The total liabilities of the United States government, including future social security and medicare payments that the U.S. government is already committed to pay out, now exceed 65 TRILLION dollars, which is more than the entire GDP of the whole world.According to the 2008 Financial Report of the United States Government, which is an official United States government report, the U.S. actually had a budget deficit of 5.1 trillion dollars in 2008.
So why did the Congressional Budget Office report that the federal budget deficit was only 455 billion dollars (which is certainly a total disaster) in 2008?
The difference lies in accounting. The CBO's figures are based on cash accounting, while the 2008 Financial Report of the United States Government is based on GAAP accounting. GAAP accounting is what is used by all the major firms on Wall Street and it is regarded as a much more accurate reflection of financial reality.
So why is there such a big difference?
Well, what the Congressional Budget Office does is some really bad accounting. When you pay social security taxes, the federal government takes that money and instead of putting it away to pay your social security benefits in the future, it takes that money and spends it however it wants.
So what about the future social security and medicare benefits that the government owes you?
There is no money there for those payments.
The government is using that money right now to make the budget look better.
That's right, you have been conned.
And as bad as the numbers from 2008 look, they do not reflect any significant money from the monstrous financial bailouts that Congress has passed.
So 2009 is going to look MUCH worse.
Pretty picture, eh?
The reality is the the United States of America is a total financial disaster.
Already, 13 banks have already failed in 2009. All of the bailouts certainly don't seem to be helping much yet.
But that doesn't mean that the federal government is going to give up trying to help. It seems a new "bailout" or a new "stimulus" is being passed almost weekly now.
Instead of accepting the fact that we must adopt a lower standard of living and deal with the reality of our massive debt, the politicians are trying to crank up the debt spiral one more time.
The truth is that all of this government spending will help the economy in the short term, but it will make the long term problems of the U.S. government far worse.
So who is going to buy all of this new government debt? China has serious doubts about who is going to buy all of America's new debt. The reality is that the only way that the government can "bailout" anyone or pay for any "stimulus" bill is to borrow.
So America borrows and borrows and borrows and borrows.
If your own personal finances were like that, how do you think it would end?
Ah, you are starting to get the picture.....
The "American Dream" is quickly becoming the "American Nightmare" and most of the politicians don't have a clue.
What are you going to do when the economy collapses and everything you ever worked for starts coming apart?
It is time for all of us to start thinking about what is truly important.....
http://www.chick.com/reading/tracts/0072/0072_01.asp
Up until now the US budget deficit has been financed by the (mainly) Asian export countries recycling their trade surplus dollars into US treasuries. This worked out nicely for the US, however there is a problem now. The trade surpluses of those countries never even approached the amount that the US government now needs to borrow, even during the good times. Now, with trade surpluses dropping, those countries will be able to afford even less US treasuries. The government will be forced to print the money it needs, thereby destroying the value of the dollar.
ReplyDeleteMake no mistake though, this is what the government wants. Paying back colossal debts in worthless currency is not a difficult task. The US government wants to spend as much as possible now and thereby control the devaluation of the dollar themselves, before others come to the realisation that America can never pay back it's current debts and liabilities in the current circumstances. By the time America's creditors come to this realisation they will be sitting with mountains of worthless paper, their hard-earned money having gone to bail out banks, invade foreign countries and propping up the American consumer.
They will have been victims of the greatest fraud and the largest bubble in history - the US treasury bond bubble.
P.S. If you think treasuries AREN'T a bubble, ask yourself why people would buy them at negative interest rates. This kind of thing only happens during bubble-based booms.
There is an excellent film which gives a very easy to understand overview of the cluster-fudging:
ReplyDeletewww.iousathemovie.com
You will be floored. It talks about much of what is posted in this blog entry.
Hey, its only money! Fire up them presses and make some more!
ReplyDeleteRT
www.anon-tools.us.tc
wtf is GDP???
ReplyDeleteGDP stands for gross domestic product. It is the sum of consumption spending by households, gross investments from private sectors, government consumption and investments (not counting gov. transfer payments - social security payouts etc.), and net exports (total income from exports minus cost of imports).
ReplyDeleteFYI there are over 9,300 banks in the US. The 13 banks you mention make up less than .15% of the total ( or 1 out of 6000). And it is disingenuous to compare the GDP of 1 year to the total indebtedness over the next 50 years. You don't take into account any tax receipts or fees collected of the rest of that time period.
ReplyDeleteYes we have serious financial problems. Yes we are flirting with financial disaster. But to falsely blow up numbers just to make your point more dramatic does you and your readers a gross disservice.
Or maybe you just flunked basic math in grade school.
This comment has been removed by a blog administrator.
ReplyDeleteSo, this is what I've been warning about for the longest time -- when the debt exceeds the GDP, the debt becomes insurmountable and economic collapse becomes inevitable ... historically speaking, when a country's economy collapses, a violent revolution follows ... given a choice, that's something I'd rather avoid, but even at this late stage, I still see but one way out -- abolish the Federal Reserve Bank, and abscond on the interest upon debt that has thus far accrued ...
ReplyDeleteYou give a false impression of debt by including forward payments and not balancing that with future revenues. Even then, the USA is in the shit and the rest of the world is not going to bale them out!
ReplyDeletethanks BCHodo. we have a problem, but this misleading, hysterical and inaccurate BS is just stupid. Oh yeah, and in 2012, the world will end.
ReplyDeleteOkay, So all the smart finance wizards must downgrade the US paper? What kind of rating would the US get if its total debt is more than the world gdp?!
ReplyDeleteDid you know that all the bills you will pay for the next 50 years is more money than you and your neighbors will make THIS year!?!?
ReplyDeleteThat's the comparison being made in this article. Kind of silly...
@BCHodo
ReplyDeleteDisingenuous to compare GDP of 1 year to the future debt?
Hardly. It shows the ability of repayment if we stay on current course.
People like David Walker (former head of the USA GAO) have been screaming about this measurement for years.
Pfft. You would have a hard time convincing anyone that people like Walker did not pass grade school math.
People like you that want to marginalize this issue is one of the reasons why the USA is going down the tubes.
Congrats and enjoy your future slavery.
@dougn
ReplyDeleteYou apparently don't get it either. Your analogy would be more to the point if it took the following into consideration.
Did you know that BOTH you and your neighbors don't make enough money every year to pay all the bills and that has been the case for decades. So each and every one of you did what you always do, you ran up your credit cards to pay this year's deficit.
But wait it is worse than that. You and your neighbors also ran up credit card bills not just for this year but you decided to commit payments for the next 50 years into the future.
And for those that think this is hysterical fear mongering, it is not. Even Federal Reserve Banks and reporting similar numbers.
You people better pull your head out of your collective rumps before you lose your country.
The USA is heading down the same path as the former Soviet Union and the collapse will likely be sooner rather than later.
Important to distinguish government debt vs. deficit. While both are a huge problem. The debt is the total amount of money owed by the country and the deficit is the amount of money that must be borrowed in the year being accounted for. If this amount is a positive figure, it is then called a surplus. This happened only briefly under president Clinton in more recent history.
ReplyDeleteok get this this is funny,..
ReplyDeleteporky pig comes out of the federal reserve and says on national tv,
yada yada yada yada yada yada wheeeerrreee broke...oink oink..
your blog is nice
ReplyDelete