Practice Good Theory

Private debt is often a bigger problem than government debt, in a mixed economy. Governments encourage private borrowing, and force some citizens to underwrite the losses of others. The great recession is essentially a tale of private debt gone wild. Greenspan's folly: After the dot.com bust, Americans did not tighten their belts for long. Look at the first chart. After dropping slightly for two years (2003-04), debt payments rose as a percent of disposable income. This was Alan Greenspan's "clever plan" (TM) to get out of the recession: " borrow against your house ". A  different (private) response: Then came the housing bust of the "great recession". Bernanke would have liked to repeat the Greenspan "solution", but this time, Americans were more scared. They have been repairing their balance sheets (see 2008 and beyond). Flat levels of liability:  Meanwhile, the total   level (nominal) of household liabilities has flatte...

In a previous post I predicted Social Security will be around for a long while. Briefly, if you are between 30 and 50 you will likely receive social security, but you will receive less than promised if you're in the upper-middle income range. (If you're 20 or so, I have no prediction to make. I wouldn't rely on it. Still, by the time you're 30, you you can re-evaluate the situation.) The math of Social Security does not add up, but each time it has faced a crisis, the tax-rate has been raised. The Wiki has a table showing how it crept up, along with a list of changes, showing how "benefits" were cut, particularly at the higher end. Even among "conservatives", only about 10% think social security should be phased out. Therefore, the program will stay. About 30% of voters, across the political spectrum, think benefits should be reduced, while the majority (60%) want the program kept as is. This means raising taxes is the most viable political s...