USA or Zimbabwe?

From Dr. Martin A. Weiss at Uncommon Wisdom:

FACT #1: The official national debt now stands at $12.68 trillion — an amount equal to about 88.5% of all the goods and services our economy produces in an entire year.

FACT #2: Contingent obligations for Social Security, Medicare, Medicaid, veterans, and pensions now stand at an additional $108 trillion over and above the "official" national debt.

FACT #3: State, county and local governments are nearly $3 trillion in debt. Many can't pay and will ultimately demand that Washington assume responsibility for that debt as well.

FACT #4: Total federal, state and local government indebtedness now stands at a mind-blowing $123.6 trillion.

FACT #5: Last year, Washington added $1.4 trillion to the debt. In this fiscal year, the Obama administration will add another $1.6 trillion!

FACT #6: In addition to funding the current trillion-dollar-plus deficits, the U.S. Treasury must borrow MORE each year to replace bills, notes and bonds that are maturing.

FACT #7: This record-shattering borrowing by the Treasury has resulted in a Mt. Everest of Treasury obligations being dumped onto the market, which naturally depresses bond prices and drives interest rates higher.

FACT #8: In a desperate attempt to keep interest rates low, the Bernanke Federal Reserve has created $1.25 trillion out of thin air to buy mortgage-backed securities ... another $300 billion to buy U.S. Treasuries ... and yet another $170.6 billion to buy other government bonds — a total of nearly $1.7 trillion in all.

FACT #9: From September 10, 2008 to March 10 of this year, Bernanke increased the nation's monetary base from $850 billion to $2.1 trillion — a 250% increase in just 18 months.

FACT #10: Despite this massive money-printing, the yield on the benchmark 10-year Treasury note has STILL risen by more than one-fifth — from 3.2% to 3.86% — since December.

FACT #11: Because of this massive money-printing, the U.S. dollar has lost nearly 10% of its value in the past 12 months alone.

The Clowns in Washington have to STOP THE SPENDING!

The Dollar Is Falling!

And our leaders are encouraging it because it preserves their power momentarily. Just look at the chart above left. We've already heard about this year's new trillion dollar plus deficit; it's 3.5 times the unconscionable debt we had under Bush in 2008. And which debt Obama strongly attacked when he was just a candidate; however, when he gained power, he suddenly forgot the danger. When added to recent deficits, the sum totals $11.8 trillion.

Because nothing drastic has happened yet, and because the Obama administration has been so terribly busy trying to change our country, most Americans have become numb to the implication of the facts before them.

However, other countries have not been so complacent. They are shifting out of dollar denominated investments and debts because they clearly see the (almost) inevitable decline in the dollar's value.

Perhaps they are paying attention to our unfunded debt such as Social Security, Medicare, Medicaid, Veteran's Benefits, and government pensions. These are not even listed on the balance sheet, but they amount to almost $104,000,000,000,000 in the foreseeable future.

If Obama passes a Health Care Reform bill, inevitably more will be added to the deficit.

And yet our leaders loudly whistle past the graveyard while they busily print more money to pay back our debts with less valuable dollars. No wonder there is a growing demand for a new international currency.

Ancient Rome, the Byzantine Empire, and Post WWI Germany all tried to use the same method when national obligations became too great to ever pay back.* After all inflation is a silent tax and many hardly even notice when politicians do it. But inevitably, it leads to the ruin of the country. In the fourth century AD, the Roman denarius fell to 1/50 of its value in a mere 13 years. The Bezant took longer, but by the 14th century it had virtually ceased to exist despite the fact it had once been the international currency. The Reich mark plunged from 4.2 to the dollar before WWI to 1,000,000 to the dollar by August 1923.

The chart below illustrates the dollar's loss of value in recent years -- 36% when compared to other currencies and a whopping 75% compared to gold. Without a drastic change in Washington, the dollar will decline even more precipitously.

*One economic writer, Larry Edelson, believes that if the US government started paying off its debts at the rate of $100,000,000 every single day, it would take 3,446 years before the debt is paid off. The statistics above came from the Uncommon Wisdom website.

The Recession Is Over?

Then why have Google searches for "collapse of the dollar" and "price of gold" doubled since 2008?