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In this case their predictions are of the "look at the trend and extrapolate over a few years" kind which I am familiar with, and have a reason to believe. The

In this case their predictions are of the "look at the trend and extrapolate over a few years" kind which I am familiar with, and have a reason to believe. There's a HUGE difference between extrapolating a trend which shows no signs of slowing, and "predicting" that it will in fact be no problem whatsoever. Extrapolating a trend requires no particular expertise. But judging the impact of a particular cashflow on an economy as a whole, well, that's a much bigger deal. How do they "know" that it won't be a problem? Can they assure us we won't enter yet another war and have to print money even faster? Are they confident that inflation will never get away from us? Have we already dodged and will we continue to dodge the liquidity trap? What happens if deflation takes over in the US -- like it has in Japan -- despite heroic levels of QE? Given that economists are unable to answer those questions plausibly (i.e. they can't accurately predict the future) it stands to reason that their assumption (which is what it really is) that the level of debt service is OK is a bit questionable in my mind. Remember, extending a trendline on a single metric (US debt or interest payments) and doing the same on a million metrics (everything that makes up the US economy) are two WILDLY different things.

dragonwriter 12y ago
> In this case their predictions are of the "look at the trend and extrapolate over a few years" kind which I am familiar with, and have a reason to believe. Those predictions necessarily involve predictions of revenue levels (and thus, general economic performance, and thus, the impact of debt service levels on general economic performance) for all the intervening years. Which means accepting them means accepting that the "experts" involved can predict the impact of debt service levels on general economic performance, which is exactly the thing you have to assume they cannot do to dismiss the relevance of economists and budget experts opinion on the final condition. > Remember, extending a trendline on a single metric (US debt or interest payments) and doing the same on a million metrics (everything that makes up the US economy) are two WILDLY different things. Debt service costs are a product of: 1) Starting debt levels, 2) Government revenue vs. expenditures in the intervening period, and 3) Cost of borrowing for the government in the intervening time. Note that #2 is dependent on performance of the overall economy, including all factors which influence the overall economy (and not just the aggregate performance, but how that performance is distributed relative to what government taxes.)
- msandford 12y ago
  So if these folks are so good at predicting to the point where we should trust their predictions, then why aren't they all retired from predicting the stock market and getting rich? Wouldn't that be the path of least resistance for someone who is good enough at this to be worth listening to? I think it's plain for most folks to understand that living beyond your means continually eventually means that debt payments comprise a large portion of your budget. No clairvoyance needed there. This is what the US government is doing right now. It's not hard to see that eventually the debt will be crushing. What's much harder to do is predict exactly at what point this will occur. I would fully agree that the exact date of the debt service exceeding other large fixed payments is highly speculative. But that it will happen, absent structural changes, I don't find terribly contentious. Deficits are nearly constant, surpluses are rare and minor. http://www.davemanuel.com/history-of-deficits-and-surpluses-in-the-united-states.php http://www.davemanuel.com/history-of-deficits-and-surpluses-...
  - msandford 12y ago
    Actually, you're probably right. The debt is a joke, we'll totally get tons of money for social security (definitely enough to pay for a sweet, luxurious retirement) and don't worry about it! Just go spend, spend, spend!
  - dragonwriter 12y ago
    > So if these folks are so good at predicting to the point where we should trust their predictions, then why aren't they all retired from predicting the stock market and getting rich? Because the value of particular investments is a different thing than any of the things that they are dealing with, in much the same way that climate is different than weather. > I think it's plain for most folks to understand that living beyond your means continually eventually means that debt payments comprise a large portion of your budget. This isn't actually necessarily true. IF you continually live beyond your means (expenditures > revenue) then, assuming financing costs aren't continually decreasing, you will have debt service costs that, on average, increase over time. If your revenue also increases over time, however, its quite possible to continually have expenditures exceed revenue without having debt service costs increase as a share of total expenditures. > It's not hard to see that eventually the debt will be crushing. [...] What's much harder to do is predict exactly at what point this will occur. That's the only thing that matters. Predicting what a trend would result in given an infinite time horizon is pointless "But this long run is a misleading guide to current affairs. In the long run we are all dead." [0] > I would fully agree that the exact date of the debt service exceeding other large fixed payments is highly speculative. Defense and nondefense discretionary spending may be large, but they aren't fixed. > But that it will happen, absent structural changes, I don't find terribly contentious. I'm not really interested in why you find it contentious, I interested in the basis for your position that the level of debt service at which that will occur is a (1) problematic in itself as a level of expenditures on debt services (dismissing the conclusion in the article that the expert consensus is that it is not), and therefore a matter of near term concern. [0] John Maynard Keynes, A Tract on Monetary Reform (1923)

dragonwriter 12y ago

> In this case their predictions are of the "look at the trend and extrapolate over a few years" kind which I am familiar with, and have a reason to believe. Those predictions necessarily involve predictions of revenue levels (and thus, general economic performance, and thus, the impact of debt service levels on general economic performance) for all the intervening years. Which means accepting them means accepting that the "experts" involved can predict the impact of debt service levels on general economic performance, which is exactly the thing you have to assume they cannot do to dismiss the relevance of economists and budget experts opinion on the final condition. > Remember, extending a trendline on a single metric (US debt or interest payments) and doing the same on a million metrics (everything that makes up the US economy) are two WILDLY different things. Debt service costs are a product of: 1) Starting debt levels, 2) Government revenue vs. expenditures in the intervening period, and 3) Cost of borrowing for the government in the intervening time. Note that #2 is dependent on performance of the overall economy, including all factors which influence the overall economy (and not just the aggregate performance, but how that performance is distributed relative to what government taxes.)

msandford 12y ago
So if these folks are so good at predicting to the point where we should trust their predictions, then why aren't they all retired from predicting the stock market and getting rich? Wouldn't that be the path of least resistance for someone who is good enough at this to be worth listening to? I think it's plain for most folks to understand that living beyond your means continually eventually means that debt payments comprise a large portion of your budget. No clairvoyance needed there. This is what the US government is doing right now. It's not hard to see that eventually the debt will be crushing. What's much harder to do is predict exactly at what point this will occur. I would fully agree that the exact date of the debt service exceeding other large fixed payments is highly speculative. But that it will happen, absent structural changes, I don't find terribly contentious. Deficits are nearly constant, surpluses are rare and minor. http://www.davemanuel.com/history-of-deficits-and-surpluses-in-the-united-states.php http://www.davemanuel.com/history-of-deficits-and-surpluses-...
- msandford 12y ago
  Actually, you're probably right. The debt is a joke, we'll totally get tons of money for social security (definitely enough to pay for a sweet, luxurious retirement) and don't worry about it! Just go spend, spend, spend!
- dragonwriter 12y ago
  > So if these folks are so good at predicting to the point where we should trust their predictions, then why aren't they all retired from predicting the stock market and getting rich? Because the value of particular investments is a different thing than any of the things that they are dealing with, in much the same way that climate is different than weather. > I think it's plain for most folks to understand that living beyond your means continually eventually means that debt payments comprise a large portion of your budget. This isn't actually necessarily true. IF you continually live beyond your means (expenditures > revenue) then, assuming financing costs aren't continually decreasing, you will have debt service costs that, on average, increase over time. If your revenue also increases over time, however, its quite possible to continually have expenditures exceed revenue without having debt service costs increase as a share of total expenditures. > It's not hard to see that eventually the debt will be crushing. [...] What's much harder to do is predict exactly at what point this will occur. That's the only thing that matters. Predicting what a trend would result in given an infinite time horizon is pointless "But this long run is a misleading guide to current affairs. In the long run we are all dead." [0] > I would fully agree that the exact date of the debt service exceeding other large fixed payments is highly speculative. Defense and nondefense discretionary spending may be large, but they aren't fixed. > But that it will happen, absent structural changes, I don't find terribly contentious. I'm not really interested in why you find it contentious, I interested in the basis for your position that the level of debt service at which that will occur is a (1) problematic in itself as a level of expenditures on debt services (dismissing the conclusion in the article that the expert consensus is that it is not), and therefore a matter of near term concern. [0] John Maynard Keynes, A Tract on Monetary Reform (1923)