Interesting and factual article in USA Today concerning our national debt of over $21 trillion and annual deficits approaching $1 trillion. Unsustainable. Prepare.
New website page: Quick-links to helpful data. National debt numbers as of yesterday, amount paid in interest for national debt each month/year, average interest rate on national debt, U.S. budget allocations, history of GDP, monetary base chart, how much we owe foreign nations, SS worker to beneficiaries ratio history, food stamp numbers, who pays taxes, helpful articles, video, plus much more…
A few days ago President Obama presented his $4 trillion budget for FY 2016. OK, the actual amount was $3.999 trillion. But, let’s go ahead and call it $4 trillion. The projected deficit is $474 billion (revenues – expenses). That means we are overspending $1.3 billion every day, $9.1 billion every week and just under $40 billion every month. The federal government will add another $474 billion to our current national debt of $18.1 trillion as of February 1, 2015.
Let me illustrate what I mean by the point of no return.
Years ago, my family visited Niagara Falls. Like many tourists, we watched the movie at the welcome center about the Niagara River and the famous falls. The movie explained that if you are traveling down the Niagara River toward the falls, you will see a sign that says, “Approaching the Point of No Return.” After you reach a specific point in the river, you will see a sign that reads, “The Point of No Return.” If you go beyond this point, it is certain that you will go over the falls because the force of the river’s current is so powerful that it is impossible to turn around, no matter how hard you try. Beyond the point of no return, gravity and physics overrule good effort, good intentions, and desire. And if you know anything about the Niagara River, you know that going over the falls is some-thing you do not want to happen!
What is the lesson? Take note of early warning signs, because at some point it will be too late.
The data in PREPARE documents we are in the river and headed downstream.
Based on my analysis, I believe the warning signs indicate that we have a small window of opportunity before our nation reaches the point of no return economically. More information becomes available every day, so the timeline can change for better or worse at any time.
Once we reach the point of no return, powerful, negative economic forces such as interest payments on the national debt, growing entitlement spending (Social Security, Medicare, Medicaid), and deficit spending,
will consume such a large portion of federal revenue that it will be mathematically impossible to recover from these mounting negative economic forces—regardless of whatever heroic efforts are tried.
This point is important enough that it bears repeating: Once we reach the point of no return, it will be mathematically impossible to recover. Please read carefully what I am saying so there is no misunderstanding. I’m not predicting we are going to have a financial crash in 20XX. (Even when you reach the point of no return, you are still in the river for a period of time before you go over the falls.) However, I am saying that the evidence supports the conclusion that if we do not lower spending and stop growing the national debt in the next few years, we will be past the point of no return because it will become impossible to raise enough revenue to pay for our growing obligations.
Your PREP Plan:
- Stay informed -sign up for my free email updates
- Put your financial house in order
As you look at economic data, there are three terms that everyone must understand: budget surplus, budget deficit, and national debt. Each fiscal year, when the accounting books are closed on September 30, the federal government ends the year with either a budget surplus or a budget deficit:
• A budget surplus is when government revenues (that is, taxes paid by you and me) exceed expenses for the current year. (That’s good!)
• A budget deficit is when government expenses (all the money the government spends) exceed revenues for the current year. (That’s not good!)
All during the year, whenever our nation’s expenses exceed income, the government pulls out the national credit card and says, “Charge it.” This means we finance our debt by selling government bonds (which are promises by the government to pay at some future time) to domestic and foreign investors (such as bond-market investors and other countries, such as China and Japan.) When we overspend (that is, have a budget deficit) we have to borrow money (by issuing more bonds) and the national debt increases.
• The national debt is the total amount our nation owes its creditors (domestic, foreign, and intragovernmental lenders and investors). This figure includes all previous deficits (plus interest owed on all outstanding bonds) minus any payments the federal government has made to pay down the national debt.
YOUR PREP PLAN: Be able to explain these three important terms.
- Budget Surplus (only 4 surplus in last 40 years)
- Budget Deficit
- National Debt
- Keep up to date on the current amount of our national debt