Why America Is Flat Broke
…And How to Shield Yourself from Miserable U.S. Economy, Soaring Deficits, and the Falling Dollar (In Three Days or Less!)
Good day... And Welcome to a Special Weekend Edition of the Pfennig!
Lately, several of you have asked me for the full story on the debt situation here in the United States.
It seems you all want to know how that debt situation affects YOU, the average tax-paying American waltzing down Main Street.
Of course, long-term readers know that’s something I cover fairly often here in the Pfennig. But I never have time to give you the FULL story...with all the gory details about the bankrupt Uncle Sam, TRILLION dollar debts, and the sinking dollar.
More importantly, I never have enough time to explain how you can get out of the U.S. dollar fast...so you can escape the rising deficit situation here in the U.S.
Now, I hate to interrupt your lovely weekend, but a special Saturday issue seemed like the perfect opportunity to cover all that.
So if you’re game, grab some coffee, and we’ll jump right in!
Let’s start with some facts first.
As of today, the U.S. National Debt is nearly $12 Trillion dollars. That’s a monster in itself, but it’s nothing compared to what the U.S. really owes…
Do You Have $344,000 to Pay Uncle Sam? Well You Should.
You see most people have no idea what the U.S. government owes on “unfunded obligations.” That’s government-ese for entitlement programs like Medicare, Social Security etc.
Right now, the total unfunded obligations sits at $106 Trillion dollars! That’s more than 780% MORE than the “national debt!”
Now, let’s do a little math…
If you charged Americans for the national debt, each citizen would have to shell out $38,940. If you just charged taxpayers, that tab would climb to $104,000 per person.
Our nation’s Total Assets now stand at $74 Trillion dollars, or $240,000 per citizen.
Now add in the “unfunded obligations” at $106 Trillion, and every citizen would have to shell out $344,000 to keep us afloat.
In other words…as a country, we are flat-broke!
By the way, if you don't believe me, you can go to the National Debt Clock website and see for yourself. But I warn you don’t go there if you have a weak stomach.
How in the World Did Our Debts Reach This High?
This deficit spending all began in the 80’s. However, at that time, the government was much smaller than it is today.
Let’s talk about some fallacies that exist when people talk about deficit spending that began in the 80’s in the Reagan administration…
Ronald Reagan increased the deficit by 35% in eight years, or $37 Billion per year. At the time it seemed like a lot. After all, the U.S. was a surplus nation at the time. In fact, economists viewed this 35% increase in eight years as “excessive.”
But when you compare it to the first eight weeks of the current administration, when Obama and his team increased our deficit by 435%, the Reagan years don’t look so “excessive” any longer!
Now I’m not comparing parties here. I’m just making the point that deficit spending started more than 25 years ago, and continues today only at a much faster pace.
In my opinion, the biggest deficit in this country is a leadership deficit. We have people in Washington D.C. that continue to make bad choices and spend, instead of dealing with a solution to reduce the government and the deficit.
Unfortunately all Americans on the street are paying for this leadership deficit where it really hurts…in our currency.
The U.S. dollar has dropped 37% in value since it peaked in 2001. And the situation does not look to improve anytime soon.
Why the Dirt-Cheap Buck Helps the U.S. and Hurts You
Here’s the real rub folks…
No matter how Treasury Secretary Geithner might preach about “maintaining a strong dollar,” as he said again at the U.S. embassy recently...the truth is a weaker dollar benefits the U.S. government.
Of course, the weak dollar also hangs Americans out to dry. We get stuck with the bill as every dollar we have buys us less.
But the weaker dollar allows U.S. exports to be more competitive in the world. The weaker dollar also allows multi-national business to enjoy huge profits overseas.
Oh! And here’s the 800-lb Gorilla in the room that I almost forgot about… The weak dollar gives the U.S. government the ability to pay back our deficits with “cheaper dollars.”
It means that Uncle Sam doesn’t have an incentive to pay off our debts. That’s the cheese that binds for the dollar folks!
One day this will all come crashing down like a house of cards, folks… and when that happens, you’ll want to have some cash outside the dollar. Trust me.
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