The Impossible To Payoff – U. S. Debt
Did you know that the total amount of money in the USA, our GDP is not enough to repay the current U.S. national debt? The $145,000 of debt per household in the USA is getting bigger with each passing year. Many still naively believe that it will be paid off. It will not be paid off.
The government spending on Social Security, Medicaid and Medicare plus the interest will be way beyond the total revenue of the Government by 2025. This does not include the expenses incurred on other programs like military or homeland security.
Surprisingly, besides this national debt, fellow Americans have accumulated a total of $58 trillion dollars of debt. This was just a mere $3.5 million 35 years ago.
Our debt bubble is here to stay and when it explodes, it will wreak havoc on our lives.
It is a shock to many that the total American debt is more than the amount of money in the USA. How can this be possible?
The money we know can be measured by just one metric. The M1 is used to measure the total amount of coins, paper money and checking accounts or MONEY to date.
This measure, M1, accounts for the most liquid assets we have and that can be quickly converted to cash.
The M1 has grown to reach new heights thanks to the rampant quantitative easing by the FED. At this time, it is nearly 3 trillion dollars.
This money is not enough to pay our debts. NO. NOPE. NEVER
Here comes in the M2.
M2 is the same as M1 plus little less liquid assets like savings deposits, money market mutual funds and other time deposits.
Our M2 is sitting at 12 trillion dollars right now.
So, is this enough? NOPE.
Is there anything else we can do?
There is the M3.
M3 includes large time deposits, institutional money market funds, short-term repurchase agreements and other larger liquid assets as well as the M2. According to some financial institutions, M3 is at 17 trillion dollars.
Even with this broadest definition of money, we still cannot pay our debts.
So what do we do?
We could start spending less than we bring in and start paying down the national debt.
This is a viable option, but our rapidly aging population will put a lot of stress on our resources. According to Frank Wolf, Our federal expenditures on Social Security, Medicare and Medicaid will exceed revenue by 2025.
Even now, we are in big mess. We are lied to about our national debt. The truth is that Debt is not “under control”.
Many think that we can improve the situation by increasing taxes. The Federal government could squeeze our incomes a little more for juice. Since the end of World War II, the Government has been taxing us in the range of 15 to 20 percent of the total GDP.
The real problem lies in our spending habits. The Federal government spending has increased by 63 percent plus inflation. Mandatory spending programs have actually doubled.
We have to stop this crazy spending.
Then we come to the issue of interest on national debt. The world is lending us huge amounts of money at very low rates to pay of our debts. However, to pay back all this we will have to spend more than a trillion dollars per year in interest on the national debt.
Therefore, it is just impossible to pay all that debt back.
This debt is growing at the time of this writing. With a staggering amount of 58.7 trillion dollars, how much longer can we sustain this?
However, the Debt decreased in 2009, during the financial crisis. It has reared its head from the dark and it nearly 3.3 times the size of the GDP. The Federal Debt makes up $18.2 trillion of the national debt and is 102% of the total GDP.
Our debt is out of our reach and we cannot pay all of it back.
Is there any other way than another financial collapse?