The world continues to spiral towards bankruptcy.
In an earlier post entitled Spiraling to Bankruptcy, I showed how the US was so deeply in debt that their only escape was via default. A recent article by Sprott and Franklin deals with the problem. They found that the GAO admits as much:
… we found a recent update written by United States Government Accountability Office (GAO) to be particularly instructive. The update noted the US’s budget deficit equivalent to 9.9% of GDP in 2009 – the largest since 1945 – and stated that without significant policy changes the US government would soon face an “unsustainable growth in debt”. This was not news to us. It goes on to state, however, that using reasonable assumptions, “roughly 93 cents of every dollar of federal revenue will be spent on the major entitlement programs and net interest costs by 2020.“8 This is news! In less than ten years, using reasonable assumptions, there will essentially be no money left to run the US government – 93% of all tax revenues the US government collects will go to pay social security, Medicare, Medicaid and the interest costs on their national debt. This implies no money left over for defense, homeland security, welfare, unemployment benefits, education or anything else we associate with the normal business of government.
In a recent post entitled Welfare States R.I.P., it was described how virtually all western democratic governments were hopelessly insolvent. That post showed how Europe was in worse shape than the US. Sprott and Franklin also deal with Europe in their highly recommended article.
On the other hand, the solution may be found in that condition also.