Prof. Laurence Kotlikoff: “US Debt Is Not $16 Trillion. It’s $222 Trillion”

Professor Laurence Kotlikoff is a Professor of Economics at Boston University, and more. He says he has used standard practices to arrive at what he calls, “The fiscal Gap”. That is the difference between America’s assets and liabilities, according to the Congressional Budget Office. Below is a fairly long interview with him in which he explains.

In the video he makes a couple of important assertions, the most important being the point that, “Congress has accumulated all these liabilities off the books, and they’re called Social Security, Medicare, Medicaid, defense spending.” He has more to say in the video that I won’t try to recite here. It’s all important stuff.

Even if the numbers are off a bit does anyone believe that he’s wrong?

I found this here. At the link there is a lot more and a couple more videos which do not induce more economic confidence.

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5 Responses to Prof. Laurence Kotlikoff: “US Debt Is Not $16 Trillion. It’s $222 Trillion”

  1. Roy Ryder says:

    This is a simultaneously complex and simple issue. The actual income and assets of the federal government is open to debate and also a moving target. However, the man is correct to state that the actual debt of the United States is in the neighborhood of what he’s stating. What he’s not talking about is the additional state debts, such as California, that will likely have to be absorbed by the federal government. Long story short: we’re screwed now and more screwed in the future.

  2. Locke n Load says:

    I have to take issue with his idea that we’re inflating the money supply by 12% every year. He also states, correctly, that the money supply has tripled since 2007 (by which he means the end of 2007 and the crisis).
    The rule of 72 would tell us that to triple the money supply the actual inflation of dollar supply would have to be closer to .38/yr on avg. Simply put, an investment making 7.2% doubles in size every 10 years. As its been only 5 and the number has tripled, the actual rate would have to be closer to 15% x 3, or, using simple interest accrual, about .40 on avg over the years. It started out lower but as they continue to print the principal rises. yeah, I could show you the actual annual numbers but I won’t, point is that over the last 5 years it has risen to 44%. This is easily verifyable by looking at the total bond sales vs the toal budget minus taxes which currently stands at about .48. 4.6 trillion spending, minus 2.5 trillion income means a 1.1 trillion deficit or .44% of actual taxable revenues.
    Simple. Not so much.

    Beyond that, what he’s talking about isn’t particularly well defined. When he says our ‘deficit’ is 222 trillion he needs to explain the timeframe, and he doesn’t. What he’s describing is actually an arc where 222 trillion is currrently the peak before it could reverse. And while that number IS terrifying, it is entirely alterable because we can alter the schedule of benefits and that arc doesn’t actually reach its peak until 2035 or so. So while we carry POTENTIAL liabilities of 222 Trln, we might only have half that if we can shave 5-10% those expenditures over the next 20 years.
    Of course everything I just said is absolutely MEANINGLESS if/when the interest rate we are paying rises.
    We’re on course to run out of ‘assets’ to purchase by the Fed within 2 years and at that time the whole illusion of this ‘stable’ bond market would be obvious. People worry about ‘failed autions’, roflmao. Folks, thats already happened. Proof is that the Fed has to buy .46 on every dollar in govt expenditures. if foreign buyers could make up the difference, they would. And they don’t. Technically, thats a FAILED AUCTION. Wow, what a great thing it is we have a Federal Reserve to cover the difference, no? Saviours!!!!

    Or not.

    Look, when they run out of assets to purchase they will either find a way to FORCE purchases or the dollar and the govt fails. I’m betting they keep the illusion alive by forcing purchases on the banks, then 401k people, then…
    It could all come crashing down before that of course by simply ditching the dollar. Which is already the goal of the BRICS. By 2016.
    So you go and figure. Will it be abrupt with a return to the gold standard for oil (already underway btw) or will we strongarm the world into a new bargain and stretch this into a Japanese 30 yr enterprise?

    Either way we are losing our power by liquidating our sovereign trust. Full faith and credit of the US my ass.

  3. Notamobster says:


    I was wondering If you’d chime in.

    • Locke n Load says:

      Really? Wondering?
      I’ve been busting my ass these past 2 months trying to NOT lose my mind or my wallet. I’ve been reduced to posting up random BS on Facebook as I drive down the road, just to stay in relative contact with the world. But this, yeah, this I had to try to step in on.
      And you’re probably glad I didn’t get into rehypothication and the actual QUADRILLION in credit assets hanging in the balnce, right?

      100+ hr weeks are brutal.

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