A 'Polite' History Of Government "Predictions"

Tyler Durden's picture

Authored by Simon Black via SovereignMan.com,

Recently the Congressional Budget Office published a scathing report that the US government debt-to-GDP ratio will double over the next 30-years.

Few government agencies are as blunt as the Congressional Budget Office.

In fact the agency’s report plainly states that “the prospect of such large and growing debt poses substantial risks for the nation. . .”

Echoing this sentiment, a former director of the Congressional Budget Office called the US debt:

“a serial horror story in which the greatest economic power ever to grace the globe sails directly into self-inflicted crisis, suffering and decline.”

Debt matters.

Nearly every major superpower over the last thousand years, from the French Bourbon monarchy to the Ottoman Empire, was eventually crushed under the weight of its debt.

The CBO has been sounding the alarm bells for years warning successive administrations that there will be serious, serious consequences in the future.

The irony is that the CBO is probably being overly optimistic.

I pulled some of their older projections from several years ago, and while they nailed the trend, they totally underestimated how severe the debt crisis would be.

In January 2007, for example, the CBO issued its annual budget and economic outlook in which they made 10-year projections about the national debt.

So, 10 years ago, the CBO estimated that by 2017, the “debt held by the public” would be $4.2 trillion, which they estimated would be 24.6% of GDP.

(Note that the CBO tends to focus on “debt held by the public”, but this number is only a portion of the total national debt.)

Now it really is 2017.

So how much is the actual debt held by the public today?

$14.35 trillion, or 76.5% of GDP… more than three times what the CBO projected back in 2007.

(Bear in mind that TOTAL government debt in the US is $20 trillion, around 106% of GDP.)

In other words, the CBO’s projection was wrong by $10 TRILLION.

That’s not to take anything away from the CBO; as the old saying goes, predictions are hard, especially about the future.

The agency is clearly doing its best to objectively highlight the obvious (and dangerous) trend of rising debt levels in the Land of the Free.

Their math just happens to be off by an order of magnitude.

It’s not just the CBO either.

As I frequently write to you, each year the Board of Trustees of the various Social Security trust funds releases a report detailing the dismal finances of that program.

In the Trustees’ 2005 report, for example, they projected that the trust funds would be “fully depleted,” i.e. completely run out of money, in the year 2043, nearly four decades later.

Eh, who really cared… 40 years was such a long time away.

The next year in the 2006 report, however, their estimated year of depletion changed to 2040… 34 years in the future.

By 2010, it had changed again to 2037… 27 years into the future.

And from last year’s 2016 report, the estimate changed yet again to 2034, just 18 years into the future.

Notice the trend? In a little more than a decade, the Trustees’ estimated date when the trust funds would be fully depleted has accelerated by 9 years.

In other words, the closer we get to the date, the more accurate their calculations become, and the faster they believe the trust funds will go bust.

Again, it’s hard to fault the trustees.

They have the right message: Social Security is going broke. They just happen to have been too optimistic in their timing.

It mystifies me how this is not front-page news on a daily basis.

I mean, the implications are enormous; the people who run the Social Security program are saying, flat out, that they’re running out of money and the program will have to curtail benefits.

And the guys within the government who watch over the budget are shouting from the rooftops that the national debt poses substantial risks.”

I imagine most people would probably agree that this stuff matters.

It just doesn’t matter to them today. Or tomorrow. Or next year.

It’s easy to put off obvious and dangerous consequences that won’t strike until several years into the future.

Such short-term thinking is in our nature as human beings.

It’s why we eat garbage foods that poison our bodies… because the life-threatening diabetes and heart disease won’t hit us for another couple of decades.

This is a dangerous gamble, especially considering that there are countless solutions to distance yourself from the impact of your government’s serial irresponsibility.

For example, there are plenty of options to establish a far more flexible, robust retirement structure like a self-directed SEP IRA or solo 401(k).

These plans allow you to save more money for retirement, cut your administrative costs, and realize far better returns in alternative asset classes.

As an example, instead of stuffing all of your retirement savings in an overpriced stock market, your IRA or 401(k) could own a profitable private business or royalty stream that consistently pays strong, healthy cash flow month after month.

This way, when Social Security does go broke, you won’t be affected one bit.

No one else can make this a priority in your life but you.

I’ll say it again: all it takes is the right education, and the will to act.

Do you have a Plan B?

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Golden Showers's picture

Always bet on Black.

daily westerner's picture
daily westerner (not verified) Golden Showers Apr 13, 2017 9:06 PM

Rather than black, always bet on semite.

Sooner or later Kosher Mafia will take over since they are well known in the casino business.

Then expect to turn on the friendlies.. as Trump turns on WikiLeaks and others that put his ass in WH

VIDEO: CIA Director Claims WikiLeaks Works with Russian Intelligence Services



Ohh wait.. already happened. The Kushner Mafia runs WH casino.

ThuleNord's picture

And just think, all the nazis wanted was an end to zog control over the banks and financial institutions. End usury and ensure a western world free of capitalist/zog exploits.

When the Jews own 90% of the msm and control all our education systems you have to stop and wonder just how "evil" those Germans really were. They warned us, they were right.


cheka's picture

so the US came into the war on the wrong side? 

panther man's picture
panther man (not verified) cheka Apr 14, 2017 7:14 AM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

Born2Bwired's picture
Looking at the XML for this page it is trivial programmatically to look for a list of usernames and then nullify the content associated with their posts replacing it with a message such as "spam deleted".  Since the Tyler's seem too busy and are not whacking down users who continue to fill the site with this crap perhaps someone familiar with building browser extensions could supply this for us? I am a programmer but not familiar with the ecosystem for browser extensions. This is very trivial look for two XML tags, one username followed by associated content,  cross reference a list of known user names... Just a thought! Make Zero Hedge Great Again! MZHGA!
HRClinton's picture

Too many words, Simon.

Was hoping for a Table of info or graph.

Ajas's picture

Short story: prior to 2007, private debt expansion dwarfed govt debt expansion. After the housing/banking crisis the only "known known" was that in order to avoid outright depression, that aggregate debt expansion had to keep steady. 

Private debt expansion cratered and still hasn't really recovered, so govt/fed spending/buying has soaked up the difference. 

You can blame Obama if you want, but he saw what happened to Louis XVI and said yep, nope, let's not do that.... Yet. 

cheka's picture

nice post.  would add to always bet on inflation because same.  laugh at any/all deflationists, as their victories will be short lived and far between

LetThemEatRand's picture

"Everybody makes mistakes; look at Hitler." - Dean Martin.

The Joker's picture

Here's a prediction for you....  Go long KY cause we're all getting fucked.

LetThemEatRand's picture

Excellent idea, but "they" prefer no lube.

Hulk's picture

I'm having a wax gland installed in my anus just in case. Too bad they pulled Olestra off the market, we are about to need it...

LetThemEatRand's picture

That surgery will entitle you to one Huffington Post op-ed on wax-glander sensitivities.  Your op-ed will also be stored in the Congressional library under "non-friction."

Hulk's picture

Now that is fucking funny !!!

divingengineer's picture

10% inflation for 30 years aaaaaaaand its gone!

Hulk's picture

Thank god that Rod Serling prepared us all for this . The signpost up ahead reads "The twilight zone" ...

wisehiney's picture

What if Russia or China calls MIC bluff and takes out some piece of U.S. air/sea/land hardware?

Maybe that is what they all want.

If you cannot pay the mortgage, burn down the house?

The digital "assets" would collapse into huge pile of x and o's overnight.

No chance to prepare.

Except before.

divingengineer's picture

What if we call their bluff and nuke Beijing, Moscow, Tehran and Pyongyang simultaneously?
And I give both scenarios even odds.

44magnum's picture

If you cant pay for asbestos removal knock down the buildings and collect the insurance?

cheka's picture

so that's why the terrists attacked lowly office buildings instead of the littany of more terror inducing targets

Sid Davis's picture

If you look at the growth of government debt over the last 117 years, it is compounding at 8+ % which means that it will be about 11 times greater in 30 years. The GDP is growing at a considerably lower rate. If you use 3% as the growth rate in GDP the GDP will we slightly above double in 30 years. This means that the government projection of a doubling of debt to GDP is a preposterous prediction. It will be far worse than that. These people must be the worst mathematicians in the universe.

A more likely prediction is that there will be a financial crisis in which the federal government either defaults on the debt or just directly prints paper dollars, destroying the value of money. Either would be highly destructive of the economy which might cut it in half, not grow by double. Such a financial and economic collapse would cause a catastrophic societal collapse, and the federal government would not likely survive such an event. The good thing is that incompetent bureaucrats like the ones making such an optimistic prediction as referred to in this article, would be out of work, and probably starve to death since they have no real marketable skills to offer to what remains of the economy. The might try changing employment to side show barker which more matches their apparent skills.

WallHoo's picture

A govement printing its own currency,the end of the world i tell ya...Althought even this cannot stop usury so...

moneybots's picture

"As an example, instead of stuffing all of your retirement savings in an overpriced stock market, your IRA or 401(k) could own a profitable private business or royalty stream that consistently pays strong, healthy cash flow month after month."


Until that fails, too. There is no guaranteed anything- except death and taxes.

J. Peasemold Gruntfuttock's picture

Oh MBots,

In the past it may have been a truism that nothing else in this existence is more sure than death and taxes.

Now I am sorry to say that is no longer the case.

It has now morphed into nothing is more sure than death by taxes.

Slowly, painfully, we wither on the vine.


J. Peasemold Gruntfuttock

Rjh's picture

A not so polite history of Zerohedge predictions: "COLLAPSE IS COMING" EVERY SINGLE DAY SINCE INCEPTION!!!!!!!!!!!!!!!!!

Still waiting for collapse, you doom and gloom morons.

Kprime's picture

as you point out, they have been right since inception,

"collapse is coming"

when collapse is here, only then can you quit saying collapse is coming.

whatisthat's picture

I would observe the CBO is controlled by the corrupt establishment.

moorewasthebestbond's picture

Smoke em if you got em, because tomorrow we die!

Iconoclast421's picture

Front page news? pfft. They printed $10 trillion. They will just print another $20 trillion. So there will be more yachts, more Teslas, and more people stuck on their porch with not enought money to even walk down the steps. How is that news? It's been happening for decades.