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Monday, October 6, 2014

The Cold Hard Numbers of US 'True' Debtload

~ All pics are of carved pumpkins

For today's post, we move away from the nauseating stench which permeates our society called Political Correctness and talk about numbers i.e. the continuing US debt load..

What we present to you today will be quite shocking but nonetheless true and numerically accurate..
Let's start with a basic question:  How much does the US borrow annually?

A) About $100 million annually

B)  About $500 million annually

C)  About $500 billion annually

D)  About $1 trillion annually
The answer of course is D..

 On September 30th, 2013 the U.S. national debt was sitting at $16,738,183,526,697.32 (That's $16.7 Trillion)  As I write this, the U.S. national debt is sitting at $17,855,539,628,073.37.  

That means that the U.S. national debt has actually grown by more than a trillion dollars in a little more than 12 months.

And it will continue to grow because we spend more than we take in via tax revenue..  Every year we're always in a deficit..
This year, we will spend $3.5 Trillion to keep the country running while taking in around $2.6 Trillion in revenue..

OK, so that question was pretty much easy..

Here's the eye-opener Q:

How much does the Federal Government actually Borrow?
A)  About $150 billion annually

B)  About $750 billion annually

C)  About $1.5 Trillion annually

D)  About $8 Trillion annually
Yep,, Once again it D for ding..ding..ding...

We will explain..

When discussing the national debt, most people tend to only focus on the amount that it increases each 12 months.  That would be the more than a trillion dollars in fiscal year 2014.

But that does not count the huge amounts of U.S. Treasury securities that the federal government must redeem each year.
When these debt instruments hit their maturity date, the U.S. government must pay them off.  This is done by borrowing more money to pay off the previous debts.

For instance, in fiscal year 2013, redemptions of U.S. Treasury securities totaled $7,546,726,000,000 ($7.5 Trillion) and new debt totaling $8,323,949,000,000 was issued.

The final numbers for fiscal year 2014 are likely to be significantly higher than that.

So the question is, why does so much government debt come due each year?
Well, in recent years government officials figured out that they could save a lot of money on interest payments by borrowing over shorter time frames.

For example, it costs the government far more to borrow money for 10 years than it does for 1 year.  So a strategy was hatched to borrow money for very short periods of time and to keep “rolling it over” again and again and again.

This strategy has indeed saved the federal government hundreds of billions of dollars in interest payments, but it has also created a situation where the federal government must borrow about 8 trillion dollars a year just to keep up with the game.
So what happens when the rest of the world decides that it does not want to loan us 8 trillion dollars a year at ultra-low interest rates?

Well, the game will be over and we will be in a massive amount of trouble.

This is a major if not primary reason the system is so rigged to keep interest rates as low as possible even though it kills savers and fiscally responsible people and overall contains salaries from rising to match the rate of inflation and increased costs of everything..

Repeating: the only way that this game can continue is if the U.S. government can continue to borrow gigantic piles of money at ridiculously low interest rates.
~ The 'Death Star'..   Star Wars..  Hmm, what is that?  (inside joke)

And our current standard of living greatly depends on the continuation of this game.

Here are more financial facts:

--  49% of all Americans live in a home that gets direct monetary benefits from the federal government each month according to the U.S. Census Bureau.

--  Americans received more than 2 trillion dollars in benefits from the federal government last year alone.
-- More than 70% of all federal spending goes to “dependence-creating programs”, and the government runs approximately 80 different “means-tested welfare programs” currently

We're not making moral or political judgments.. That's simply the reality of things..

Here's more reality:

-- Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, more than 70 million Americans are
-- It is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.

-- In 1945, there were 42 workers for every retiree receiving Social Security benefits.  Today, that number has fallen to 2.5 workers, and if you eliminate all government workers, that leaves only 1.6 private sector workers for every retiree receiving Social Security benefits.

-- Right now, there are approximately 63 million Americans collecting Social Security benefits.  By 2035, that number is projected to soar to an astounding 91 million.   Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

None of this is very comforting..
But the goal isn't to just provide mind-numbing stats or whip the readers into a panic-attack laden tizzy..

Its simply to present reality.

And while no individual has the power to fix the problems, the best way to buffer oneself from the ultimate endgame is to do whatever possible to get yourself out of debt, especially where adjusted interest rates are concerned i.e. some types of mortgages, credit card debts, payday loans, etc..
And as much as realistic to your personal situation, do what you can to build up or bolster your savings while keeping your nest egg out of the treacherous waters of a rigged stocks & commodities market.

We only warn because we care.

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