Former US Federal Reserve Chairman Alan Greenspan says that growing social welfare spending is a direct threat to the economy.
According to Greenspan, the more money that is siphoned off for entitlements, the less there is for investment needed to maintain productivity gains that are the foundation of future income generation.
Entitlement spending in the US exceeds military spending: entitlements are more than $1.75 trillion, while the Pentagon costs are around $700 billion annually.
Нalf of all Federal spending goes to social welfare spending, while in 1970 it was 20%. Greenspan believes that it will only increase.
In nine years, the three primary entitlements of Social Security, Medicare and Medicaid and interest on the growing federal debt will consume all federal tax revenues.
The government will have to double federal tax rates to pay for entitlements as the elites will hardly be ready to give 80% of their income in federal tax.
Obviously, economic elites and corporations have a great influence on US government policy, while ordinary citizens have little or no influence at all.
Greenspan compares this situation with the end of the Roman Empire. The Romans also had insufficient tax revenues on the back of growing military needs and mistakenly bet on bread and circuses, which devastated the public treasury.
Currently, the US government is trying to solve problems by printing money to subsidize federal deficits, ignoring the imminent fall of their currency.
