As freedom seems to erode in America and government gets bigger, there are some positive aspects to look at.  There are two areas in particular where America is still strong in the liberty category.  They are freedom of speech and freedom to bear arms.  While these two areas do have some government interference, particularly in regards to gun control, America is still a relatively free place when considering these two subjects.  I don’t think it is because they happen to be part of the 1st and 2nd Amendments.  I suppose freedom of religion could also be included in the relatively free category.

One area that puzzles me is freedom of association.  For some reason, many, if not most, Americans simply cannot grasp this concept.  It is easy in some circumstances for Americans to grasp, but then very difficult in other areas.

When Rand Paul was running for U.S. Senate, he came under fire from Rachel Maddow and others for suggesting that certain parts of the 1964 Civil Rights Act were harmful.  While Paul did not exactly do a stellar job of defending himself and his position, he was correct in his original assessment.  The problem with the 1964 act is that it was the major start of government interference in freedom of association.  Instead of just saying that state and local governments cannot discriminate based on race (ignoring the federalism argument), the law extended way beyond that and told individuals and companies outside of government that they couldn’t discriminate.

That was really the major start of what has become our highly-litigious society.  It should not surprise anyone that something like the Americans for Disabilities Act would come decades later, which ironically probably hurts disabled people more than it helps them.

After the Maddow/ Paul interview (or debate), some people reversed it and asked the questions in a different way.  For example, some were asking, can a black restaurant owner prohibit a member of the KKK from entering his restaurant?  When the question was posed this way, then all of a sudden many more people understood freedom of association.  The majority of people said that it was his restaurant and his property, so he should have the right to refuse to serve the KKK member.

Many people do not understand libertarianism simply because they cannot differentiate between the law and social behavior.  When libertarians say they want to legalize drugs, some people take that as encouragement for others to use drugs.  When libertarians say that you shouldn’t have to wear a seat belt, some people think that libertarians are against using seat belts.

When libertarians say that business owners, landlords, or anyone else should be free to discriminate, many people take that as libertarians advocating discrimination based on race, gender, sexual orientation, religion, or whatever.  It is not that libertarians advocate racial discrimination.  It is that libertarians believe in freedom and that includes property rights.  If you own a piece of property, you should be able to invite who you want on it and not invite who you want.  This would include a business owner telling potential employees and customers whether or not they are invited on the business owner’s premises.

Of course, in a free market, most businessmen that discriminated purely on racial grounds (or some other grounds) would likely not do well in business.  It is also the right of people to boycott the business.  In addition, if the business owner were not hiring the best employees at the best available prices because of race, gender, etc., then he would only be hurting himself and the productivity of his business.  But if that is his business, he should be free to make that choice, even if it is not tasteful or outright disgusting, as long as he isn’t initiating force against others.

Freedom of association is one topic where Americans really need to evolve.  We live in a politically correct world now and it is affecting our property rights.  There are a lot of unintended consequences when laws are made interfering with freedom of association.  Americans must see things differently on this topic if America is ever going to be close to free again.

The elections in Greece were held over the weekend.  It seemed that everyone was holding their breath, waiting for the outcome of the elections, and in turn the future of Europe.  You can view the election results here.  As you can see, the first place party could not even break 30%.  Not only was there not a clear majority, nobody could even get a third of the votes.

According to this article, nearly 38% abstained from voting.  For such a seemingly important election, that is a rather high number.  This 38% can be translated into NOTA (none of the above).  It was really NOTA that won the election.

The mainstream media and the rest of the establishment seemed fairly pleased with the results.  Their dream of the European Union and a one-world government is not quite dead yet.  They are still holding out hope that Germany will continue to bail out Greece.

While mixed results in an election can mean different things, I don’t think these Greek elections being so mixed (with seven candidates receiving at least 4%) is the same as what you would see in the U.S.  In the U.S., there are actually some proponents for smaller government, even if just on certain issues.  Some people like Obama and the Democrats for being less pro-war and better on civil liberties.  Some people like the Republicans for supposedly being better on lower taxes and less spending.  While these things aren’t reality and there are many who support the parties for opposite reasons, there are at least some sentiments for smaller government.

In Greece, the voters are looking for a year-round Santa Claus.  They believe in a free lunch and they want it.  The problem at this point is that the chickens have come home to roost.  They can no longer live off of past savings and the current productivity is very weak.  It is a massive Keynesian experiment gone bad, even though it was predictable.  A country cannot expect to thrive with a massive welfare state and high taxes.  When there are people who are 50 years old and retired on a big government pension, you know there is something not right.

The Greek voters are really mad at the politicians right now.  They are not sure who to blame the most at this point.  But it is a large majority of Greek voters who are asking for a free lunch.  They are asking for the impossible.  The politicians can keep making promises, but when they fail to deliver anything, then the people get mad.  As Margaret Thatcher said, the problem with socialism is that eventually you run out of other people’s money.  I suppose that can be applied to the Greek welfare mentality.

In the end, this election will mean nothing.  Perhaps the German government will fork out another bailout package one more time.  They are throwing resources down a drain.  Greece is going over a cliff, whether it is this month, next month, or next year.  It is inevitable that Greece will break apart from the euro zone and go back to printing its own money.

There really isn’t that much good news for the American economy.  There is the small wave of believers in the free market, mostly followers of Ron Paul.  There is also technology, particularly in the electronics industry, that continues to grow by leaps and bounds.  Everything related to government though is bad news for the economy.

There is one other item that is a little bit of good news.  It would not be considered good news for Keynesians.  It is good news for Austrian school followers and those who have a good understanding of the free market.  The good news is that debt levels for Americans is stable or even slightly down.

As I said, this is bad news for Keynesians, who believe that prosperity comes from people spending money.  They can never seem to explain why people don’t want to spend money in poor African countries.  If all you need for prosperity is for people to want to buy things, then the whole world should be wealthy.

For those who are not Keynesians and who believe in the workings of the free market, a reduction in personal debt is good news.  An economy grows and prospers from savings and investment.  If you didn’t have savings and investment, it would be very difficult for the average standard of living to increase.

Part of the reduction in personal debt has come about because of people giving up their houses in short sales and foreclosures.  While this is not exactly the ideal way for personal debt reduction, I suppose it still counts in a sense.  But aside from that, credit card debt has actually gone down for the average American since the fall of 2008.  According to this website, outstanding revolving consumer debt went down from $989 billion in the 4th quarter of 2008 to $787 billion in the second quarter of 2011.  I’m not sure what the latest statistics are, but I don’t believe they have changed much.  You can also read some interesting credit card statistics on this website.

The average American, even those who are working, realizes that the economy is not strong.  People have cut back, whether it is not taking a big vacation or simply cutting back on the daily Starbucks.  While people are probably not saving as much as they like, paying down credit card debt is almost the equivalent to saving.  This is actually what the economy needs.

The major problem of course is government, particularly the federal government.  It is offsetting the work and newly found frugality (relatively speaking) of the average American.  While the average American has stopped accumulating debt and is even paying it down a little, the federal government continues to accumulate massive debt and higher spending.

I think Americans are actually smarter with their finances than what many people think.  There is a certain intuition.  While Americans may get sucked into Fed-induced bubbles, like what happened in housing, they have enough sense not to get too bogged down in credit card debt.  Of course, some people are absolutely terrible with their money, but I am just talking about the average or median person.

In conclusion, an economy grows and standards of living increase due to prior savings and investment. Consumer demand only drives an economy in the short run.  You can’t consume what isn’t produced.  The key to wealth and prosperity is production and you can only get increased production through savings.  The average American is helping the economy in the long run by saving more and paying down debt.  The federal government is hurting the economy by spending more and increasing the debt.

Immigration is one of those few issues that libertarians can reasonably disagree.  It is kind of like the issue of abortion in that regard.  There are some good libertarian arguments to be made for both sides of the debate.  In fact, with immigration, there is even middle ground that might be reasonable for a libertarian.

I have never really understood those who are really anti-immigration.  It is really the heart of America.  I’m not sure if these people are racists or just scared of people who might look a little different or speak differently.

Some of the reasons for people being anti-immigration, that may sound somewhat reasonable, are actually reflections of big government that is already in place.  There are two primary examples here.

First, some say we can’t have open immigration because of the threat of terrorists.  Some might even argue against most or all immigration, particularly from specific countries.  Many of the terrorists on 9/11 were actually in the U.S. legally, so the current policy didn’t stop them anyway.  But even if closing the borders were effective (which it wouldn’t be), the only reason there are so many people wanting to cause terror in the U.S. is because of the U.S. government.  If there were no bombings of other countries, and no blockades, and no coups, and no military bases, and no propping up of dictators, then there would be few people who would ever even care about America.  They would certainly have little incentive to hurt Americans.

Second, some say we can’t have open borders or any immigration at all because they will collect welfare.  Again, this is a symptom of big government.  If we didn’t have a welfare state, then we wouldn’t have to worry about immigrants coming to America to collect free goodies.  The only people that would move to the U.S. would be those looking for work (or perhaps vacation).

I have never understood the welfare argument.  Welfare does far more harm than good in the long run for most people.  Yet, if it actually worked, I would probably feel more sorry for the poor Mexican immigrant who had little opportunity who is just looking for work.  Why would I think that some bum in America is more entitled to welfare, just because he happened to be born in a certain area?  I’m not saying that all welfare recipients are bums, but my point should be well taken.

It is hard to believe what has happened to America.  The land of the free is now the land of taxes, wars, and passports.  It used to be that almost anyone could go to America in search of a better life.  You had the responsibility of taking care of yourself and your family, but you were free to search for opportunity.  It came to a point where immigrants would go through New York Harbor, but even then, they were just checked to make sure they weren’t carrying any strange disease.  Aside from that, most could enter almost immediately.

I hope we can one day see an America where Americans are not worried about immigrants because of terrorism or welfare, because there will be little of it.  Maybe we wouldn’t have to worry about drugs either if they are actually legalized.  If America becomes free again, then immigration will become a moot point for most people.  And if other countries follow suit, then maybe there won’t be so many people trying to flee their homeland.

If America stays on its current path, then I don’t think Americans will have to worry about immigration anyway.  Who will want to come here?

North Dakota Residents Like Big Government: at least that is the conclusion that can be drawn from Tuesday’s election.  There was a ballot initiative – Measure 2 – which would have banned all property taxes in the state.  It would have made North Dakota the only state to have no property taxes.

It didn’t surprise me that the measure failed.  What did surprise me is by how much it lost.  Less than one quarter of the people voting actually voted to support the measure.  Over three quarters said no to the measure and yes to big government.  You can see the results here.

According to this article, eliminating the property tax in North Dakota would have meant a cut of 23% from the state and local taxes.  North Dakota has somewhat high property taxes.  It also has state income taxes and a sales tax.  Of course, it has the thousands of other taxes that other states have like gas taxes, car registration fees, etc.

North Dakota has seen a substantial increase in tax collections recently, due to the oil boom in the western part of the state.  It is also one of the most solvent states, with low unemployment.  There was never much of a property boom there during the housing bubble that so many other areas in the U.S. had.  This means that there also wasn’t a big bust there, so the budget stayed balanced with no big cuts being necessary, as tax collections did not dry up for the state government.

This would have been the perfect time to eliminate the property taxes.  With the big boom from the oil discoveries, the residents there could have done away with all property taxes and still not have had to cut much from the budget.

According to this story, the opponents of the measure (the advocates of big government) outspent those who favored abolishing the tax almost $600,000 to $22,000.  It should be no surprise that the National Education Association made a significant contribution against the measure.

I can just imagine the commercials being run and the things being said on television.  They were probably telling people that if the measure passed that firefighters wouldn’t have the funding to show up to houses burning down.  The police wouldn’t be able to respond to 911 calls.  The athletic and arts programs would be shut down in the public schools.  Or worse, the schools would have to shut down.  While I might be exaggerating a little on those comments, they are probably not too far off.

I suppose there is one libertarian argument against the measure and that is that it takes away local control, just as someone was cited in this article.  However, I doubt many people voted against the measure thinking this way.  Also, I would have had no trouble voting for the measure because it wasn’t dictating any kind of replacement tax.  It would really be up to local governments to find other ways to tax if they chose to do so.  Also, this local argument doesn’t fly when it is usually the state governments that mandate government education be provided.

It really is shocking that less than one quarter voted to support this measure.  This is in a supposedly red state.  It just shows that Republicans love big government too.

In Massachusetts, which is thought of as a liberal high-tax state, the two ballot initiatives there to end the state income tax received higher percentages than this North Dakota initiative.  In fact, the first drive to end the state income tax in Massachusetts actually came close to winning.

I would think it would be harder to repeal a state income tax than property taxes.  In most states, half the residents pay little to no state income taxes, so it is hard to make the case for them.  For property taxes, the case should be a little easier.  I know that renters won’t directly benefit immediately, but it should be easy enough to explain that if all landlords have their expenses reduced significantly, it will probably mean lower rents.  While cost does not automatically dictate price, it can and does affect it.

If the vote in North Dakota is at all representative of the country, then I guess most Americans are still not ready to give up their slave status to the state.  This was a perfect opportunity where there was no voting for the lesser of two evils.  It was an up or down vote and North Dakota residents decided overwhelmingly that they like their big government.

The economy, particularly in the U.S., continues to hang in the balance.  Unemployment is still high and the official numbers are not all that accurate because they don’t include part-time workers and people who stopped looking for work.  The stock market has been a bit of a roller coaster ride.  Meanwhile, price inflation has stayed relatively low, while interest rates are at or near all-time lows.

The Federal Reserve is walking on a tight rope.  On one side, there is inflation.  On the other side, there is recession or depression.  The problem is, as time goes on, the rope gets thinner and thinner.

If the Fed leans too far to one side, it might fall over.  Or perhaps it will try to overcompensate going the other way and fall to the other side.  Or maybe the rope will end and a fall into a combination of both pits will occur.

I think the low interest rates and the recently downtrending stock market indicate that another recession is likely.  The problem is that there was not a correction allowed to happen from the last recession.  The problems are much worse now because of all of the debt and money creation.

I think a likely scenario at this point is for another recession to appear.  Then, Helicopter Ben and the Fed will react with more quantitative easing (money creation).  The next round of QE will probably not be as generous in terms of results.  I think we are likely to see higher price inflation, unless the Fed is timid by its own standards, in which case the next recession will be deep.

I see a scenario similar to the 1970’s as more likely than a scenario like the Great Depression.  I am not necessarily talking about severity, but the characteristics.  I think it is likely that we will eventually hit a point of seeing high price inflation and a weak economy at the same time.

If things became anywhere near the Great Depression, then the Fed would open up the flood gates of money and would trigger severe price inflation.  Bernanke has been critical of the Fed during the period of the Great Depression for not being aggressive enough.

Another thing to consider is that there was no FDIC during the Great Depression (at least in the beginning of it).  There were a lot of bank failures, which reversed the fractional reserve lending process.  This was essentially a deflation of the money supply.  So even though the Fed actually did try to create some monetary inflation, it was not enough to offset the bank failures and the average person’s desire to spend less.

Hopefully, if we do see a scenario like the 70’s, the Fed will act in much the same way.  Paul Volcker, as Fed chairman, slammed on the monetary creation brakes.  The U.S. had a good hard recession, but it also set the stage for a nice recovery.  That was probably the last time in American history that a recession was allowed to play out and a great deal of the malinvestment was able to be corrected and reallocated more in accordance with the free market.

It is still possible that we could have a Japan-like scenario where we see low price inflation and an economy that just kind of sputters along.  However, I don’t see it happening for a couple of decades like it has happened in Japan.  The U.S. central bank is more aggressive than the Bank of Japan and Americans are unlikely to buy U.S. government debt to the same extent that the Japanese have bought Japanese government debt.

Let’s just hope that if we hit a 1970’s America scenario that the Fed will act in much the same way now as it did then.  While it would cause a severe recession, it is better than the alternative of hyperinflation.

There was news over the weekend that the euro zone has agreed to lend Spain up to 100 billion euros.  That is about 125 billion U.S. dollars.  Spain has been the latest country to follow Greece in its solvency troubles.

While this may help “save” Spain in the short run, it is just more kicking of the can down the road.  The problem is, whenever they kick the can further down the road, it makes the final day of reckoning that much worse.

While comparing a government to an individual or family is not a very good comparison in most cases (because governments rely on their monopoly of the use of force in a given territory), it can actually provide a pretty good analogy in this case.

Let’s say that someone makes $50,000 per year in income.  For the sake of this discussion, let’s pretend there are no taxes.  Let’s say that this person spends $60,000 per year.  He is running a deficit each year of about $10,000.  In addition, his total accumulated debt is $100,000 (and growing by $10,000 per year).  Let’s say this debt is in the form of credit card debt.

What is the solution for this person?  He could declare bankruptcy, which would wipe out the $100,000 in credit card debt.  However, his credit card companies would shut down his accounts and would no longer be willing to lend him money, especially without collateral.  So the person would be forced to cut his spending by at least $10,000 per year, assuming he can’t earn more.

Another solution is to cut spending drastically.  Not only does the person need to stop running up more debt, but it would probably be a good idea to start paying down the credit card debt, as the interest payments alone are high.  This would mean the person would have to cut spending each year by a far greater amount than the $10,000.

Another option is for the person to get another loan.  He could get a loan (from a fool) for another $20,000 and this would allow him to continue his spending for the next 2 years.  The problem is that the total debt goes up to $120,000, or more if you include interest on the debt.  By getting another loan, this person is just that much further in the hole.  It means it will be that much more difficult to get out of this situation in the future or else the bankruptcy will be that much bigger.

By Spain getting a loan from the euro zone, it just means they will be that much further in the hole.  The Spanish government will never be able to get out of the hole unless there is a big direct bailout (not a loan) or else bankruptcy.

It makes it easy to see how all of this will end.  By giving Spain a loan, it just encourages a continuance of reckless spending.  It means that things will be that much worse in the near future.

The only solution is a dramatic cut in government spending.  It will come eventually, either way.  The government can try to raise taxes, but this will not do anything.  Art Laffer had it right with his curve.  If you raise taxes high enough, it just discourages further production and can actually lead to a decrease in total tax collections for the government.

It started with Greece.  Now it is Spain.  This will be a pattern throughout the world.  It will happen in many western European countries.  It will probably happen in China, Japan, and the U.S., among others.  At some point, governments will be forced to cut back on spending.  The longer they wait, the more painful it will be in the future.

The big political news this week in the libertarian world, and I suppose maybe the Republican world, is that Senator Rand Paul announced his support for Mitt Romney in his presidential run.  Ron Paul (Rand’s father) sent out an email to his supporters saying that he would most likely come up short in the delegate count at the Republican convention in Tampa.  While Ron Paul hasn’t officially withdrawn, he is basically acknowledging that Romney will be the nominee.

Not long after Ron Paul’s message to supporters, Rand Paul appeared on Sean Hannity’s television show. He said that while his father is his first choice, he would support Romney as the nominee.  You can watch it here:

Many libertarians (particularly Ron Paul supporters) see this as a sellout.  They see it as a slap in the face. Rand Paul gained much of his financial support in his senate run from his father’s supporters.

As I have said before, Rand Paul is the best senator in the U.S. Senate.  Until Ron Paul retires from the House, Rand Paul is not the best congressional member (from a libertarian perspective).  Actually, even when Ron retires, Rand may still not be the best congressional member.  While he will remain the best senator, there are probably others in the House (like Justin Amash) who are probably better than Rand (but still not as good as Ron).

I have had my hesitations about Rand Paul from the beginning.  He is much more of a politician than his dad.  He is not a principled libertarian.  He is somewhat acceptable to some of the establishment.  People like Sean Hannity like Rand Paul.  That makes me more skeptical of him.

I don’t think this is a black or white issue (and I’m not talking about race).  It isn’t that Rand Paul is on our side (the pro-liberty side) or the other sided (the statist side).  He really is in between.  He is decent on economics, but not as good as his dad.  He is half-decent on foreign policy.  He is much better than Romney or Obama, but he is much worse than his dad.  The same can be said for civil liberties.

Overall, I think it is good that many Ron Paul supporters are giving Rand a hard time about his support for Romney.  They see it as a political move, which it is.  The only thing I would say is that you should try to stay somewhat respectful, as Rand can still be a good ally moving forward on many issues.

People are now trying to speculate on whether Ron will follow in his son’s footsteps and throw his support behind Romney and be a good little Republican.  I highly doubt this will happen.  Romney, for the most part, stands for almost everything that Ron is against, and vice versa.  If Ron Paul endorses Romney, it really will be a sellout.  He will have gone against everything he has stood for, for the last 35 plus years.

Hypothetically, if Ron Paul did endorse Romney, it wouldn’t make that much of a difference (at least as far as the election goes).  Ron Paul supporters will not fall in line, at least for the most part.  They will do their own thing.  They are not going to vote for Romney or Obama, unless they were planning to already.

I don’t think we have to worry about that scenario.  I am quite confident that Ron Paul will not endorse anyone, particularly Romney or Obama.  I also don’t think Ron will have a problem staying out of it.  The only problem would be if Rand becomes Romney’s running mate.  While I doubt that Rand will get the VP nod, it sure would make it interesting as far as Ron’s support.  Even in that scenario, I still think Ron might stay out of it and plead the fifth.  He is that principled that he might not endorse his own son if he were paired with Romney.

Many Ron Paul followers and Austrian school followers are big fans of Murray Rothbard.  I suppose most of the new and young Ron Paul followers are not as familiar with Rothbard, but many of them turn to Rothbard to expand their knowledge from what they’ve learned from Ron Paul.

I can’t say that Rothbard has been a big influence on me directly.  The people who have been a big influence on me (Harry Browne, Lew Rockwell, Richard Maybury, Ron Paul, just to name a few) were influenced by Rothbard (some more than others).

I have actually had a few disagreements in Rothbard’s writings.  I differ on his position of fractional reserve banking, just to name one.  But I still find it hard to believe that Rothbard would have advocated a law against consenting adults engaging in fractional reserve lending and borrowing.

I have not fully immersed myself in Rothbard.  I have read a couple of his shorter books and I have read many of his articles.  I always find his articles discussing politics informative and interesting.  His writings on Reagan and Clinton are really fascinating.  I also agreed with his writings on being involved in politics (endorsing candidates, forming coalitions, voting, etc.).  Some people think it is a contradiction for an anarcho-capitalist to be involved in politics at all.  I think Rothbard showed the benefits of political alliances and he was right that it wasn’t a contradiction.

It really is too bad that Rothbard passed away at a relatively young age (68 years old) in 1995.  It definitely would have been interesting to get his take on September 11, 2001 and the Bush Junior presidency.

If there is one thing in particular that I can say I really learned from Rothbard, it is his writings on consent.  He expounded on what de la Boetie said over 400 years ago.  He pointed out that a government does not have to be overthrown using violence.  All that has to happen is for a large percentage of the population to withdraw their consent.  When the government no longer has the consent of a large portion of the populace, it will collapse from its own weight.

The Soviet Union collapsed and there was virtually no bloodshed.  It is not because Gorbachev was a really great guy when he was in charge.  It is because he no longer had consent from the people.  The whole system was a joke and it was unsustainable.  The system collapsed without violence.

The message we can take here is that this is an intellectual battle.  We don’t need to elect the right politicians.  We don’t need to pass the right laws.  We don’t need term limits on politicians.  We don’t need to convince the politicians who are currently in office.  All we need to do is educate others on the benefits of liberty.  When a large portion of the populace no longer consents to government force, then that in itself will reduce the power of the politicians.

Ron Paul has had virtually no success in passing legislation.  His success has been one of education.  He has spread the word to millions of people.  He has changed hearts and minds.

It is too bad that some great libertarians like Rothbard and Harry Browne are not alive today to see the success that Ron Paul has had in educating millions of people.  These men were quite optimistic about the future, but I think even they would be surprised at how far we’ve come so fast.

There is a story linked from Drudge that says France has cut the retirement age from age 62 to age 60 for those who entered employment at 18.  Earlier in the week, Drudge linked to a story, quoting someone who said that the retirement age (in the U.S. I believe) might have to be raised as high as 80.

Of course, the first thing a libertarian might ask is, why is the government determining a retirement age?  It is up to each individual to decide what age he will retire.  The reason that the government talks about the retirement age is because of Social Security and Medicare (or their equivalents in other countries).

It is crazy that the French government would actually cut the retirement age, given the current economy and the massive budgetary problems that countries in Europe are having.  If anything, the age should be going up so that the government can stay solvent.  The new French government is admittedly socialist, which means they believe in free lunches and fairy tales.

As far as the U.S. goes, I think the retirement age (referring to Medicare and Social Security) will go up eventually.  The public sector unions lost in Wisconsin yesterday.  Next, the senior citizens will lose in the whole country.  Some think I’m crazy for saying this because seniors make a powerful voting block.  But when young people have their backs against a wall, they will vote to cut grandma’s Social Security check before they have to pay even more in the way of taxes.

This is why I don’t really worry about the unfunded liabilities too much.  They certainly are an issue, but it is an issue that can be quickly fixed by raising the retirement age.  A portion of the federal debt is also made up of intra-governmental debt, which is simply debt that the government owes itself.  Intra-governmental debt is almost $5 trillion of the total national debt of almost $16 trillion.  About $2.7 trillion alone is owed to the Social Security Trust Fund.  Just raise the eligibility age to collect Social Security to 80 and this would wipe that debt off of the books.

The squeeze is on.  The governments of the world keep trying to kick the can down the road, but things are coming to end.  They are really close for Greece.

In the U.S., things may chug along for a little while longer.  Eventually, Congress will be forced to cut back, assuming that the Fed doesn’t go into hyperinflation mode.  I think Americans will reject large tax increases.  We will eventually see spending cuts.  Since Medicare, Social Security, and the military make up the majority of the federal budget, those things will not be left alone.

I don’t think Social Security and Medicare will go away entirely any time soon.  But it is quite reasonable to think that changes will be coming in the form of reduced benefits and a higher age for eligibility.