Saturday, December 20, 2008

US Passes Debt Milestone

19 December 2008

The news of the past week has been the Bernard Madoff Ponzi scheme - with Mr. Madoff having vaporized $50 billion of his investors' money. Dishonest and tragic, this is the sort of story that emerges in a widespread financial crunch, such as we are presently seeing.

However, make no secret of it, the next Ponzi scheme to emerge is unfolding in full public view.

The US government has no intention of repaying its debts - its bonds are worthless.

Or, to be more clear, the bonds will be repaid in US dollars that are of little or no value.

How much larger is the scale of the calculated US government default?

I've taken this piece from Agora Financial's "5 Minute Forecast." I'm reproducing this in whole, as the archives are somewhat challenging to track.

The combined debt and obligations of the US government now surpass the net worth of its citizens. That, of course, might be a redeemable situation.... But contemplate the direction the US government is now following, adding $1 to $2 trillion dollars per year to the figure.

The US has dug a hole so deep, there is now no way out - apart from an Argentina-style debt default.

Bernard Madoff - take heed. This is how you truly do it on a grand scale. From the 5 Minute Forecast:

"Which is greater? The U.S. government’s mountain of debt or the entire net worth of all U.S. citizens?

"For the first time in our history, it’s the former.

"As of the end of September, the U.S. government held '$56.4 trillion in debts, liabilities and unfunded promises for Medicare and Social Security,' said research published this week by the Peter G. Peterson Foundation. The number comes directly from the Treasury release we harped on Wednesday.

"And our collective net worth? $56.5 trillion, as calculated by the Fed at the end of September as well.

“'Given more recent developments, it’s clear that America now owes more than its citizens are worth,' said PGP Foundation president and protagonist of I.O.U.S.A. David Walker. 'Passing this shocking milestone highlights the need for President-elect Obama and the next Congress not only to turn the economy around and boost consumer confidence, but to put a process in place that will lead to tough choices getting made to strengthen the government’s financial condition once the economy begins growing again.'"

Thanks to Agora Financial for this piece of news....

1 comment:

  1. "The combined debt and obligations of the US government now surpass the net worth of its citizens. "

    That's mind-boggling!