The condition of the US worsens by the day, although you might not be able to figure that out by reading the mainstream media. Addison Wiggin for The Daily Reckoning has no problem seeing through the fog and reporting the real condition.
The record deficit was typically underreported:
That figure of $82.7 billion is merely the BS figure the Treasury puts out there when it reports the deficit. The real tell is how much the national debt grew. And in April, that figure was twice the size of the “official” monthly deficit – $175.6 billion.
These are numbers never seen before for the month of April, traditionally a large surplus even in a deficit year, because of tax remittances due on April 15. Wiggin also points out that every month since October 2008 has been a deficit. Tarp and the rest of the alphabet-soup programs passed thereafter.
We have run deficits before, but never of this magnitude. Furthermore, Wiggin believes that these deficits are unlike any others that preceded them:
We’re rapidly approaching a point of no return, says our friend Gene Steuerle of the Urban Institute. “Both liberals who want to maintain spending programs and conservatives seeking to keep taxes low seem to think – or, at least, want to think – that economic growth can once again solve our problems.”
No more. “In the past, fiscal imbalance was mainly a temporary, current issue only. Yes, congresses would occasionally spend much more than they collected in taxes, sometimes heedlessly. But as long as revenues over time rose with economic growth and most spending was discretionary, push never came to shove as long as the next congresses weren’t too profligate…
We have passed the tipping point where debt is compounding faster than the economy can possibly grow. It is merely a matter of time before we become Greece.
Please comment on this:
http://www.americanthinker.com/2010/05/the_dollars_demise_is_not_inev.html
Steve,
I believe the article is factually correct regarding the split between external and internal debt, however that begs the question. First we do not need $117 trillion down the road to fund our “liabilities.” We need it today. That is a present value calculation that grows exponentially over time. Unfortunately, as I have indicated elsewhere (search on Spiraling to Bankruptcy) the entire net worth of the country is about half of this number. The actual debt is relatively small (although spending is out-of-control suggesting that it will become very large very soon). The big problem is the unfunded social commitments (social security, medicare and medicaid). They are over $100 trillion.
It doesn’t matter what the Supreme Court states regarding whether these are legal liabilities or not. The fact is that they were a promise by the government to its citizens. The citizens trusted what the government told them (including the “trust” fund nonsense). I sure wouldn’t want to tell the populace that they no longer will get social security or health care. Our welfare assistance is a legal liability either, except the people on it believe it is an entitlement. Stop welfare payments to folks in any major city and you will end up with major air pollution — the city burning down.
Better to default on the “legal” debt. It will be a lot less destructive for the US. Unfortunately, you still will be unable to honor the social promises. Good bye dollar, good bye all fiat currencies!
Monty