Everything is Worse Than We Think…

…when it comes to society-wide savings, as Great Stagnationist Tyler Cowen explained the other day in the New York Times. And yes, now that you ask—is is the gub'mints fault. (That's how we talk here in Hollywood.)

Here's why:

Say that you have $20,000 in Treasury bills. You probably believe that you own $20,000 in wealth. This will encourage you to spend and come up with ambitious plans. Yet someone — quite possibly you — will be taxed in the future to pay off the government debt. The $20,000 may be needed in order to do that.

The illusion is this: A government bond represents both a current asset and a future liability, yet for most people, those future tax payments feel less concrete and less real than the dollars they're holding….

….the sorry truth is that our savings aren't worth as much as many of us think, and a rude awakening is coming. One way or another, some of our savings will be taxed away to make good on governmental commitments, like future Medicare benefits, which we currently are framing as personal free lunches.

Are we broke? Signs point to "yes."