So says Monty Pelerin’s World (www.economicnoise.com) in edited excerpts from the original article* which Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) below for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.Below is the email which reads, in part:
Today the Congressional Budget Office (CBO) released “The Budget and Economic Outlook: Fiscal Years 2012 to 2022″ (www.cbo.gov/ftpdocs/126xx/doc12699/01-31-2012_Outlook.pdf)…which clearly shows that the fiscal situation is MUCH worse than people realize and that the American people are wildly under-estimating the deficits America is going to run in this decade. Here is why:
1) The average rate of interest the Fed has had to pay to borrow for the last two decades has been 5.7%. However, CBO is projecting the cost of money at only 2.5%. A return to the normal Fed rate would, by 2020, add $5 trillion to the cumulative deficit.
2) The CBO are over-estimating growth in 2012-2022. 2.5% is more likely than the ridiculous numbers they are projecting. That would add $4 trillion by 2020…
3) The 5 biggest budget items are Defense-Military ($700 B), Social Security ($725 B), Medicare ($560 B), Medicaid ($275 B), and Interest on the Debt ($227 B) totaling $2.467 T but only collected $2.302 T in taxes!… Since it is (politically) impossible to cut any of these items, at best, this Congress will only slightly reduce the rate of speed at which we are heading toward a debt default.
4) America is headed for an entitlement crisis. Between 2010 and 2030, spending on Medicare, Medicaid and Social Security will explode – and with the Baby Boomers retiring en mass over the next 18 years (2011-2029), at the rate of 10,000 a day, it will be impossible for any politician to do what is necessary in order to save us from going over the falls. Any talk of cutting entitlements and they will be quickly thrown out of office.
Is America then headed for an inevitable default? [Is it] Weimar Germany, here we come? [The fact is, the above] are all symptoms but they are not the problem. They are mere symptoms of the disease, the rot of our soul.
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Eventually the world will realize that the U.S. deficit and debt are beyond the capacity of this U.S. government to bring under control and, at that point, the ratings agencies and world markets will begin to treat the U.S. debt the way they treat the debts of Italy and Spain.
[Frankly,] as soon as interest rates rise the deficit-debt will explode…and it will be all over for America…The situation is much worse than the government is willing to admit. There would be a Revolution in this country if they put out the real numbers and accurate projections.
This letter has been long enough…
Blessings and all the best,”[Name Withheld]
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The U.S. government is spending more than a trillion dollars more than it takes in every year…[which] all gets into the pockets of ordinary Americans [who,] in turn,…use that money to pay the mortgage, buy food, shop at the mall, etc. – creating a “false prosperity” bubble that is not real. It may feel real to you right now, but it is unsustainable…We are living in the greatest debt bubble the world has ever seen and, as such, a devastating economic collapse is on the horizon no matter what we do [so] don’t let this false prosperity and this “calm before the storm” fool you…There is going to be a massive amount of pain so you might want to get yourself and your family prepared for that. [Let me explain.] Words: 1211
Countries around the world, particularly in the West, are hopelessly in the red, with debt rising every day. Even worse, politicians seem paralyzed, unable — or unwilling — to do anything about it. It is a global disaster that threatens the immediate future… [Let me explain.] Words: 1132
Evidence shows that the U.S. money supply trend is in the early stages of hyperbolic growth coupled with a similar move in the price of gold. All sign point to a further escalation of money-printing in 2012…followed by unexpected and accelerating price inflation, followed by a rise in nominal interest rates that will bring a sovereign debt crisis for the U. S. dollar with it as the cost of borrowing for the government escalates…[Let me show you the evidence.] Words: 660
When the supply of something is increased sharply relative to demand, the value of that commodity will decline. If the supply continues to increase rapidly and indefinitely, then that item will become worth less and less, with the potential to finally become nearly worthless. This is the Developing Disaster facing the US Dollar and the world. This is the factor that could become the single most important criterion in investment allocation decisions and possibly even for individual financial survival…[Let me explain this further by reviewing the 7 major problems facing the U.S. (and thus the world) and how they all will lead to problem #7 – devolution.] Words: 1520
The onset of the world’s worst financial crisis in many decades is one of the most important factors (if not the most important factor) currently influencing investment decisions. The crisis has created chaos and confusion. Not many people understand how the world has arrived at this unfortunate situation. This report endeavours to identify the underlying causes of the crisis and explains why the USA current account deficit has been the main destabilising force in world finance. Words: 3806
Countering Krugman’s argument that today’s low interest rates show that no one is worried about lending money to us and, therefore, that we should borrow and spend our way to prosperity, Ferguson argues that today’s interest rates are irrelevant. When countries get into trouble, he says, they get into trouble quickly – the way Greece and …
Wars and depressions largely characterize the periods of time where there have been significant run-ups in the level of the U.S. National Debt Burden per Capita [i.e. the U.S. National Debt Burden per Capita-to-income Index], with the debt taken on to support the costs of the U.S. Civil War and World War II being the most significant. Today… it is perhaps most comparable to the Great Depression. [Take a look.] Words: 326
By now nobody should have any doubts as to just how disturbing America’s fiscal debacle is. For those naive and innocent few who still think there is a Hollywood ending with a pot of gold awaiting everyone at the end of the rainbow, we present the following “10 essential fiscal charts” from the Pew Policy Institute.
The kind of impact [our economy is] going to have will not be like flying into the side of a mountain. It will be the kind of crash that skids over land, clipping trees and buildings until the plane ends up wingless in a smoldering heap. I just hope the fuel tanks don’t ignite when the long rough ride is over. [Let me explain.] Words: 832
It really is hard to find the words to describe the true horror of the national debt of the U.S. The U.S. government has been on the greatest debt binge in all of human history, and a day of reckoning is coming that is going to be so painful that it is going to shock America to the core. We have lived so far above our means for so long that none of us really has any concept of what “normal” is like anymore. The United States has enjoyed the greatest party in the history of the world, but now this decades-old party is ending and the bills are coming due. Our current system is headed for an inevitable collapse. There is no way of getting around it – a horrific economic collapse is coming [and] it is going to change the world. You better get ready. [Let me explain further.] Words: 1771