We know that the United States (and the rest of the world) uses an unbacked paper currency which has lost perhaps 90% of its value in the last 40 years. We know that the official US government debt exceeds $16 Trillion ...
Good read from GE Christenson. Here's a snippet:
"... We know that the United States (and the rest of the world) uses an unbacked paper currency which has lost perhaps 90% of its value in the last 40 years. We know that the official US government debt exceeds $16 Trillion and is growing rapidly - approximately 12% per year for the past five years. We also know that the present value of unfunded obligations of the US government for Social Security, Medicare, Medicaid, military pensions, and other commitments is $100 Trillion to $220 Trillion depending upon who is counting. It does not matter which calculation is correct since it is impossible for the US government to fund and pay either present value estimate.
"The current debt exceeds $16 Trillion and will increase at current growth rates to about $25 Trillion in another four years. Interest rates on the national debt are historically low because the Federal Reserve continues to "print money" and then makes huge purchases of government bonds. Assume a modest 5% interest rate on $25 Trillion of national debt in 2016. Do you believe that our economy can generate $1.25 Trillion in annual taxes just to pay the interest on the debt? How about funding a 6% interest rate on $35 - $45 Trillion in national debt by the year 2020? The interest payments would be about $2.4 Trillion - approximately the entire revenue for the government in 2012. "If something cannot go on forever, it will stop...."