On March 6, 2019, I released a podcast episode entitled "Federal Debt, the Ticking Bomb that No One is Willing to Diffuse." It was episode 628 of the podcast. The following day, March 7, 2019, I released episode 629, which was called "In-Depth Version, Federal Debt, the Ticking Bomb that No One is Willing to Diffuse." I explained very carefully and in great detail the exact numbers of the fiscal situation in the United States.

I closed those podcast episodes by explaining to you why I was actually taking so much time to explain it. I explained to you that it's my opinion that inevitably the U.S. government will default on its obligations. And by the way, default happens in various forms. I think the United States will continue to be strong, continue to be successful, but it will default on its obligations.

But I explained to you why that's not a crazy outlandish theory. And I said, "Here is what the government will need to do in order to bring its financial situation back into a position of fiscal sustainability." I explained the numbers of exactly what you would need to see. That was four years ago that I made that podcast episode.

And I thought it would be useful here, four years later, to talk about the improvements in the situation. Hopefully you just fell off your chair laughing. Short story is there are no improvements. Everything has gotten worse over these intervening four years. Of course, we've faced the COVID crisis and all kinds of things that have gotten worse.

And in that episode I quoted extensively from Brian Riedel from the Manhattan Institute his paper called "A Comprehensive Federal Budget Plan to Avert a Debt Crisis." And in today's episode I want to begin with some comments from a recent op-ed that he wrote in the New York Times because he gives a good and accurate look, a very short and accurate look at the current numbers facing the US-American situation.

The op-ed was entitled, published February 21, 2023, entitled "Biden's Promises on Social Security and Medicare Have No Basis in Reality." In his State of the Union speech this month, President Biden pledged to block any reductions in scheduled Social Security and Medicare benefits. He also promised that any tax increases would be limited to families that earn more than $400,000, roughly the top-earning 2% of American families.

Together, these promises are almost certainly economically impossible. Over the next three decades, the Social Security system is scheduled to pay benefits $21 trillion greater than its trust fund will collect in payroll taxes and related revenues. The Medicare system is projected to run a $48 trillion shortfall. These deficits are projected to, in turn, produce $47 trillion in interest payments to the national debt.

That is a combined shortfall of $116 trillion, according to data from the Congressional Budget Office. The inflation-adjusted figures trim by roughly one-third. These unsustainable figures result from demographics, rising health care costs, and program design. The ratio of workers supporting each retiree, which was about 5 to 1 back in 1960, will fall to just over 2 to 1 by the next decade.

People who live until age 90, a fast-growing group, will spend one-third of their adult life collecting Social Security and Medicare benefits. Today's typical retiring couple will receive Medicare benefits three times as large as their lifetime contributions to the system, and also will come out ahead on Social Security, adjusted into present value, according to the Urban Institute and the Brookings Institution.

Now, pay very careful attention to the next paragraph I'm going to read to you. I'm going to read it slowly so that you can follow the numbers in an audio format. Pay careful attention. The President's implication that full benefits can be paid without raising taxes for 98% of families has no basis in mathematical reality.

Imagine that Congress let the Trump tax cuts expire, applied Social Security taxes to all wages, doubled the top two tax brackets to 70 and 74%, hiked investment taxes, imposed Senator Bernie Sanders' 8% wealth tax on assets over $10 billion, and 77% estate tax on estates valued at more than $1 billion, and raised the corporate tax rate back to 35%.

Combined federal income state and payroll marginal tax rates would approach 100% for wealthy taxpayers, and America would face among the highest wealth, estate, and corporate tax rates in the developed world. Yet, total new tax revenue, 4% of GDP, would still fall short of Social Security and Medicare shortfalls that will grow to 6% of GDP over the next three decades, not even having the defense budget would close the remaining gap.

More realistically, if these programs aren't reformed, the middle class will have to shoulder the burden, just as they do across Europe. And the burden is massive. Closing with taxes the aforementioned Social Security and Medicare shortfalls would more plausibly mean raising the payroll tax by 9 percentage points and imposing a 20% value added tax.

Taxes haven't been raised that dramatically since World War II, back when tax revenues consumed a much smaller share of our economy and there were many more untapped revenue sources. If such tax increases sound painful, Congress could close as much as two-thirds of the Social Security and Medicare shortfalls by increasing program eligibility ages and paring back the growth of benefits for non-poor retirees, according to my research at the Manhattan Institute.

Perhaps the President assumes the federal government can just borrow $116 trillion over three decades, on top of the current roughly $25 trillion in federal debt held by the public. But who will lend the government this much money? China and Japan are already paring back their roughly $2 trillion in American debt holdings.

It seems unlikely that other countries would step up to take on much more. The Federal Reserve is trying to reduce its own more than $5 trillion in Treasury holdings that temporarily soared during the pandemic, and cannot monetize $100 trillion in debt without hyperinflation. That leaves America's banks, corporations, and investors, which almost surely lack both the capacity and willingness to lend $100 trillion to a government that cannot control its own finances.

At some point, the bond market will likely tap out, forcing Congress to finally confront its soaring deficits. The danger is that waiting for a debt crisis will make the inevitable reforms so much more drastic and painful. At that point, retired baby boomers will be too old to absorb benefit changes.

The bloated national debt will bring colossal interest costs, and years of automatic benefit expansions will be even more politically difficult to pare back. The responsible alternative would bring Democrats and Republicans together and put everything on the table – Social Security, Medicare, taxes, and defense – to build a balanced solution that gradually phases in reforms and exempts low-income seniors while we still have time for this gentler solution.

Social Security and Medicare sustainability is not merely a future challenge. Their annual program shortfalls – forecasted to rise from $426 billion to $2 trillion over the next decade – are the main driver of budget deficits, expected to head well past $2 trillion in a decade. Social Security and Medicare are vitally important programs that represent a commitment between generations.

No White House has seriously entertained addressing their unsustainable costs since the 2011 deficit negotiations. Back then, Vice President Joe Biden courageously put all taxes and spending on the table in hopes of a grand deal on deficits. With the Social Security and Medicare trust funds headed toward insolvency within 11 years, that courage is needed again.

And thus concludes Brian Riedel's Op-Ed from two days ago. I don't have a ton to say on this subject because my major intent is simply to keep you informed. In terms of solutions, I have none. There really aren't any. When you look at it, it's a fairly simple situation.

Either you have to increase government revenue, increase the income for the government, or you have to decrease the expenses. And so, as I see it, there are four basic options. And these are the only four that I can come up with that will eventually be a pathway out of this situation.

Option number one is raise taxes or government fees. The sources of revenue to a government are taxes, government fees, and inflation. We'll get to that in a moment. But it's taxes and government fees. So you have to either raise taxes or government fees. In terms of how to raise taxes, there are a couple of basic ways to raise taxes.

Number one way is you can increase the rates of tax. The taxes are charged at increased tax rates. So you were going to be charged 35%. Now you're going to be charged 45%. That's the way, number one. A second way to raise taxes is to increase the base, the tax base that is charged on.

So for example, right now, Social Security and Medicare wage base is, what's it, $120 something thousand dollars? Just a little bit, somewhere in that range. And so that amount can be increased. You could say, well, all of your wages are now subject to Social Security taxes. And so previously you were making $400,000 a year and you were paying Social Security and Medicare taxes, employment taxes, on $100 something thousand.

But now we're going to charge that on $400,000. So there's a major tax increase, but they didn't change the rates. They changed the base, the wage base. Alternatively, the government, in order to raise taxes, can impose new taxes. So you saw this with various, you see this with various surcharge taxes and special taxes that get levied on certain activities.

Those are the three basic ways that you can increase taxes, is number one, increase the rates. Number two, change and increase the tax base. And then number three, impose new forms of taxes. Or you can raise government fees. And so for some services that government provides, the government can charge fees.

This is negligible in the modern age, but it can be done. So either the country can raise taxes or government fees, or number two, you can lower government spending. So the government can choose to lower spending and say consciously, "We're going to reduce our spending." This is different than default, which is number four, but reduction of spending would say, "This year we were planning to spend a trillion dollars on this government program, but what we're going to do is we're going to cut that budget and beginning three years from now, we're going to spend $500 billion on this government program." So you can lower government spending.

The third thing that you can do is inflate the currency. So when you inflate the currency, it allows government to satisfy its technical obligations to say, "Look, we paid our bills." But because you're paying those bills with inflated currency, you're getting a discount versus what you would have had to pay if the currency had not inflated.

And then number four is you can default on obligations. Now for a limited time at Del Amo Motorsports. Get financing as low as 1.99% for 36 months on Select 2023 Can-Am Maverick X3. Considering the Mavericks taking home trophies everywhere from King of the Hammers to Uncle Ned's Backcountry Rally, you're not going to find a better deal on front row seats to a championship winner.

Don't lose out on your chance to get a Maverick X3. Visit Del Amo Motorsports in Redondo Beach and get yours. Offer in soon. See dealer for details. And default can take many forms. So it can take the most drastic form when a government just doesn't make its interest payments on its debt.

I think that's unlikely for the United States, but it has happened all around the world with many governments all around the world. They just simply flat out default. They don't pay the interest payments on the bonds that they owe. Default can take other forms as well. So default can include things like raising the age of retirement.

When you started working as a 20-year-old worker, you were promised that at age 65 you would be able to retire. But now the laws have changed and you have been promised that now your age of retirement is now 75. I consider this to be a form of default because it's a changing or renegotiation of promises.

There are other forms of default that are also again softer. So a number of years ago on the podcast I profiled an extensive article on Medicaid beneficiaries in Maine. And these are people who are entitled to government benefits to pay for their health care. The problem is quite simply the rates that the government is willing to pay to nurses to provide the care.

The market conditions do not make it possible for there to be health care workers available on those systems. And so although technically the government says, "We'll write the checks," there's no one who wants to work and there's no one willing to do it. And so the person who is eligible for benefits doesn't get those benefits.

And this is again another form of default. There are other things as well. Basically default means government renegotiating its commitments, changing the terms of the alleged contract. Because there is no contract. Remember that what the government says and does is not a bilateral contract. They're not obligated to do it.

It's a unilateral agreement where they set up a program and they say, "This is what we're going to do." And then if they want to change it 10 years later, they change it. And other than a ballot, a vote in the ballot box to vote for one representative over another representative, you have no say in the matter.

You can't affect it or change it. So those are the options, right? In order for the United States government to deal with its fiscal problems, or any government, they have the option to, number one, raise taxes or government fees. Number two, lower government spending. Number three, inflate the currency.

Number four, default on obligations. And so you say, "Well, what's going to happen?" None of us know. We are in genuinely uncharted territory. We don't know. And what I find very difficult is while the fiscal situation of the US government is bad, it is by no means worse than many other governments in the world.

There are many, many major leading governments that are in far worse shape. Simultaneously, while the US fiscal situation is bad, the US economic situation is better than, again, virtually anywhere else in the world. And so I myself don't know how to reconcile this paradox. All I know, what I believe, is that the fiscal situation is a separate and while connected, it's not a directly influential force on an economic situation.

The fiscal situation does matter, but the economic situation is a separate animal. And so I don't try to connect them. I recognize that they influence one another, but I don't try to connect them directly and say that because the US fiscal situation is bad, that that automatically means that the US economy is heading into the tank.

To me, that's an unwarranted claim. What can you do to protect yourself? Well, the first thing you can do is be informed. That's why I'm trying to inform you about the situation. If you understand the facts, the mathematical facts, without even touching on things like the whole concept of trust fund, right?

There is no trust fund. It doesn't, the money doesn't exist. It's a bunch of IOUs traded between government entities. There's no money. It's all made up in the first place. So first is understand. Understand that no matter what the politicians say, the politicians are trying to get elected and gain power.

The math is undeniable. It's inescapable. And the math is devastatingly bad. So as once you know it, then you can press forward and provide for your own solutions. As I see it, that's the starting place. So be informed about the situation. And that none of the policies or proposals that I see recommended currently are in any way mathematically sound.

You hear someone say, "I'm going to come out." Or you hear that the government just changed something and they increased it by 1%. Just ignore it. It's all noise. If at some point in time you get a bipartisan collaborative effort to make significant changes on government spending or on these programs, pay attention.

And then go and look for an appropriate analyst who will look and say, "What kind of impact do these make?" Again, I find Brian Riedel to be an extraordinarily knowledgeable, useful analyst. And he has plenty of information available for those who wish to dig into the numbers. So if something like that comes along, great.

But as you heard in the paragraph that I read in his op-ed, and as you heard in the podcast episodes four years ago, these proposals need to be very, very significant in order to move the needle in a meaningful way. So pay attention. Number two, don't expect any government promise to be there for you.

It'll be nice if they are. And if you're 70 years old, file for Social Security and take it, obviously. But if you are 40 years old, don't expect the government to hold good on its promises. Which means you have a responsibility to provide for yourself those things that previous generations voted that the government would take care of them for themselves.

What are they? Well, the big ones are health and health care. You have a responsibility to take care of your health so that you will be in good health in your old age. Remember that Medicare and Medicaid are not health care programs. They are health cost payment programs. Getting access to Medicare and Medicaid is not going to be the key thing that helps you to be healthy.

No question that they can pay for many things that will help you to enjoy a stronger quality of life. But you need to focus first and foremost on developing and maintaining your physical health. That's the fundamental thing to begin with. So if you go into old age as somebody who has lots and lots of health conditions and is dependent upon a government program to gain access to a doctor and gain access to a doctor, there's a very strong chance that you're going to die much earlier than otherwise you would.

But if you're someone who goes into old age in vigorous personal health, able to enjoy all of the benefits of good sound health, being free of sickness and disease, etc., then you can enjoy your old age regardless of what government programs are doing or not doing. So we all have a basic limit to our experience of life and genetic potential and health history, etc.

But today you should be focusing on maximizing your personal health to the highest degree possible. Assume that you're not going to receive any health care from others and recognize that you need to care for your own health. That's to me the fundamental thing. Related to that, with regard to government income from government pensions, be it social security or be it other forms of government pensions, just pretend that those things don't exist.

I don't think it's warranted to discard 100% of it. To me that seems extremist. I wouldn't tell somebody who has a military pension, "Oh you should just pretend you don't have one." No, to me that's silly. Social security is much more questionable, but again I think there will always be some expression of social security because our entire country in the United States has systematically – number one, we accepted and voted for these programs, we voted for the politicians who established them, and they've become so interwoven in the American fabric that this is a fundamental part of what it means to be American, is to have access to these welfare programs that there's no serious politician or no widely accepted politician who is seriously running on the idea of discarding these things.

So if you're a hardcore libertarian, no government programs, no welfare programs, it's a pipe dream. Get out of here. It's not going to work. It's silly. I'm with you ideologically, but practically there's no point in even talking about it. These programs are here to stay, but they're not going to be as significant to most beneficiaries as they once were.

There's going to be some form of default. So you're going to be expected – you're not going to retire at 65 or 70 years old. You're going to be expected to work from 70 to 80 and then file for social security, etc. And in order for that to be successful, you will need to accomplish a couple of personal things.

One, you need to increase your personal health so that you can work effectively. Number two, you need to pay careful attention to your career choices and you need to choose a career into which you can grow and flourish for the long term. And so that career should have a few basic features.

Number one, it should not be a career that's physically damaging to your body. It should not be a career that grinds you down and you're going to reach 50 years old and you can't do it anymore physically. So if you're in a career that is grinding down your body, dump it.

Number two, it should not be a career in which you will be subject to heavy, unrelenting pressures of ageism. The most accepted forms of discrimination in the United States today involve discrimination based on age, ageism, discrimination against the young and the very young and discrimination against the old and the very old.

And so recognize that you, as you age, are going to face significant levels of discrimination and you need to make sure that your career is one in which your wisdom and your judgment and your skills and your faculties, etc. will become more valuable as you age rather than less valuable.

A career that involves you being able to use your physical body and be stronger and have better eye-hand coordination, etc., this is not a career that has a good long-term potential for you. On the other hand, a career that involves perspective, judgment, wisdom, etc., is a career that does have a long-term potential for you.

So there's plenty of time for you to orient yourself and orient your long-term career thinking in the direction of something that you will succeed with until you're very, very old. Another important component of your career choice needs to be for you to choose a career that you find personally fascinating with the goal of being engaged in it over a long period of time.

And there are many careers that are so vast in their scope that you can press forward and continue to learn and develop other things and explore other aspects of it. You don't want to have a career that maybe if you're not mastered it today, let's say you're 40 years old and you look down and you recognize that at the age of 50 I'm going to have mastered this career and there's going to be nothing left for me to learn.

Well, that's a problem. So now you need to create something that's going to put in place for you a 30 or a 40 or a 50-year learning scope so you can be engaged with it and interested in it and be challenged in your career in a significant way. So those are some things you can consider on the income side because the most obvious way to thrive when government pensions are breaking down is for you to have private sources of income.

Work is the most reliable way for you to handle that. On the expense side of things, you want to take careful thought for how you can protect yourself against needing a lot of money. I've already mentioned health care expenses, which wind up being a significant factor in most retirees' budgets.

And if Medicare or Medicaid or other, whatever the replacement government programs are, if those programs are insufficient to pay for your health care expenses, then you need an alternative. And again, I've emphasized, do everything you can to achieve and maintain the highest personal level of health possible to minimize your need for physicians or medical intervention.

You also want to control your other personal expenses so that you have money available to purchase outright and directly the kinds of medical care and intervention that you need. So put yourself in a situation where your need for money is much less significant. Most of us have an actual need for money that is very low.

But what we do is we make lifestyle choices that result in our needing higher amounts of money. And so it's important that you recognize these are choices. These are choices that we make. We could live very comfortably in a simple one-room cabin on a little parcel of land somewhere with very, very modest expenses as an individual or as a couple.

We could live that way. But most of us don't choose to live that way. So you might want to have multiple plans that result in your being able to live a life of very low expenses if you needed or wanted to. I consider it a sign of weakness for a man to not be able to adapt very comfortably to multiple lifestyles.

If you're in a situation where you just have to spend the amount of money you spend right now and there's no way to do it, I cannot possibly spend less than $15,000 a month, then that's a sign of weakness. Strength means that you can live very well on $15,000 a month and you can live very well on $1,500 a month and you can live well on $150,000 a month.

As human beings, we can adapt both up and down the scale of hedonism. And what I think is a very rewarding thing to do is to create multiple lifestyles in your mind that you would be very content and happy living. And find your version of that. To me, if I had a little cabin or if I lived in a little RV or something like that, just the amount of intellectual goals and hobbies that I have that are unfulfilled are things that could occupy me very happily for years and years and yet cost no money.

And so I could happily live in a little one-room apartment somewhere or a little studio somewhere. Maybe I'm taking care of, living in my RV, watching A Christmas Tree a lot during the season to make a little money or maybe I'm a building super. I become the little old guy that sits at the front of an apartment building and says, "Welcome," and make sure that everything's okay with the building.

But give me a stack of books. Maybe you want to learn math and you just are frustrated and upset so you buy yourself a stack of math textbooks that you're going to spend five years working through or reading all the classics or whatever your version of that is or mastering anything that you're interested in, but mastering it.

And in our modern world, you can live well on little money. And so put yourself in a situation where you can do that. In addition, I think you should think very carefully about family structure and about community. Again, my ambition when I'm old is basically the same as what my dad has always said.

He's like, "If I can't live well alone, just give me a tiny little bedroom in your house and I'll be happy." To me, that's the thing as well. At this point, I have five children. Assuming my children survive to adulthood, if I have a little room in my children's houses and I bounce around among them, I'm happy as a clam.

And to me, the importance of community is a very important thing for you to consider. So that may involve having children. If you don't have children, then you need to pay very careful attention to how you can build and cultivate that community. It takes years to build community and you're going to need to build community across generational boundaries.

You can't just be friends with a bunch of people who are your age because when you're all old and half your friends are dead, you need someone who's going to care for you. So you need younger friends, which means you're going to need to find people to sow into and mentor and care for, etc.

I don't think that children are the guarantee to community in your old age. Those without children can do that, but you do need to be intentional. You need to be intentional about finding young people and mentoring them and loving them and sowing into their lives. And with luck, they'll reciprocate and care for you as you age.

The growth of government welfare programs has enabled many of us to walk away from the community binds that sustained us in the past. Being a single man or a single woman in the world has only truly become possible with the growth of welfare to provide for you. So if welfare is under attack and welfare is not working as well as it once did, that's where it will be increasingly important to provide for yourself and also to revert to the ancient practices of living in community.

So you want to develop that. If you have children, you need to make sure that you have a relationship with those children that will stand the test of time. And if your children watch you not care for your parents, then there's a good chance that you have modeled for them what they're going to do for you.

If you don't have a close and warm relationship where they want to be with you, there's a good chance that they're not going to want to be with you. And so as a parent, it should be an important focus for us to focus on building those values and developing the relationship with our children so that in our old age and potentially in our poverty, we have the ability to live out our years in love and in community.

With regard to other things, I think it behooves you to make backup plans. And so I've talked a lot about backup plans. Remember that these particular issues that we've discussed are primarily related to the country of the United States, the fiscal situation of the United States. And so I think it makes sense to diversify out of one specific country.

And again, this is hard because I believe that of any country in the world, the United States probably has the best potential future. But I think it makes sense for you to not be reliant on one country. And so if you're a high income earner and you expect taxes to increase, you obviously want to do everything you can to protect against that with normal traditional financial planning.

And I think you'd protect against that by being able to escape the US tax net entirely. I don't expect there to be large and significant changes in US taxation broadly. It's my opinion. It's a studied opinion. I have arguments for it, but it's my opinion that the US government won't make significant changes with regard to tax collection.

And primarily, I think this is due to simply market pressures. And in an increasingly mobile world, and in a world where there are much, much lower tax jurisdictions, I think that if the US government increased its tax collections beyond what it is now, there would be increasing levels of pressure and increasing amounts of people just simply leaving and escaping the US tax jurisdiction.

The US government, I think, has done a remarkable job of dialing in its spot on the Laffer curve. The Laffer curve is the curve that illustrates where the optimal level of tax collection. You want to tax your citizens as much as you can in order to receive the maximum revenue, but not tax them so much that they actually do something different and leave and go somewhere else or change their behavior in order to minimize taxation.

And I think the US has pretty well dialed that in. And so I think that if they increase tax rates much or made big changes other than the small changes they always make at the margin of satisfied political support, then I think that they would lose tax revenue significantly.

But I always want to have a backup plan. And so I want to make sure that I have the ability to go leave the United States, go to another place if that were smart for my business, etc. And so you can think about that and engage in international planning.

By the way, internationalescapeplan.com is your starting point. I have a course on this and most of the course is dedicated to a plan B. It's not dedicated to saying, "I'm going to teach you how to leave the United States and move to Dubai today." It's more about, "Wouldn't you like to have a backup plan?" Although I don't live in the United States at the moment myself, I think that it's very probable that I myself will return to the United States in coming years.

Because I think economically and etc., I think the United States has the most to offer from most places as compared to most places in the world. But what I feel very good about today that I didn't feel very good about five years ago was that now that's an option.

I'm not stuck in the United States like I was five years ago. Today I could leave and I could sever my relationship with the country at any point in time. It's not always free to do that. There are exit taxes etc. that have to be planned for and considered.

But to me that has helped me to be much more relaxed and sanguine about this entire situation. And I would encourage you, so if you'd like to know how to create a plan B, go to internationalescapeplan.com, take my course and I'll explain it to you very carefully. It's something that everybody should do.

Even if you say, "Joshua, for the rest of my life I'm going to live in the United States." Great. I'll probably be there with you in the future. But still you should go and you should do the stuff that I explain in that course. It makes all the sense in the world and it's really, really important.

And it will bring you a sense of freedom. You won't care about politics nearly so much. You won't argue about this stuff nearly so much once you know that it's all optional. Your participation in it is optional. So making a long-term plan in terms of taxation could be important because if government raises taxes that could cost you quite a lot of money.

In terms of spending, again I don't think the government is going to lower spending much until it has to. But remember that default is always an option. They could default. And so if there are things that you yourself are particularly concerned about, you may wish to establish redundancy. So if you think that Medicare and Medicaid are facing really bad situations, then it might behoove you to go ahead and make a plan to have access to another government's welfare programs.

So I think it makes a lot of sense to be a dual citizen of the United States and Canada. And that way if the welfare system in the United States is breaking down, you gain access to the welfare system in Canada. If you're not getting the treatment that you want in the welfare system in Canada, then gain access to the United States.

At the moment, and then the other thing is in addition to government welfare programs or government health care programs, etc., health insurance programs that you may gain access to, you might want to consider the place of medical tourism. And so in North America, we basically have this perfect trifecta at the moment where you can get incredible medical care at a much lower cost in Mexico.

So you can go to Mexico for medical tourism. You can gain access to all the benefits of the United States. And then if you also have access to Canada, you've got a great trifecta. You've got two governments with strong welfare programs that if you satisfy the relevant requirements and laws, etc., that can provide you with the government benefits that are useful.

And then you can gain access to Mexico, which does not have a strong government welfare program, but does have a great private market for you to simply pay for the care that you need. And so you may want to think about some form of diversification for that. I've worked with many clients who, for example, have maintained Canadian residency for this purpose.

And I think it makes a lot of sense for you to consider what are those things that I would need and how do I provide for them. And again, internationalization is not the only thing, but it can be an important thing. Maybe you live in a downtown area in the United States, but you go ahead and you buy a humble cottage in a rural area knowing that if I couldn't maintain my expensive lifestyle, this would be my backup lifestyle.

I think many people overestimate the benefits of retiring to a so-called cheap country, but there is no question that many people have improved their lifestyle by making that move. So as long as you have community and your consumption needs are modest, having a plan for an international retirement to a lower cost of living place where you can get better health care, etc., I think is a smart move.

There is a bustling retirement, basically we call it retirement tourism, medical tourism market in many places. Some in Central and South America, in Southeast Asia, there is a bustling market where you can go and for very modest amounts gain access to basically a continuing care retirement community, etc., that's beautiful and luxurious and where you have care that you need and good medical care, but the cost differences between those countries and the United States are so significant that you can really afford it in a strong and excellent way.

So these are the basic strategies to think through and then watch the situation over the coming years. I'm not a skilled prognosticator or predictor of events, but it sure seems to me that at the moment in the US system, we don't engage in much excellent long-term strategic planning. And so until we get to the point, and because the baby boomers hold so much political power and because the younger generation, which is increasingly a sizable voting bloc, tends towards big government left-wing thinking, I don't expect these programs to be cut in advance of, I don't expect them to be cut proactively.

It's just so obvious, right? President Trump, or former President Trump, forgive me, I don't like to refer to former politicians. Presidency is not a kingship, so forgive the slip. You're not a president for life. Former President Trump, who's been, I guess, campaigning recently to be re-elected, represents, I think, the perfect kind of populist argument to say, "No, we're not even going to talk about cutting Social Security, Medicare, etc." I don't expect, I haven't heard of any kind of right-wing Republican who's even been willing to propose anything like this.

And then on the Democratic side, the idea of cutting these kinds of programs is just a non-starter. So maybe at some point in time, there could be some cuts in defense spending, things like that. Who knows? But at the end of the day, Medicare and Medicaid and Social Security are the huge issues, and since there's no political will to trim these, I don't think there'll be any meaningful political action until we get into a crisis point.

And at that point in time, who knows? Who knows what happens? Could tax rates change? Of course they could, but again, I think that if they changed, they would be fairly short-term in change. When you look at some of the examples that we have around the world, whether it's the Connecticut millionaires tax or the Massachusetts millionaires tax or what the French tried when they said, "We're going to raise all these taxes," the big money has global options in a way that never before existed.

And while the United States is a great place to make a lot of money, it is not the only place that offers a great lifestyle. And so big money has tons of global options today that never before existed. And in an increasingly connected world, it's incredibly possible. And there's so many great lifestyles that you can live tax-efficiently, that I think that if they doubled tax rates or doubled tax collection in some way, I think that would be a major flaw.

And of course, it would have massive economic harm, etc. So I think the most likely solution is various forms of default and inflation. That to me seems like the most probable scenario, because you can justify various forms of default, trimming back programs, etc. And I think most people are willing to accept that.

If you talk to most retiring millionaires, and you said, "We're going to impose means testing on Social Security," I don't hear strong rebuffs against that, at least in my personal conversations. Regardless of someone's political convictions, I say, "Yeah, you know, that makes sense. These programs are to protect the poor and indigent.

So if I don't get mine, that's fine." That seems to be more common in terms of what I hear. And then inflation, broad levels of mass inflation will also reduce the bill for the government over time. But your guess is as good as mine. That's the situation. Those are Brian's, Brian Riedel's current up-to-date numbers on it.

I will link in the show notes the previous episode, if you want to go back and listen to what I did on this subject four years ago. I don't think that this means that an economic crisis is upon us. I don't even think it would stimulate a broad-scale economic crisis.

I think that these are long, slow-moving targets, and I'm just focusing on building a life that is independent of these programs, and hopefully I'll be able to be in a strong enough situation to then help some of the poor people who wind up getting hurt the most. To me, what is, I think, most harmful about these programs is we see, if there were a collapse, and I try to hesitate using that word, but what happens, why is that so destructive?

These forms of welfare programs build an expectation into people's lives that relieves them of personal responsibility. And I've known many people who lived exclusively on Social Security, and they said, "Why should I save money?" "Oh, because I've got Social Security." And so they start to count on Social Security being that thing that's going to provide them with their income.

And so what was a well-meaning program winds up creating more demand for its program. And so there are people who just don't save money proactively. Maybe there are indeed fewer poverty-stricken people living on the street in our communities because Social Security is there. Maybe that's the case. I think it's probably the opposite, though, meaning that, yes, they can live on Social Security, but there would have been more people who would have taken responsibility for themselves previously.

In addition, these government programs cut down on localized community levels of charity. And people say, "Well, I'm not going to. Why should I give?" If you go to the United States, where social welfare programs are abundant, and you see people begging on the side of the street, at least a lot of people I hang out with say, "Well, that guy is just there to make money.

He doesn't need it. There's plenty of stuff available to him." Or you go to places with a strong welfare state where there's guaranteed—I guess the Swiss maybe, I'm not super informed—but places like Switzerland, where there's clear government programs, I don't think the Swiss give a lot of money on a personalized basis to local people because they know that if somebody genuinely doesn't have it, the welfare program is there, and it's strongly run by the government to alleviate those situations, and I pay taxes and that cares for it.

Now flip that on its side, and you can see in other places where those programs don't exist, then people are much more giving in terms of, "This is my charity giving. I need to make a donation to this poor person because clearly he has no legs. He can't work," or etc.

And so while I think it certainly feels more comfortable for most of us to not be in a situation where there are beggars, that lack of local community expertise and skill of taking care of poor people, etc., I think leads to a lot of hardship over time. So at the end of the day, I don't worry myself much these days about having opinions at all on these broad scale levels because not my circus, not my monkeys.

I can't do anything about it. But what I can do is try to take care of my family, myself, prepare as I've told you. I can inform you about it, and then you can do it, and then that'll have a ripple effect through some other people, and at least our families can get through the hard times.

And if we can get through the hard times, then we may be able to reach out a helping hand to those who need it as well. So I hope this information is useful to you, and I wish you well. Be back with you soon.