What are the Implications for the World?
The most advanced industrial nations of the world, save China, are all insolvent as a result of pursuing unconstrained social welfare states. China has its own short-term problems, but that is beyond the scope of this note. Politicians apparently are the same across cultures. That is, they will spend and promise more than they can deliver.
All of these welfare states will default on the social promises made to their citizens. Some or all will also default on their debt obligations. It is mathematically impossible for that not to happen! When the defaults begin, they are apt to be domino-like.
With Social Security, Medicare and Medicaid growing exponentially and no known way of financing these obligations, it is merely a matter of time before the US is forced to default.
There is no political willpower in any country to face up to the problems that the uncontrolled welfare state has caused. “Playing ostrich” may be a viable political strategy on small matters, but it is not useful in this case. Eventually, markets will force action that politicians want to avoid. Sadly, by delaying action, politicians ensure that their countries are further down the road to ruin than necessary.