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I'd wager that the vast majority of the rise in 'fiscal exposures' is primarily due to the decrease in interest rates.
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Which decrease? Or... are you saying their refusal to raise interest rates enough is the major cause?
[/ QUOTE ]I'm saying that the present value of a payment that must be made far in the future is hypersensitive to a change in interest rates. Interest rates decreased around 3% over the 2000-2005 time frame he considered, which makes the present value of the payments to be made in the distant future skyrocket.
So...umm...their 'refusal' to raise rates could be seen as what's making the figure LOOK so big. Just as 2000 was a spike in rates, 2005 was a trough in interest rates--they've inched back up considerably since. He just 'coincidentally' chose the window that made the problem of future obligations look as dramatic as possible.
He definitely has some objective with this video other than unbiased public education.
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First of all do we know what interest rate he based the PV of future obligations on? Not sure we do. You wrote in part:
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Just as 2000 was a spike in rates, 2005 was a trough in interest rates--they've inched back up considerably since.
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Here's a chart of the 10 year treasury over the long term:
Long Term Chart of the Ten Year Treasury
If 2000 was a spike what was 1981-82? It's clear that when Volker took over the late in the Carter administration that Fed policy changed drastically. Greenspan's tenure was basically a continuation of the policy that set off a disinflationary period that lasts to this day. I don't think we're going back to Fed policies enacted pre Volker but one never knows.
Here's a linky with interviews of Mr. Volker that you may find interesting.
Volker Interview