America’s Fiscal Cliff

From Maulden Economics I found this little gem…

“Next year, the US national debt will top $20 trillion. The deficit is running close to $500 billion, and the Congressional Budget Office projects that figure to rise.

Add another $3 trillion or so in state and local debt. As you may imagine, the interest on that debt is beginning to add up, even at the extraordinarily low rates we have today.

Sometime in 2019, entitlement spending, defense, and interest will consume all the tax revenues collected by the US government. That means all spending for everything else will have to be borrowed.

The CBO projects the deficit will rise to over $1 trillion by 2023. By that point, entitlement spending and net interest will be consuming almost all tax revenues, and we will be borrowing to pay for our defense.”

There are three ways this intractable debt bomb will be diffused:

1. Taxes will be raised to the sky…not going to happen because they already have.

2. Government will slash welfare and defence…not going to happen, ever!

3. Inflation, like America has never seen before will be unleashed to shrink the debt with an avalanche of new money…I’ll bet my house on this outcome.

Kevin Davis