also, the big employers wanted to lower wages What happens when wages are lowered? Last time The Great Depression. So no accident there Maybe just greed and ignorance. The people that did this don't care about you or me or the average college graduate. In real terms the federal statistic - average weekly wage has been falling for forty years. Duh. The secret of M A G I C is misdirection. Have we been talking about these most important problems? Again When you lower wages you lower wages O B V I O U S Did I nnotice - No - Unlike Adam Smith I didn't realize man is evil. At least some men are. How did I find this? I kept reading, and read Ravi Batra's book - The Pooring of America. This is in Ted converstions now and comments on Huff Post. S C A R Y
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      Jun 12 2013: It is ironic that you have pointed to Ricardo before as he brought about comparative advantage. Which states the opposite of your theory.
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    Jun 12 2013: Yes it is just a math problem that no one wants to look at, but the chickens will come home to roost...