> 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)
> 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.
This is actually totally true. It's neigh tautological. If you're always adding debt then everything else equal, debt service costs go up. If you're adding debt while interest rates drop, debt service costs might go down. But in the end interest rates (at least for the majority of human existence minus a few short periods) have been positive, and not only positive but higher than they are right now.
Speculating that things will be OK because interest rates will stay low only makes sense if you're:
1. An idiot with no understanding of history and a complete lack of ability to do sensitivity analysis
2. Someone who has the ability to control the interest rate
In my mind we've got a whole bunch of folks in camp 1 and 2 at the moment. Thanks to them we've got high REAL unemployment and non-trivial REAL inflation. Before you say "but unemployment is 5.6%!" I would encourage you to understand the way the unemployment metric is calculated and to ask if you think that's the proper way to do it. http://www.gallup.com/opinion/chairman/181469/big-lie-unempl...
And before you suggest that the inflation numbers are legit, please do a thorough review of the methodology and explain to me how constantly changing the benchmarks doesn't constitute some kind of academic dishonesty if not outright fraud. Just because the government says something doesn't make it true.
For example, they tried that with the Kennedy Half Dollar and no matter how many they made people kept buying them because although the official value was $0.50 the actual value in terms of metal was much higher. http://en.wikipedia.org/wiki/Kennedy_half_dollar#Initial_pop...
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)