Many of us have known for a while that the U.S. is running out of time on its debt clock, but now the Treasury Department has confirmed it, via a report it snuck out last Friday. Enter Dr. Chris Martenson, with this week's must-read blog post: "The United States is Insolvent":
The US is insolvent. There is simply no way for our national bills to be paid under current levels of taxation and promised benefits. Our federal deficits alone now total more than 400% of GDP.
That is the conclusion of a recent Treasury/OMB report entitled Financial Report of the United States Government that was quietly slipped out on a Friday, deep in the holiday season, with little fanfare. Sometimes I wonder why the Treasury Department doesn’t just pay somebody to come in at 4:30 am Christmas morning to release the report....
But, hey, I understand. A report is this bad requires all the muffling it can get.
Follow me (and the Treasury Dept) below the jump to Meineke, 'cause we're going to need a huge-ass muffler.
David Walker, Comptroller of the US, followed up the report with an accompanying statement, saying:
"...the U.S. government's total reported liabilities... continue to grow and now total approximately $50 trillion, representing approximately four times the Nation’s total output (GDP) in fiscal year 2006, up from about $20 trillion, or two times GDP in fiscal year 2000.
...it seems clear that the nation's current fiscal path is unsustainable and that tough choices by the President and the Congress are necessary in order to address the nation's large and growing long-term fiscal imbalance."
What!?! Say that again??! $50 Trillion in liabilities. Wow, and I've been worried about my mortgage and credit card debt. This is SERIOUS debt. Martenson again:
...the official debt stands at $8.507 trillion or 65% of (nominal) GDP but when we add in our "off balance sheet" items the national debt stands at $53 trillion or 403% of GDP.
Now that’s horrifying.
OK, so what does all this really mean? We'll just print more money, right? Once again, Dr. Martenson sums it the consequences:
- There is no way to "grow out of this problem". What really jumps out is that the US financial position has deteriorated by over $22 trillion in only 4 years and $4.5 trillion in the last 12 months. The problem did not "get better" as a result of the excellent economic growth over the past 3 years but rather got worse and is apparently accelerating to the downside.
- The future will be defined by lowered standards of living. ...the insolvency of the US will minimally require some combination of lowered entitlement payouts and higher taxes. Both of those represent less money in the taxpayer's pockets and, last time I checked, less money meant a lower standard of living.
- Every government facing this position has opted to "print its way out of trouble". That's an historical fact and our country shows no indications, unfortunately, of possessing the unique brand of political courage required to take a different route. In the simplest terms this means you & I will face a future of uncomfortably high inflation, possibly hyperinflation if the US dollar loses its reserve currency status somewhere along the way.
Oops. There goes my idea.
In all seriousness, I feel there will be no bigger issue going into the 2008 campaign; we need to start the debate now and help push our legislators (on both sides) to:
a) recognize there is even a problem.
b) recognize the problem is potentially immense.
c) begin brainstorming viable solutions and approaches.
Maybe we can start right here. Ideas???
P.S. - Again, read the whole article, it's eye-opening:
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