There was a heated debate between Steve Liesman, who I consider a pseudo spokesman and apologist of Ben Bernanke, and Rick Santelli, the man whose on-air tirade inspired the Tea Party Movement, on CNBC this past Monday. The two debated about whether the Federal Reserve should raise interest rates soon. The debate quickly devolved into Santelli doubting the reliability of the government’s economic numbers and Liesman trying to trumpet the numbers as economic facts. I embed video of this argument below because it’s rather entertaining.
In my last blog I highlighted how U.S. Government economic data is unreliable, particularly the unemployment and inflation data. A third area where the U.S. Government really misrepresents numbers is the size of the deficit. The following is a brief passage from a special report about the upcoming economic collapse and next world war that I am working on which touches on the size of the U.S. fiscal deficit:
“The fiscal situation in the U.S. is far worse than what the government presents to the public. There are two types of budget deficits figures released by the U.S. Government: one touted by Congress while the other one is a less publicized financial audit made by the Treasury Department. Congress’s numbers are the most flawed because they “don’t count the growing burden of future pensions and medical care for federal retirees and military personnel”.[i] This makes a major difference in the bottom line as the audited report shows that the government ran a $5.1 trillion deficit rather than just a $455 billion deficit in 2008.[ii] If the government used the same accounting system that publicly-traded companies use they would have reported that they have a $63.8 trillion GAAP negative net worth.[iii] These facts are startling, but they only show a small part of a much bigger long-term fiscal problem.
The U.S.’s fiscal burden has grown so large that experts now consider the country bankrupt. Boston University Professor Laurence Kotlikoff defines national bankruptcy as the point when “fiscal burdens facing current and future generations ... exceed the resources of those generations, get close to doing so or simply get so high as to preclude their full collection, the country's policy will be unsustainable”.[iv] The U.S. already appears to be well beyond the threshold of bankruptcy since unfunded liabilities are several times more than its economy.The long-term consequences of having massive fiscal burdens will be catastrophic:
“We’ll see skyrocketing tax rates, drastically lower retirement and health benefits, high inflation, a rapidly depreciating dollar, unemployment, and political instability. As they say, bad things happen to good countries, and we are heading into on God-awful fiscal storm, the full dimensions of which are hard to fathom”.[v]
Right now the special report I am working on is 32 pages long. I may post more previews of the report in coming posts.
References
[i] Cauchon, Dennis. What’s the Real Federal Deficit? 3 Aug. 2006. A01 USA Today http://www.usatoday.com/printedition/news/20060803/1a_coverart03.art_dom.htm
[ii] Corsi, Jerome. “It’s Official U.S. Government is Bankrupt”. 18 Oct. 2009. Last Accessed 21 Oct. 2009. http://www.wnd.com/index.php?fa=PAGE.view&pageId=113366
[iii] Ibid.
[iv] Kotlikoff, Laurence. J. Is the United States Bankrupt? Federal Reserve Bank of St. Louis Review, July/August 2006, 88(4), pp. 235-49.
[v] Burns, Scott. and Laurence J. Kotlikoff. The Coming Generational Storm: What You Need to Know about America’s Economic Future. Cambridge, Mass: MIT Press, c2004.
