Unless entitlements are substantially reformed, the U.S. will likely default on its debt; not in conventional ways, but via inflation, currency devaluation and low to negative real interest rates.
Gross says entitlements are where the money is so that’s where the cuts will need to be. True enough, but were we to end our various insane military adventures we would not only save money, we would save lives and have far more friends worldwide as well. I suggest that the belligerent militarism of the US is a primary cause of wars, unrest, and rebellions across the planet.
But Gross’ larger point is correct. Entitlement spending is not sustainable. Liberals and progressives who squeal about possible cutting of entitlements need to provide answers and solutions and not just lamenting that conservatives are grinches. Pretending there is no problem will not suffice.
The true but unrecorded debt of the U.S. Treasury is not $9.1 trillion or even $11-12 trillion when Agency and Student Loan liabilities are thrown in, but $65 trillion more! This country appears to have an off-balance-sheet, unrecorded debt burden of close to 500% of GDP! We are out-Greeking the Greeks.
Thus we will undoubtedly have inflation, which will help those with assets and hurts those who don’t. The possibility of the US defaulting on debt is indeed quite real.