Federal Deficit Exceeds $3.5 Trillion Per Year
Federal Deficit Exceeds $3.5 Trillion Per Year
Many of you are reading this blog because you already know the financial catastrophe awaiting the federal government and those dependent upon it. However, for those of you who've not been exposed to the truth yet, here's the reality:
What's the real Federal Defici?
Simply put, the federal government is flat bankrupt and the world's central banks are beginning to figure that out. It is not a matter of IF America will experience hyperinflation, but WHEN. China and the United Arab Emirates are just two examples of countries whose central banks are now diversifying their reserves away from U.S. Treasuries ("dollars"). The only thing preventing total collapse is that if these nations were to quickly liquidate their treasuries they would shoot themselves in the foot by devaluing their very own reserves: the treasury bonds themselves. Consequently they're attempting to get value out of their treasuries before the "run on the banks" begins. Make no mistake that with the world awash in dollars and with Washington continuing $3.5+ trillion annual deficits that "run" IS COMING! If you think it can't happen then consider two things: 1) history is replete with fiat currencies that have ended in disastrous hyperinflation (and I can't think of one successful fiat currency); and 2) our Federal Reserve Notes (FRNs) have only been off the gold standard completely since 1971 - a result at that time of international distrust of our spending habits and financial condition, which have only worsened for the federal government over the past 36 years - only 36 years of a 100% fiat currency, so understand that the dollars in your wallet are terribly unproven and are not the dollars of our fathers, grandfathers and all those Americans who preceded us. We're in a terribly dangerous "experiment" that ended badly with "Continentals" in the 18th Century, just as badly with 19th Century Confederate paper money in the CSA, and would have been even uglier with "Greenbacks" had Congress not eventually kept its promise to redeem them with specie.
To put the federal deficit in perspective consider that the total annual revenue of the federal government is currently $2.7 trillion. Therefore, federal spending amounts to more than $6.2 trillion (when accrued liabilities are added in) creating a deficit of more than $3.5 trillion. This is proportionate to a family whose income is $50,000/year, but whose expenditures are $114,800. At such rates of spending, how long would it take creditors to deny the extension of credit to such a family? How long until that family declares bankruptcy and defaults on its debt? Not long at all of course. The difference with the federal government is that it can run the "printing presses" rather than declare bankruptcy thereby fulfilling payment of its debt obligations with now worthless paper - hey, they owed you 100,000 FRNs, they "printed" them, and you got them, what's your complaint? The complaint is the hyperinflation caused by the "presses" running nonstop now means your 100,000 FRNs won't buy a latte at Starbucks!
Indeed, fiat currencies know only one end: financial ruin. Our currency is only 36 years in the making and financial ruin is still to come; just as certain as the sun rising in the east, the federal government will collapse under its own weight and the dollar will come crashing down as everyone holding treasuries attempts to liquidate sending their value plummeting to worthlessness. There are solutions for the financially astute, but for liability sake as a professional financial advisor I can't list them here. Contact me if you'd like to discuss them further. I'm not saying run for the hills... yet. The Fed has medicated the disease of a fiat currency for nearly four decades and may continue to do so a while longer. However, with the baby boom demographic turning 60 for the first time last year, the federal government is faced with keeping Social Security and Medicare promises for the largest wave of retirees EVER in the history of those programs. And the Boomer generation lasts for 15 years! So the federal government is at the end of its rope. Now more than ever is the time to vigilantly prepare for the absolutely certain financial collapse of the United States federal government.
