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Thread: America is staring at total debt of $115 trillion

  1. #1

    America is staring at total debt of $115 trillion

    By Puru Saxena
    BIG PICTURE: “It’s a question of how do you achieve the deleveraging. Do you go through a long period of slow growth, high savings and many legal problems or do you accept higher inflation? It would ameliorate the debt bomb and help us work through the deleveraging process” – Kenneth Rogoff, Professor of Economics at Harvard, Former Chief Economist at the International Monetary Fund

    Make no mistake; the developed world is drowning in debt and as outlined above, there are only two viable options – a global economic depression or very high inflation. It is our contention that the policymakers have chosen the latter option and over the following years, we will experience the trauma of severe inflation.

    Look. The American government is staring at total obligations of US$115 trillion, America’s debt to GDP ratio is off the charts and the American public is also up to its eyeballs in debt. Under this scenario, you can bet your bottom dollar that the American establishment will try to reduce this debt overhang through a process known as monetary inflation.

    Over the past two years, the monetary base in America has expanded from US$827 billion to an astonishing US$1.93 trillion! Up until now, this surge in the monetary base has not permeated through the broad economy but once the money velocity picks up, the money supply will zoom and the end result will be surging price inflation.

    It is notable that America is not alone in pursuing inflationary policies; most nations all over the world are printing money and debasing their currencies. In this era of globalisation, no country wants a strong currency and everyone is engaged in competitive currency devaluations. Given this reality, we firmly believe that this money and debt creation will cause an inflationary holocaust over the coming years.

    In fact, those who erroneously believe that deflation is unavoidable should review Figure 2 which highlights the mind-boggling expansion in the balance sheets of various central banks. As you can see, America alone is not the only nation guilty of printing money; the Europeans have also jumped on this train to Inflationville. Continued...

    http://www.commodityonline.com/news/...24022-3-1.html



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  3. #2
    I found another interesting article on that site:

    http://www.commodityonline.com/news/US-gold-reserves-value-is-$6000-per-ounce-24021-3-1.html (page 1)

    http://www.commodityonline.com/news/US-gold-reserves-value-is-$6000-per-ounce-24021-1-1.html (page 2)

    TGR: Many equate gold with an insurance policy and hold about 10% of gold in any portfolio. Given the situation we're in with currencies and the central banks, are you suggesting more than that?

    PS: That's an interesting question. You buy insurance to cover yourself if the unlikely occurs. Homeowners insurance, for example, protects you if your house burns down or if you are robbed or something really unusual and terrible happens to your home. Most people never make a major claim on their homeowners insurance. They might have claims, but most people's houses don't burn down.

    But to say that bullion is insurance is misleading because there is no doubt that today's paper monetary standard will fail. There is no doubt. It's not a question of "if" but "when." You're seeing all the signs of a monetary collapse, where enormous debts are made because paper currency is very flexible and can be expanded. Those debts can never be repaid.

    This is always how paper monies collapse and that's exactly what's happening to the dollar today. You can view bullion as insurance if you think it's unlikely the dollar will collapse. But the dollar is collapsing now, so I wouldn't describe gold bullion as insurance. I would say that it's natural, sound money and that everyone should consider their own personal net worth in terms of gold bullion. That's how I measure my own net worth, that's how I advise other people to do it.

    TGR: So 10% isn't enough?

    PS: Talking about allocation is like asking, "How wealthy do I choose to be?" I keep all of my savings in gold bullion—no dollars, no Treasury bonds—and try to add to my savings hoard every year regardless of the price. If the dollar has an intrinsic value of zero, what is an appropriate price for gold bullion? In terms of dollars, there would be no cap, so pricing it in dollars is impossible. So I just advise people hold their savings in gold and to own as much as they can reasonably afford.

  4. #3
    USA GDP is $14 Trillion. How will USA pay their debts of $115 Trillion?.

  5. #4
    Can someone explain to me what they mean by "an inflationary holocaust"? Are we talking Weimar Republic inflation, or like... 20% inflation (which, although not great, is probably bearable).

  6. #5
    Quote Originally Posted by UK4Paul View Post
    Can someone explain to me what they mean by "an inflationary holocaust"? Are we talking Weimar Republic inflation, or like... 20% inflation (which, although not great, is probably bearable).
    Read this

    Time to get out the wheelbarrows? Another look at the Weimar hyperinflation



    http://www.ronpaulforums.com/showthr...ghlight=weimar

  7. #6
    Why do we always hear about USA debts?.

    Why do we never hear about China debts and India debts?. Now China and India are prospering and getting rich.

  8. #7
    U.S. Debt Totals $133 Trillion, China Prime Beneficiary of Fed Money Printing

    Even if the government could somehow pay off that debt at the rate of, say, $100 MILLION PER DAY, EVERY DAY STARTING RIGHT NOW, IT WOULD TAKE 3,663 YEARS BEFORE THE TOTAL GOVERNMENT DEBTS AND OBLIGATIONS ARE PAID OFF.

    Even if Washington were to pay off $1 BILLION per day, it would still take about 366 years before they’re paid off.


    The U.S. Federal deficit at $1.6 trillion

    The officially recognized national debt at $12.1 trillion

    $3.5 trillion owed to foreign investors

    Unfunded national obligations of $106.5 trillion

    Another $9 trillion in cumulative deficits over the next 10 years

    At least another trillion dollars needed for health care reform!

    Grand total: $133.7 TRILLION IN DEBT!

    http://www.marketoracle.co.uk/Article15977.html

  9. #8
    But but but but... we can always just print more!

    *drools on her Obama Change We Can Believe In shirt*



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  11. #9
    If we were to pay off the debt it would wipe out the money supply. Every country is on the fiat system. What makes their worthless paper more valuable than our worthless paper? Isn't paper just paper?
    "..and on Earth anguish of nations, not knowing the way out...while men become faint out of fear and expectation of the things coming upon the inhabited Earth." -- Jesus of Nazareth

  12. #10
    Quote Originally Posted by wildfirepower View Post
    Why do we always hear about USA debts?.

    Why do we never hear about China debts and India debts?. Now China and India are prospering and getting rich.
    http://www.marketskeptics.com/2009/1...ng-global.html
    Pfizer Macht Frei!

    Openly Straight Man, Danke, Awarded Top Rated Influencer. Community Standards Enforcer.


    Quiz: Test Your "Income" Tax IQ!

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    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of appointment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  13. #11
    Unfunded national obligations of $106.5 trillion
    This includes things like Welfare and Social Security and assumes that threre are no tax collections in the future to finance them for the next 10 or so years.
    $3.5 trillion owed to foreign investors
    Double counting. This is part of the National Debt.
    The U.S. Federal deficit at $1.6 trillion
    Again, double counting. This is this year's portion of the National Debt.

  14. #12
    Quote Originally Posted by Zippyjuan View Post
    This includes things like Welfare and Social Security and assumes that threre are no tax collections in the future to finance them for the next 10 or so years.




    Double counting. This is part of the National Debt.


    Again, double counting. This is this year's portion of the National Debt.
    Have these been funded yet? No, that is why they are listed as unfunded liabilities... Falling tax receipts and increasing obligations are not a good recipe for funding this. You think we will collect 106 trillion in the next 10 years to fund these programs??

  15. #13
    Quote Originally Posted by not.your.average.joe View Post
    Have these been funded yet? No, that is why they are listed as unfunded liabilities... Falling tax receipts and increasing obligations are not a good recipe for funding this. You think we will collect 106 trillion in the next 10 years to fund these programs??
    What if we could buy food and not pay tax? How? By buying food from another state.
    "..and on Earth anguish of nations, not knowing the way out...while men become faint out of fear and expectation of the things coming upon the inhabited Earth." -- Jesus of Nazareth

  16. #14
    Quote Originally Posted by not.your.average.joe View Post
    Have these been funded yet? No, that is why they are listed as unfunded liabilities... Falling tax receipts and increasing obligations are not a good recipe for funding this. You think we will collect 106 trillion in the next 10 years to fund these programs??
    Just as the taxes have not been collected yet for each year of the programs the expenditures have not been made for any of those years. If you can't count the taxes you can't count the expenses either. You can't have it both ways. We may or may not collect $106 trillion in taxes but we will not collect zero in taxes for it in that time. The tax rates are authorized- new taxes do not need to be created to fund them. Both the taxes and expentitures have been authorized so it is not correct to say that they are "unfunded". True the money is not sitting in the bank right now to pay for the next ten years but that does not mean it is unfunded.

  17. #15

  18. #16
    What has USA done so as to collect/accumlate debts of $133 Trillion?. Is it because of outsourcing jobs and manufacturing to China and India?.



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  20. #17
    The debt is about $14 trillion- not $133 trillion. That comes from the government spending more than they take in. Some people try to include all the social security benefits for the next ten years without counting the taxes which are also expected to be collected during that time to pay for those benefits. That is where the $100+ trillion comes in. Losing jobs can contribute a small amount to this since losing jobs means losing some tax revenue but the biggest factor by far is simply spending money that Congress does not have.

    We also have a trade deficit (which is not a debt since trade is paid for) from buying more stuff from other countries than we sell to other countries. Losing jobs overseas contributes to this.

  21. #18
    Quote Originally Posted by wildfirepower View Post
    What has USA done so as to collect/accumlate debts of $133 Trillion?. Is it because of outsourcing jobs and manufacturing to China and India?.
    700 military bases in 130 countries. always being at war, etc. <--big part

    and 98% of all government programs.

    plus we've got the Pentagon unable to account for $2.3 trillion. stuff like that.

  22. #19
    Quote Originally Posted by wildfirepower View Post
    USA GDP is $14 Trillion. How will USA pay their debts of $115 Trillion?.
    Assets - Liabilites
    http://www.marketoracle.co.uk/Article7622.html

    I guess we liquidate all our assets to the New World Government.



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