Last October the "National Debt Clock" in New York City ran out of digits to record the ever expanding figure that represents what the U.S. government (and therefore, all Americans) owe.
And we done "owe it to ourselves," folks. We owe it to our creditors, a majority of whom are foreigners and foreign governments.
As a short-term fix, that digital dollar sign ($) on the billboard-style clock near Times Square was switched to a figure -- the "1" in $10 trillion. When this happened three months ago the federal government's then current debt was about $10.2 trillion.
But that was then – this is now!
Bail Out Billions
According to Bloomberg News, the total of various federal credit facilities and bail out programs approved by Congress in its panic thus far comes to about $ 7.7 trillion, with trillions more being demanded by everybody and his brother. That $7.7 T includes all sorts of government handouts, to FannieMae, FreddieMac, Citicorp, numerous other banks, AIG, Bear Stearns, et al.
How Much Is a Trillion?
But what does this $7.7 trillion represent anyway? In the United States a "trillion" is a very large number that is represented as the number one, followed by 12 zeros: $1,000,000,000,000.
Look at it this way.
There are about 100 million households in the United States. One billion dollars = $10 per household. A trillion is 1,000 billion. So one trillion dollars represents $10,000 per household. And $7.7 trillion is therefore about $77,000 per U.S. household.
The median U.S. household income is a little over $50,000. So each household's share of the $7.7 trillion in rescue/bailout funds is equal to about all of a year and a half of household income.
For some prospective, consider that $7.7 trillion equals more than 35% of the entire U.S. gross domestic product (GDP) so far in 2008.
A History of Debt
The National Debt is the total amount of money owed by the government; the federal budget deficit is the yearly amount by which spending exceeds revenue.
Back in 2005, the annual federal budget deficit was about $800 billion, financed by U.S. Treasury bonds purchased by the Japanese and the Chinese. It is predicted that President Obama’s first year deficit will be at least $1 trillion, the highest ever in a single year.
As I noted above, today the national debt has reached over $10 trillion but don’t forget the estimated cost of unfunded public commitments, (including entitlements such as Social Security and Medicare), stands at just under $53 trillion. (That bring the total debt to $63 trillion, even without the $7.7 trillion)
And that equates to $175,000 for every American.
The "experts" keep telling us that all this some day will have to be paid by taxpayers. But the truth is about 60% of the U.S. households don't pay any income taxes at all. Most of income taxes are paid by the top 20% of households, those "rich" people whose taxes Mr. Obama wants to increase so they can be more "patriotic", in vice president-elect Biden’s quaint phrase.
Worthless Paper?
In the meantime the waning Bush government is printing money as fast it can, its only tangible asset being those official printing presses at the Mint. In other words, the "assets" the government and the people are relying on are stacks of paper with printing and colored ink on it. No gold, no silver, just paper.
This enormous debt will have be paid by everyone in the form of inflation when inevitably prices rise and the value of the dollar drops still further.
That old saw about the debt being imposed on our grandchildren no longer applies -- now it will be many future generations of the as yet unborn, our great grandchildren and our great-great grandchildren, that will be forced to pay the horrendous bill for our collective financial sins.
The Emperor Has No Clothes!
What I can’t understand is how otherwise rational people can accept as any sort of security at all government bail outs financed by nothing more than borrowing, plus printing more rapidly devaluing currency.
The plain truth is that the American government is bankrupt and no one seems willing to admit that fact.
* I explore offshore places where you can stash your cash legally in one of my latest books. Click here.
Comments