Why the Fiscal Cliff is a Scam

The Real News Network has the interview Why the Fiscal Cliff is a Scam with economist James K. Galbraith.

For those who are interested in econometric models and their predictions, perhaps this excerpt may talk to you.

But those long-term CBO forecasts of very rapidly rising national debt, very rapidly rising deficits, rest on a couple of very doubtful assumptions. One is that health-care costs will continue to rise more rapidly than every other cost in the economy forever—can’t happen and won’t happen, but that’s—you can build a computer forecast that makes it happen, in which it happens. And the other is that the interest rate that the federal government pays on its public debt will be raised by the Federal Reserve, let’s say, four years from now, to a point where it’s higher than the growth rate of total output, the growth rate of income, and then that interest burden compounds, the interest payments compound as a share of GDP and go up very rapidly after that. If you stretch out that forecast long enough, you can get a debt-to-GDP ratio as high as you like in a computer projection. But once again, it will not happen in real life. It’s not consistent with the way an actual economy is going to function.

I hope to find more details of the article referred to in the interview. Right now, the web site serving this article is not responding. Apparently, this down time is so common that there is a website to answer the question Is the Alternet down right now? Well, the web site is not particular to alternet, but the fact that the link that checks the alternet appears in a Google search is what is indicative.

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