[vc_section][vc_row][vc_column][vc_column_text]At $21 trillion, the U.S. national debt is not even a number anymore. It’s becoming abstract.
Most Americans don’t even know it exists since the ramifications of running such a bloated-up deficit have never stopped the country from paying their obligations.
The U.S. government doesn’t miss a payment, ever, but here’s a snapshot of its financial situation:
The Federal deficit, which is the difference between the expenditures made by Congress and the money collected through taxes, stands at over $730B, but that’s small compared to the US Federal spending, already approved by the president of over $4 trillion.
To repay it, every citizen will need to come up with $65,000; put differently, each taxpayer will need to send the Federal government a $175,000 check.
Medicare payments already cost $1.2 trillion, with social security coming in second at $1 trillion.
The debt to GDP ratio sits at 106%, which is more than most other nations on the planet.
Given the choice between loaning the Federal government money or holding a piece of burning coal, it might be a less painful notion to get burned.
I have seen some wild interest payments due by populations in my travels around the globe, but a country, which pays $2.6 trillion a year, when combining household, state level, Federal level, and businesses combined, should take a close, hard look at what has gone wrong.
On average, every family in America is $850,000 in debt, when dividing total debt by the number of families, while total savings per family stand at a “whopping” $4,345 – it’s a joke.
We’re at the end of the road for this experiment. The fuse is shortening.
But, the debt problem is not isolated to the U.S., because, like any good banker will tell you, if the borrower is having trouble paying back, that’s also disastrous for the lender.
Foreign governments own $6.5 trillion of U.S. issued debt. In other words, they’ve loaned the Federal government this amount.
What’s keeping hope alive and our system functioning is the fact that total assets, owned by individuals, businesses, states, and the Federal government are north of $100 trillion today. You see, when all is said and done, we, the people, have unleashed massive wealth onto the world, but have allowed the government to run wild, on the flip side.
More than anything, it looks like there are several “Americas” under one umbrella today – the country is divided, since out of 326 million people, 40 million live on food stamps, and 165 million (half of the population) are receiving some form of government assistance.
One out of every two individuals in the U.S. is taking money from the government, which makes me realize that they do not know the extent to which their government is indebted, or they are in a situation, where ceasing to receive subsidies, puts them in existential risk.
Neither of these conclusions is good for the health of the nation.
In 1913, the Dollar to gold ratio stood at $28.96 per ounce, while today it is around $5,000.
Silver is even worse. In 1913, the Dollar to silver ratio stood at $2.66, while today it is around $632.
The median income is $31,000 today, but as I said, each taxpayer owes $175,000, which means the debt/income ratio is close to 6:1.
No one knows when this will all reach a screeching halt, but we can make sure that we have some “insurance policies” in place.
I urge you to specialize; find a niche that you can excel at and create value. I urge you to save and to diversify, both financially and geographically, if possible.
Lastly, I implore you to understand that there’s a changing of the guard in the U.S., with the baby boomers becoming the dependent demographics, while the millennials are entering peak-earning years.
This change will be the source of friction and opportunity.
When the U.S. sneezes, the world becomes sick; even if you’re outside the U.S, this will impact your life.
There is nothing surer about your financial well-being than to stay out of personal debt; find your strong suits, focus on them, and build an asset portfolio. Do that at the expense of all the above methods. Postpose any short-term pleasures you’ve accustomed yourself to until you have 24 months of cash set aside, at least.
Make this your highest priority. This habit of saving and looking for ways to increase your income is the driving force behind America’s rise to glory, and its lack is the cause of its demise.[/vc_column_text][/vc_column][/vc_row][/vc_section]
