Obama legacy likely to be huge US financial collapse…

Just before Obama began his first term, and before the Financial Crisis of 2008, the national debt represented 62 cents of every dollar of this nation’s Gross Domestic Product, or GDP.

Simply put, GDP is the total amount of goods and services produced by a country. If you looked at a country like a business, their GDP would be their gross sales.

Last year – for the first time ever – the national debt exceeded the U.S. GDP.

This means that we, as a nation, owe more than we produce.

We are now part of a very “unique” group of countries in the world that have a debt-to-GDP ratio greater than 1. We now rank number 6, right behind Ireland, Portugal, Italy, Greece and Japan.

This is NOT a list the most prosperous nation on earth should be on.

US heading to third-world financial status

What is even more troubling is not only the size of the debt but how fast it’s been growing compared to the economy, and that is what’s keeping lots of us up at night.

If the economy grew faster than the rate the government borrowed money… the debt wouldn’t be as much of a problem.

But we are now on an unsustainable path. Under the ‘leadership’ of Barack Obama, our deficit is growing at eight to ten percent per year while the economy is growing at only two to three percent per year.  How is this economically sustainable?

We are now at the tipping point… when government debt is greater than its ability to repay that debt.

The next step in this debt disaster is even more terrifying.

That’s because the cost of paying the interest on this debt has become astronomical. In order to keep current on our interest payments right now…the cost is more than $415 billion!

This amount — $415 billion — is almost as much as the government spends on Medicare…and it’s the same percentage of the U.S. budget that is spent on education.

So we’re spending just as much to educate the nation’s children as we are simply to maintain our debt at its current level.

But here’s the dangerous part:

For the past few years, the Fed has maintained a near-zero interest rate policy…and for good reason: The U.S. currently pays an interest rate of just 2.4% on its $17.6 trillion in debt.

Every 1% rise in interest rates would increase the debt payment by more than $170 billion!

In other words, a simple 1% increase in the interest rate we have to pay on our debt would mean the total cost would climb to more than $600 billion – almost as much as the entire U.S. defense budget!

So far, the Fed has been able to “manage” the cost of this debt by keeping interest rates low.

But the Fed could have to raise interest rates – and soon – in order to help the U.S. economy avoid a crippling inflation that would resemble the 1970s or early ‘80s.

Or – even worse – the decision could be out of the Fed’s hands entirely…

Here’s where the situation goes from disappointing… to dire. Why? Because the United States is no longer in control of the interest rate it pays on its debt.

That’s because foreign investors now own a whopping 48% of U.S. debt…up from just 19% back in 1990.

US Debt Held by Foreigners

In other words – we’re now at the mercy of China and Japan – the two largest holders of U.S. debt.

If either of those nations demand higher interest rates…the U.S. will be forced to comply. And – as I just showed you…the impact on the U.S. budget will be devastating.

If rates go up by 1% — where will we get the more than $170 billion needed to finance a 1% rise in rates… the $255 billion needed to finance a 1.5% rise… or the $340 billion needed to finance a 2% increase?

Every 1% rise in interest rates would increase the debt payment by more than $170 billion!

We don’t have the money – that’s the point. So government spending will have to be cut…in a big way.

American citizens got a small taste of spending cuts when Obama shut down government services during the first two weeks of October 2013:

800,000 federal employees were furloughed 1.3 million were required to work without pay Government contractors such as United Technologies were preparing to lay off 2,000 workers, Lockheed Martin, 3,000.

Shelters for domestic abuse victims across America had trouble paying their bills and closed down.

More than 19,000 low income school children lost access to programs that provides nutritious meals and medical screening.

Even our nation’s brave heroes — individuals who fought for our freedom in Vietnam, Korea… even World War II — were denied access to the national memorials erected in honor of their fallen comrades.

Simply put — it was sickening to watch.

But it also shows you that if Obama and our government are willing to stoop so low as to treat the men and women who have protected our freedom so poorly during a short-term squabble over money…

They’ll do anything when a real crisis strikes.

The barricades put up around the World War II Memorial in Washington have become a symbol held up by both Democrats and Republicans as an example of what’s wrong with Washington.

If millions of Americans were impacted by the last, brief government shutdown…

How long would it take before there would be chaos and riots in our cities in the event of more drastic – and more prolonged – spending cuts?

Before looting and gangs roam the streets of our major cities?

The bottom line, folks, is this: Our beloved USA is no longer in control of its own destiny. Our future can easily be controlled by Russia and China…and these countries are already well on their way toward dictating that future.

[from a report prepared by Stealth Stocks Online]
……………………………………..

 

As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

 

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