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![]() Real Wealth #274 09/23/2010 Some Estimates Put Total Federal Debts at $200 TrillionDear Subscribers, I may be way too conservative in the recent past in my assertion that the Federal Government may add up to a total debt of $41 Trillion. Frankly, there are so much debt on “budget” and “off budget” and such tremendous Federal financial guarantees that it’s hard to find a hard number that’s completely reliable. There are a great many very credible analysts and economists who are insisting the total debt add up to much more -- between $60 Trillion and $200 Trillion. Case in point... Laurence Kotlikoff, an economist at "The problem is we're seeing an explosion in spending," added Andrew Moylan, director of government affairs for the National Taxpayers Union. In 1980, the debt - the accumulated red ink incurred by the Federal Government - was $909 billion. This represented some 33 per cent of gross domestic product, according to the Congressional Budget Office (CBO). Thirty years later, based on this year's second-quarter numbers, the CBO said the debt was $13.4 trillion, or 92 per cent of GDP. The CBO estimates the debt will be at $16.5 trillion in two years, or 100.6 per cent of GDP. But these numbers are incomplete as I keep pointing out. These numbers do not count off-budget obligations such as required spending commitments for Social Security and Medicare, whose programs represent a balloon payment for the Government as more Americans retire and collect benefits. In the case of Social Security, beginning in 2016, the US Government will be paying out more than it is collecting in taxes. Without basic measures - such as payment cuts or higher payroll taxes - the system could be on the road to bankruptcy, according to officials. "Without changes," wrote Social Security Commissioner Michael Astrue, "by 2037 the Social Security Trust Fund will be exhausted. There will be enough money only to pay about $0.76 for each dollar of benefits." Mr Kotlikoff and Mr Moylan agree Mr Kotlikoff says the debt is actually $200 trillion. Mr Moylan says the number is likely about $60 trillion. But whichever figure is accurate; all three agree that the problem has worsened in the last few years. They say and I have been saying all along the danger is growing because Congress and the Administration, whether Republican or Democrat, consistently overspend. Now we find ourselves in a situation were the Federal Reserve is literally throwing Kerosene on fiscal fire stating they stand by to do what’s needed. All of this is the underpinning why the price of gold has been up 10 straight years. If we sold all the gold in Yesterday I appeared on the CNBC mid day show discussing why $1300 gold is likely only the beginning. Had I more time I would have cited all of this. I would have also have brought up the fact that we are approaching peak gold production as I have in recent monthly issues of the Gold & Energy Advisor. To see the video click the link below: http://www.goldandenergyadvisor.com/page/gez/video/?sid=1284734031.3595 Best Wishes, James DiGeorgia Editor P.S. My Gold and Energy Options Trading service is making on profitable trade recommendation after another. Yesterday, we recommend puts on the S&P index and this morning at the market lows we recommended taking an 18% profit. In a world were investors and speculators are making 3% a year on their money or less an 18% profit in literally less than 24 hours is remarkable. We’re in the process of updating the track record on the Gold and Energy Options Trader website they’re a little behind the actual results. Over the last 37 months, one of the most depressed economic environments in Out of 131 Trade recommendations there have been 105 winners, 1 break even and just 29 losers. My Gold and Energy Options Trader is easy to subscribe to. I give the first 30 days for just $1 and then charge just $99 a month and throw in a 90 day membership to the ButtonWoodClub and exclusive membership that give you access to over $3419 in subscriptions to several great newsletters and investor tools. Subscribe to Gold and Energy Options Trader today! Please see risk disclosure link below. |
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