Wednesday, March 24, 2010
Read it and Weep:
People are hyper-focused on the the government's debt which, high as it is, still remains less than 100% of our approximately $14 trillion GDP. But the real, hidden disaster is the level of unfunded entitlements. Unfunded entitlements currently stand at $46 TRILLION DOLLARS, or another 328% of GDP on top of the debt! This is almost a 400% increase since 2000. Said another way, for the government to satisfy all of its debts and fund promised entitlements, AND ASSUMING NO ADDITIONAL INCREASES, it would have to confiscate the TOTAL VALUE OF ALL GOODS AND SERVICES produced in the United States for FOUR ENTIRE YEARS. And this is before we account for ObamaCare!
If debt were our only problem, we would have no problem. The government can simply inflate away debt by devaluing the dollar (i.e., by having the Fed print money to purchase US Government Securities, as it has been for the last year). But unlike debt, entitlement obligations automatically adjust for inflation! Said another way, the more inflation the government creates in order to monetize its debt, the more that inflation increases the amounts owed under these entitlement programs. It's a vicious cycle, and there is no way out.
In short, the US government will never default on its debt, but it will certainly "default" on its entitlement programs--social security, MediCare, and yes, even ObamaCare.
If you think the riots in Greece are bad, just wait until the American people are told that the retirement and health care benefits that they were promised their whole lives simply can't be paid.