How much do we owe? Here is the truth!

It never fails. Every day someone asks me to explain
what our “true deficit” is here in the United States. Journalists, Neighbors.
Your fellow readers – they all want to know. But as often as people ask, nobody really wants to hear the truth.

Discussing our real debt is as taboo
as mentioning global warming. Only certain analysts dare mention it – even
though it affects every person living in the U.S.

That’s because no one wants to admit
that we’re flat-broke.

We have absolutely NO way to pay off
all those phantom liabilities that the U.S. government keeps promising. Our
Twin Towers of debt are stripping your dollar’s value a little bit more with
each passing year.

Even worse, President Obama, Geithner
and Bernanke keep telling you everything is fine! Well I’m flat-out disgusted
folks. It’s time to set the record straight.

Because the reality is every single
person in America would have to shell out not thousands…not hundreds of
thousands…but a cool MILLION to pay off all our debts.

Don’t believe me? Let’s take a closer
look…

The $13 Trillion Debacle that

We Are All Paying For

Our national debt changes by the
second, but as of this writing, the latest number is: $13,737,000,000,000.
That’s $13.7 Trillion dollars folks.

If you charged Americans for the
national debt, each citizen would have to shell out $44,200. If you just asked
taxpayers to pay it, that tab would climb to $124,000 per person.

At this pace in just five years our
national debt will be more than $17 Trillion! That’s over $53,000 per each
citizen! Or $153,000 per taxpayer!

But that’s not close to the real
deficit. The REALLY scary debt numbers are the ones that are NOT counted.

You see, most people have no idea what
the U.S. government owes on “unfunded obligations.” That’s government-talk for
entitlement programs like Medicare, Social Security – the programs that no
politician wants to do away with.

As it stands right now, Social
Security costs $14,663,000,000,000. Medicaid creates $19,400,000,000,000 in
more debt. Medicare is the worst offender at $77,147,000,000,000.

Add it all up, and the total unfunded
obligations sit at $111.2 Trillion bucks! That’s more than 755% MORE than
the “national debt!”

Or in short, that’s over $1 million
per tax payer!

That means that if every tax payer in
U.S. forked over a million bucks, we would just be at BREAKEVEN. Since these
programs are set to automatically grow, we’d be getting right back in the hole
again.

By the way, if you don’t believe me,
you can go to the National Debt Clock website and see for yourself. But I warn
you don’t go there if you have a weak stomach.

So the Question Is: Who Will Pay Our
Debts?

Like every other government in the
world, we can only raise money in two official ways. Either we can raise taxes
or sell our debt through bonds.

(I say “official” because you can also
raise funds by printing money and debasing your currency … which the government
does too.)

No politician likes to raise taxes, so
that leaves us with selling Treasuries – especially to foreigners. We want
foreign buyers because it brings more money into the country.

Unfortunately foreign investors are
intelligent. They are now asking the question that every good lender asks a
borrower, “Will you be able to pay me back with interest?”

The answer is no, we can’t. At least
not officially. Just the interest on the Treasuries we sell alone will cost all
tax revenues for years to come.

In the next few years, the U.S.
government will have to make some drastic changes if they want to get
foreigners to buy our debt. They can… 

1. Raise interest rates aggressively to make the Treasury bonds more attractive to buyers


2. Debase the dollar further, to deep discounts, to allow the buyers of Treasuries to purchase them at a discount.


3. Raise Taxes to levels not seen other than during wars. By raising taxes, it would reduce the amount of debt the government needs to finance, and reduce how many Treasuries are in circulation.

And even if all three are put to work,
there’s no guarantee that it will be enough to convince foreigners to buy
Treasuries.

If the day comes when no shows up to
buy our debt, it’s very possible the U.S. could default in some manner.

Or more likely, the Federal Reserve
will use their backdoor buying program to mop up the excess Treasuries. As
everyone in the U.S. knows, the Fed just pledged another $600 billion to buy
Treasuries – but that’s nowhere near how many they will have to buy to fix this
problem.

But here’s the thing: This kind of
ridiculous debt financing has never been tried. It’s really just creating more
debt to buy up that debt. It’s very possible that such a debt circle will have
even worse consequences – for you, and all your dollar-based wealth.

The Solution: Duck
and Cover!

As you can imagine, no politician is
going to be able to pay off our debts at these extreme levels. On the contrary,
President Obama has allowed the annual deficit to rise to $1.4 trillion. (Not
that I’m pointing fingers – Bush II let our deficit rise to $450 billion during
his tenure!)

Instead, you must look after yourself.

The easiest thing to do is take a page
out of China’s playbook and stop buying long-dated Treasuries. You don’t want
to be left holding worthless paper if the day comes when the U.S. can’t pay you
back.

Then you must cover yourself. Start
trading your sinking dollars for stronger currencies. Personally I like the
Aussie dollar, Canadian dollar and Norwegian kroner as long-term stores of
value outside of the U.S. dollar.

As I mentioned, nobody wants to talk
about our real debt. But ignoring this pending tsunami will be quite
detrimental to your investments or wealth.

I humbly suggest you take action now
before this debt situation gets even more ridiculous.