“The developed world’s Ponzi scheme is caused by record-high levels of public and private debt. And it is exacerbated by huge unfunded liabilities that will be impossible to pay off owing to long-term changes in developed-world demographics.
All stakeholders will have to make sacrifices. Creditors will have to accept losses. The wealthy will have to pay more taxes. Wage earners will have to work longer and save more for their retirement. Public spending on social welfare will have to be cut, even as spending in new areas of social investment will have to be increased. Government will have to get smaller and more efficient. And because these problems don’t affect the developed economies alone but also global growth, the emerging economies will have to contribute to the solution by consuming more and exporting less.”