Tuesday, September 4, 2012

Sweet Sixteen

This seems suspect to me. The Debt Clock is timed to cross the $16 Trillion mark during prime time news on the first day of the Democratic National Convention.

Monetary theorists of the Keynesian School are not all that worried. This theory sees the US Debt as the foundation for the world monetary supply and that paying down the debt would actually hurt the world economy.

The number that really scares me is the $120 Trillion in unfunded liabilities. The unfunded liabilities includes items like $21 Trillion for the prescription drug liability.

I suspect Keynesian theorists look favorably on the unfunded liabilities as well. Investors in the biotech sector will pay higher prices for pharmaceutical stocks knowing that the government will dish out $21 trillion for drugs.

My sympathies lay with the Austrian school which sees fault in the great nexus of contracts that make up the world economy. If things prove a house of cards, the economy could crash even worse than it is today.

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