The federal government’s debt will soon reach $10 trillion. That’s about $130,000 per family of four in the United States.
But if you think that’s bad, then consider the real national debt. After all, the phony $9+ trillion “debt” does not include any of the following:
- The Social Security deficit
- The Medicare budget shortfall
- The new Medicare Prescription Drug Benefit
- Unforeseen (but virtually guaranteed) future wars
According to Richard W. Fisher, president of the Dallas Federal Reserve Bank, the first three of the above account for $99.2 trillion. Of this, Medicare makes up 69%, Social Security 14%, and “conservative” President Bush’s Medicare Prescription Drug Benefit 17% (more than Social Security!).
But what about #4? The U.S. has been in a nearly perpetual state of war since Pearl Harbor, and we now have a “War on Terror,” the proponents of which admit has no end in sight and could last for 100 years. War is expensive, and yet government accounting doesn’t even consider it. We’re spending at least $6 billion per month in Iraq, and there are more (and bigger) wars on the horizon, if history is a reliable guide.
How do liberal and neoconservative economists – the ones who scoff at the gold standard and celebrate the Fed – respond to this? For the most part, they don’t. If they do, they make ridiculous claims that “enhanced productivity” will allow us to claw our way out of this hole. But for the most part, they ignore the matter and hope the monetary and fiscal facade can remain standing another day longer, hopefully until they’re in their graves from old age. Unless these economists are pushing 80, I fear they may not get their wishes.
The fact is that the U.S. is bankrupt. We’re just lucky that the rest of the world is still living the fantasy, pretending that the emperor (or in this case, the Empire) has clothes. Sooner or later, and I’m betting it’s sooner, the chickens will come home to roost. The U.S. dollar will follow all fiat currencies that came before it in reaching its intrinsic value of $0.
Or another way of looking at it, the Fed can simply print $1.3 million per family as part of a “national debt bailout” and call it even. I’m sure there would be plenty of court economists who would celebrate this as a majestic action by the U.S. economy’s central planners! But one way or another, Dollar Hegemony is coming to an end. The sensible thing to do is get prepared.