US ‘could be going bankrupt’

One of the elements in the ‘Perfect Storm’ of problems converging on our future is the ever growing U.S. budget deficit.

The problem is that the United State’s debt load is getting too large. Yes, we’re still paying our bills as regular as clockwork and yes we are still politically stable and have a strong economy. But that’s like saying, “Yes, Bob’s paying his bills every month and he’s got a good steady job and a stable personality, but….” The fact is Bob can’t just keep taking on more and more loans. The fact is that at some point, folks will stop loaning Bob more money because it’s obvious that sooner of later he’ll be in over his head. If Bob pushes the situation too far, he’ll begin to get a bad credit rating even though he’s paying everything on time. And once his credit rating’s suspect, folks will be a lot less inclined to give him new loans and those who already have loans out to him will be feeling nervous and wondering how they can recover them.

This scenario has been unrolling for a long time and many of us are just waiting for the other shoe to drop and hoping it won’t.

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The United States is heading for bankruptcy, according to an extraordinary paper published by one of the key members of the country’s central bank.

A ballooning budget deficit and a pensions and welfare timebomb could send the economic superpower into insolvency, according to research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St Louis, a leading constituent of the US Federal Reserve.

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