Could America be falling from grace due to government policies? Perhaps. Could America be falling from grace due our lack of financial capability? Maybe. Could our fall be due to Federal Reserve irresponsibility? Partly. What is the real reason that America has lost so much manufacturing muscle, financial might, fiscal responsibility, moral rectitude, and brain power and perhaps more importantly why has this situation decayed so rapidly?
The answers are all around us to see. Yet, Jesus said “there are none so blind as those that will not see”.
America has lost its first love: Liberty. Instead, America has traded its love of Liberty for an unfaithful mistress called Comfort. The mantra that the American masses chant, consciously or subconsciously, continually is “comfort”. We just want to be “comfortable”‘.
Everything is fine. Tomorrow will be just the same as yesterday. Just leave us alone. There is nothing to worry about.
Yet, the truth is the world around us, and especially the world immediately in front of us, is quickly becoming unwound.
First, the American dollar is in very real trouble. In five weeks the dollar lost over 6% of its value against the euro and the weak euro has been the only thing saving our US Treasury bonds from sinking further.
Second, the debt level of the Federal Government, to use Federal Reserve Chairman Ben Bernanke words, “the federal budget appears to be on an unsustainable path”.
And no wonder Chairman Bernanke made this harsh, yet truthful, observation. The US deficit is $13 Trillion and the entire value of all goods and services produced (GDP) in America is only $14 Trillion this year. That would mean that the United States debt to GDP ratio is 93%.
At this rate we make Spain look tame at 53% of GDP.
Of course this means that we have totally ignored the value of all our un-funded obligations to Social Security, Medicare, Medicaid, Prescription Drugs, and Government Pensions. Should we add these unfunded debts of $123 Trillion to the current deficit of $13 Trillion then no one has more debt as a percentage of GDP than us. Not one country comes even close to our horrific debt load of 1,030%.
And even this ignores the amazing debt loads of 46 of our 50 states that will add another $120 Trillion to our governmental debt load.
So let’s do a little math. If we add the current Federal deficit ($13 Trillion) plus unfunded Federal Debt of ($123 Trillion) plus unfunded state and municipal government debt ($120 Trillion) that would equal = $256 Trillion.
Folks I think that we are bankrupt…and that is not considering the personal and corporate debt of Americans.
“Randall, we don’t have to pay all these debts in one year”, you say. Okay. You’re right these debts are spread over 20 to 30 years.
Let’s go with the longer term of 30 years and see how much we would have to pay each year, assuming absolutely no interest expense and that the economy will not ever be less than the current GDP.
So, we have $256Trillion/30 years = 8.56 Trillion a year required to service the debt. Considering that the Internal Reserve is only going to bring in $2.6 Trillion this year in taxes it easy to see that we are totally out of control.
Rest easier my friend. Mr. Obama ordered the government to find $100 million in cost savings.
But, if the $100 million doesn’t rescue us, which it obviously can’t, I’d be looking out for Trillions of dollars being printed in the very near term.
Can anyone say, “German Marks”?
