Bankers would not be allowed to lend out their customers’ money without explicit permission and full disclosure of the risks. Large private losses could still take place within the financial system but without endangering the rest of the economy or burdening taxpayers. In short, Kotlikoff’s proposal stops bankers from being able to gamble with other people’s money.
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“The Clash of Generations is so well written that Scott Burns and Laurence Kotlikoff should be considered the Stieg Larssons of economics. But there is one difference: the horror story they tell—about the debts that burden the young—are not fictional. This is a great book of great importance, and every paragraph contains some new and interesting observation.”
—George Akerlof, Nobel Laureate in Economics, 2001
financial meltdown
THE US has a fiscal gap—the present value of all its future spending (including servicing its official debt) less all its future taxes of $202 trillion—almost 14 times GDP. Greece, by comparison, has a fiscal gap of about 11 times GDP. To close the US fiscal gap would require raising all federal taxes, immediately and permanently by almost two thirds!