Despite the current claims by the national media and the government, things just aren’t going all that well.
Our Oh So Sustainable Deficit
Our federal deficit continues to skyrocket to impossible levels.
In 2007 one of the big stories was the natural deficit that Bush was rocking. Spending was unsustainable according to the media, at $162 Billion.
Today, four years later, we’re looking at a budget deficit of….
Remember that unsustainable Bush Deficit of $162 Billion? Well, on several occasions during the Obama administration, including most recently February of this year, we have had MONTHLY deficits that are higher than the ANNUAL deficit of 2007.
And Barack Obama tells us that our government needs to live within its means. Boy, looks like we’re doing that, doesn’t it?
Let’s Talk About Interest Rates…
Now that you’ve seen that, lets play some numbers. Last year we spent about $180 Billion in debt interest payments on $14 Trillion in debt. Based on simple math, that’s a 1.3% interest rate.
Let’s play a little game and say that the interest rates go up to about 4%. Not at all unreasonable .. in fact, it’s still relatively low considering our history. That $180 Billion in interest payments jumped up to over $560 Billion a year.
This will decrease the amount of money that the Government can spend before it runs a deficit by sixty percent.
Now picture a completely reasonable scenario where the world assumes we aren’t going to be able to pay any of this off in the long term … because we can’t … and they bump our interest rate as a result of that to 8%.
Try $1.2 Trillion a year in interest payments ALONE. That leaves about $800 Billion left over before we run a deficit. Oh by the way, that’s what we spend every year on Medicare. Or Social Security.
Do you understand the ramifications of that?
Someone tell me how we get out of this without a total collapse, because I don’t see it. There is ZERO political will in DC to change a damn thing.
The Handouts Grow and Grow
Somewhat related, we find out thanks to CNBC that our federal government hands out so much money to people that it is the equivalent of 35% of all wages and salaries earned in the US.
Tens of millions of Americans now depend on the government to put food on their plate. How do you think they’ll react when the inevitable cuts come?
This seems to me to be a reasonable guess…
A Fascinating Video and a Compelling Promise
Finally, there’s an interesting YouTube video I came across today. It’s from a hacker group that just recently announced they’ll be releasing documentation on Monday that shows Bank of America willfully and intentionally committed mortgage fraud. Nice.
Let me know what you think about the video…