Skyrocketing U.S. public debt will not lead to default, inflation, necessarily higher taxes, or necessarily slower economic growth in the future, given the unique economic environment. Public debt in the United States, the United Kingdom, and Japan can go much higher than people think–and has before–without causing the dire consequences that many fear.

In the last two decades of the 20th century, the investing public was given a picture of corporate financial performance that was in significant part illusion. This 2001 research report set out to answer the question “Just how widespread and serious is the overstatement of aggregate corporate profits?” The macroeconomic evidence indicates that corporate operating earnings for the Standard & Poor’s 500 during this period were significantly exaggerated—by over 20 percent in some years.