Do Deficits Matter?

The U.S., once the mightiest financial force on earth, can't pay its bills without heavily borrowing and printing money. "Who cares," you may say. The answer is you, for it will have a tremendous impact on you.

Here is a harsh fact: The interest payments on that debt are now $200 billion a year and growing fast and that's at interest rates near zero. What happens when interest rates return to normal levels? It will take a 1/2 trillion or a trillion dollars a year just to pay the debt costs, even if not another nickel was borrowed.

Where will the money come from? The government brings in only 60 cents for every dollar it spends. So will it sharply raise taxes? If so, on whom? Everyone? The wealthy only? Giant corporations? If it's only the latter two, it won't raise nearly enough money. Will it slash spending? If so, what will it slash?  Social Security? Medicare? ObamaCare? Unemployment benefits? Education? Military? What ever it chooses, jobs across the nation will be lost. One of those jobs may be yours.

In any case, if it doesn't sharply hike tax rates and slash military spending, possibly cutting military spending by 1/3 or even in half, any plan is doomed to failure.

If it doesn't take these actions, the government will go broke. Yet everyone thinks it can't happen here and if it did, it can't happen now, and if it did it can't happen to them. But it has happened to most of Europe, most of Asia and most of Latin America and this time it is America's turn.

What is happening now is like the run-up in housing prices a few years ago. Anyone paying attention knew it was unsustainable, but mass denial allowed it to continue until it exploded with consequences that have only just begun. The worst is yet to come. But the Fed didn't see it coming nor did the rest of the government, nor most of the economists and pundits.

If you are an American, please raise your voice, for it is in your silence this out of control spending is taking place. If you are a foreign national, brace yourself for America is well on its way to defaulting on its debts to you. If we Americans do nothing our dollar will be destroyed and it will take our savings with it. It can and will happen here.

Dick