"After my sixth divorce, I started to wonder if it was me?" Greg Allman
When the final epitaph is written on how governments around the world created the upcoming global depression, it will be written in red ink of the exploding pension bomb.It is incideous. One hundred years from now sociologists will have a fancy name for the dynamic of spending future generations' money on the current generations' pensions. The costs of supporting a retired teacher from age 50 to 90 are astronomical. All the current leaders are off the hook. They will be dead when the bill comes due. Future leaders get to blame the problems on dead people. Future workers will be holding the bag.Frankly I hope the pension bomb blows up soon. That way, people who are alive then the fuse was lit 30 years ago will see the devestation of when it blows. I'm afraid that only after the pension bomb blows (which will be the financial equivalent of Hiroshima) will proper laws be passed to outlaw inter-generational financial promises by government.
Government spending all comes down to priorities. Relating government to a houshold budget: A normal household might have say desired 4 items: Food, clothing, shelter and vodka. They also have an income (tax revenue) and a credit card (deficit spending). A properly run household would pay for needs (food, clothing, shelter) with income and extra left over could go to the lowest priority item, vodka. It would never finance vodka on the card, and certainly never do so chronically. A family that does so goes homeless.A government-run household would choose not to go through the painful process of prioritization. The head of the houshold pays for the vodka with income, and then run out of money for food. THEN, makes make the case to the spouse that food is an emergency spending issue requiring the purchase of food on the card. This is what governments do EVERY DAY with spending. It's easy to say that basic services (national defense, police, fire, teachers) are necessary and need to be funded by higher levies and deficits. But what about the other stuff? The government's version of vodka. Items such as entitlements, unemplyment benefis or welfare? Ok. Let's prioritize these against police, and teachers. And prioritize those against higher taxes and deficit spending.This prioritazation would force the proper question to be asked of the voters---one that the government won't want asked: Instead of, "Will you agree to give up more of your income for better schools?" (The houshold's food/shelter.) Rather, "Do you want to forgo your income to fund a 40 year pension for a teacher that retires at 50? (Vodka)."The answer to both questions would be quite different.
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