The Rag Reel


Tuesday, June 8, 2010

#2 The Pain of Growing

   One of the most optimistic ways to deal with a debt trap is to assume your income is going to go up, despite lower investment in new opprotunities. This may not be realistic, but it sure sounds good, lol. Not surprisingly, many of the most optimistic governments budget proposals assume our economies will soon be growing at remarkable rates. It's true that robust growth can mean more jobs, more economic activity and most importantly for the government more tax reciepts. However, this growth is "inevitable" approach to budgeting is a lot like spending the winnings from your lottery ticket before you even know it's a winner; and the odds are that it's not, lol.

   To-date growth in the U.S economy has been nowhere near recent projections; and to make matters worse , an aging U.S. population will soon be paying less in taxes just when the government needs to payout more in retirement benefits. Japan is already feeling this demographic squeeze, as is much of the EU.

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