Wednesday, August 23, 2006
Is the U.S. Bankrupt?
By: Patrick Wood on Jul 17, 2006
Do Federal Reserve managers secretly believe that the U.S is bankrupt and is about to go under?
Well, where there's smoke, there's fire!
A stunning 23 page report by Professor Laurence J. Kotlikoff titled "Is the U.S. Bankrupt?" was issued by the Federal Reserve Bank of St. Louis in November, 2005, and quietly posted on their public website. Although publicly accessible, it was totally ignored by the U.S. press.
Kotlikoff is professor of Economics at Boston University and has penned at least 355 papers published by the Federal Reserve over several years.
Kotlikoff concludes that "Countries can and do go bankrupt. The U.S., with its $65.9 trillion fiscal gap, seems clearly headed down that path."
The fiscal gap of $65.9 trillion is more than 5 times U.S. Gross Domestic Product and twice as large as national wealth. The fiscal gap is all the money that the U.S. owes now and in the future, for which it doesn't have revenue to pay for. According to Kotlikoff,
One way to wrap one’s head around $65.9 trillion is to ask what fiscal adjustments are needed to eliminate this red hole. The answers are terrifying. One solution is an immediate and permanent doubling of personal and corporate income taxes. Another is an immediate and permanent two-thirds cut in Social Security and Medicare benefits. A third alternative, were it feasible, would be to immediately and permanently cut all federal discretionary spending by 143 percent. (p. 8)
Imagine Ben Bernanke, chairman of the U.S. Fed., getting up in front of Congress and stating "The U.S. is clearly headed toward bankruptcy!"
The stock market would crash, the dollar would melt down, the bond market would implode and real estate would be frozen in time.
This writer hates to be a pessimist, but this does not make for an optimistic near-term or long-term forecast. Monetarily speaking, it's time to "run for the hills."
The demise of the dollar may be at hand.
(Ed. note: For you history buffs, compare today's monetary scenario with 1928-1929 and the subsequent sharp removal of credit from the manic stock market of the 1920's.)
To read the 23 page report issued by the Federal Reserve Bank of St. Louis in November, 2005, written by Professor Laurence J. Kotlikoff, titled
"Is the U.S. Bankrupt?" click here.
From The August Review
Global Elite Research Center
posted by Vetzine