Obama Drone Terror! U.S. Can't Pay off DEBT!

By Reginald Kaigler (DEMCAD)

Face Reality: U.S. Can't Pay off DEBT

I recently interviewed financial and precious metals expert Dr. Lee Warren and a viewer commented that the doctor was incorrect in claiming that the federal debt could not be paid off. The viewer claimed that if taxes were increased by 5% across the board, the deficit could be solved in 10 years.

Well, let's take a closer look at that claim. The United States has been running huge deficits since 2000. Essentially, the federal government is spending more money than what it is collecting from tax dollars.

If the gov had 2.4 trillion in revenue and 3.7 trillion in spending in 2012, how is a 5% tax increase going to help?

First, you would have to assume that a tax increase would lead to a significant inflow of cash for the federal government. You would have to assume that the big increase in taxes would have no effect on business activity and would only encourage growth. Two assumptions that are not backed by any evidence.

But let's say that raising taxes somehow lead to a huge tax increase.

Let's assume revenue doubled to 4.8 and spending remained at 3.7 trillion. That's 1.1 trillion surplus every year. We have 16 trillion in debt, if we had 1.1 trillion surplus years for 10 years, we would still owe near 5 trillion dollars and that doesn't  even include the medicare social security liabilities.

The real liabilities of the federal government are Social Security, Medicare, and federal employees' future retirement benefits, which already exceed $86.8 trillion, or 550% of GDP. That's 550% of the entire economy in one year. That's translates into five years of the total production and services of the entire economy just to pay off the debt.

What this means is that the entire system is insolvent and there is no way to save it. The sooner people face that reality, the easier it will be to start to prepare for the inevitable collapse.

Historical Federal Receipt and Outlay Summary
Cox and Archer: Why $16 Trillion Only Hints at the True U.S. Debt

 Obama Drone Terror

So not only is the empire crumbling, the emperor has gone mad. The Obama White House recently declared that it was legal for the federal government to use drone strikes to kill American citizens as long as the government believed the target was an operational leader within Al-Qaida or a related group even if there was no evidence or intelligence of an active plot against America.

Essentially, the White House is ignoring Due Process and declaring that it can kill anyone.

The Numbers

Last weeks unemployment claims stood at 366,000, while Nonfarm business sector labor productivity decreased at a 2.0 in the fourth quarter. Remember, the commerce Department claims that GDP only dropped 0.1% in the fourth quarter. Expect a revised number, the economy is contracting.

BLS: PRODUCTIVITY AND COSTS

Guns

I told my viewers to consider buying a rifle before the election. Before there was a crisis and the guns flew off the shelves and become unaffordable. Unfortunately, the day has come for millions of Americans. AK pattern rifles that sold for 600 bucks is now at 900. If you didn't prepare by storing guns and ammo, I don't know what to tell you. Hopefully, things claim down as more supplies arrive, but you can't afford to abandon your other emergency preparations. Good luck.





 

By Reginald Kaigler (DEMCAD)

The Dow Jones is over 13,000 and the talking heads on television are declaring the U.S. economy to in a recovery. But over 46 million Americans are still depending on food stamps, the weekly jobless claims are starting to decline and unemployment is still stubbornly high despite the Labor Department's attempts to official push millions of unemployed into the non-labor force category. And recently, the factory orders fell off of a cliff in March.

The GDP numbers were obviously a big disappointment. The first quarter of 2012 had an unusally warm season, which made individuals and companies buy specialty items much earlier than usual. This should have really boasted the numbers, but all the labor department could come up with is an anemic 2.2%. Which means there's going to be significantly less growth in the second quarter. Essentially, the purchases that are usually made in the second quarter have already been made for the first.

Factory orders Dropped 1.5% in March
46 Million Americans on Food Stamps
GDP Growth

So it's refreshing to see a clip of someone on CNBC telling it like it is. Boston Properties CEO Mort Zuckerman pulled no punches with his analysis.

"We have the most stimulative fiscal and monetary policy in the history of this country and here we are three years into the recession and it's not ended. I think we may be heading for an even weaker economy this year than people expect." 

He was right about the European economy, too. I especially enjoyed his analogy about the man who jumped out of a 25 story build and yelled, "Nothing's happened yet!"

Right now, I'm focusing on creating secondary income. I want to be as versatile as possible, because I think things are going to get very interesting this year. Don't be surprised when the economy gets worse.