Laurence Kotlikoff of Boston University in a recent speech calculated that the total debt (including unfunded liabilities) of the U.S. is currently at $222 Trillion. Politicians are well aware of “off balance sheet” liabilities that have been hidden from the public. If would be like omitting your home mortgage off of your balance sheet so that you appear to have more wealth and less cash requirements. This is a very dangerous scenario to the American people as well as the rest of the world. The last six decades of an off-balance-sheet, unsustainable financing scheme have left the U.S. insolvent.
One of the toughest realities to deal with is financing leverage. When an individual buys a new car on a 72 month loan but wears the car out before the 72 months are up he is now paying for something of little or no value. When you owe more than the current value of the asset, it gets ugly. When a country has leveraged its future based on false assumptions, it will also get ugly.
It really got started with the baby boomer generation. When the boomers entered the workforce social security was created to fund the elderly and to be paid for by the young boomers. What those in power did not count on was the increased life span of the elderly and the reduction in births after the boomers. Talk about a perfect storm, legalized abortion removed population from the future workforce and pharmaceuticals helped doctors increase the lifespan of the elderly even though healthcare costs based on symptom treatment would skyrocket.
Do you think I want to give up my Social Security checks after being forced to contribute for the past 45 years? No way! Do you think I should pay for the guilty who knew this day of reckoning was on the horizon? Absolutely not! As a small businessman, I actually paid twice as much as the average worker since my little company had to match the employee contribution to Social Security and Medicare. The large population of baby boomers all feel the same way.
Is there a solution? The only solution of the current economic system is to print money and use inflation to pay off the debt with dollars worth much less than today’s value. In fact, that has been happening for some time now. Remember when a Coke was nickel? Now you pay twenty times the amount for the same product.
The issue revolves around value. Hard assets have true, tangible value. Paper assets have relative value. When the day of reckoning arrives, paper assets will be devalued to extreme levels. An economic collapse could cause paper assets to become worthless. Tangible assets would take a hit as well since the demand for those assets would be dramatically affected. However once the smoke cleared the tangible assets would migrate to their intrinsic value. I believe the gold/silver ratio would return back to 16 ounces of silver equal 1 ounce of gold.
The backers of the U.S. Dollar as the global reserve currency are quickly approaching a storm of epic proportion. The only question is what day will the “Black Swan” arrive. Before arrival of that day, I believe that Our Heavenly Father will have a network in place to fill the vacuum. The ongoing moral decline of the global system can only be replaced with a righteous alternative. Mothers will be crying in their pillows at night asking “How did this happen?”. Men’s hearts will fail once they have realized their blindness in the financial decisions and direction they took. In desperation men will repent and look for answers. Our Heavenly Father will respond as a Father who loves His children but will evoke a lesson to insure they learn from the lawless acts before restoration can be completed.