The U.S. Debt Bomb Is Much Higher Than Most Americans Realize – Got Gold?

“…The U.S. debt bomb is much higher than most Americans realize.  When the U.S. economy finally starts to implode investors need to understand that ASSET values will evaporate while DEBTS stay the same.  That is a recipe for disaster.”

Prepared by Lorimer Wilson, editor of munKNEE.com – Your KEY To Making Money! [Editor’s Note: This version* of the original article by Steve St. Angelo has been edited ([ ]), restructured and abridged (…) by 27% for a FASTER – and easier – read.]

“That’s correct. There’s a lot more debt than Americans realize sitting on the balance sheet of the U.S. Government. Let’s add up all the U.S. Government debt and put it into perspective. 

• The total U.S. Federal debt is $21.97 trillion
• U.S. Agency debt comes in at a whopping $9.26 trillion
• State-Local Debt is $3.1 trillion
• Thus, total outstanding U.S. Government debt is a staggering $34.3 trillion…

If we include all of this debt and compare it to the U.S. GDP, it is substantially higher than the current 104% stated by the Federal Reserve.  By incorporating ALL debt, the total U.S. Government debt to GDP figure is more like 166%.  Of course, the accountants at the U.S. Treasury and Federal Reserve don’t want to include all of this debt because it makes the financial ratios much worse.

Forecasts for just U.S. Federal Debt suggest we are going to reach $30 trillion by 2025:

According to Statista.com, total U.S. Federal Debt will reach $22.5 trillion by the end of fiscal 2019 (Sept 30th) but will continue to increase to $30 trillion by 2025.  I have also included my estimated average interest expense paid by the U.S. Treasury for its outstanding public debt.  Remember, this only consists of the current $21.97 trillion of Federal Debt.

If interest rates continue to rise slowly to the same level it was in 2010; then the U.S. Treasury will be forking out $900 billion a year just to service its debt:

The data put out by the TreasuryDirect.gov website has shown that the interest expense the U.S. Treasury has paid for the first three months of fiscal 2019 (Oct-Dec) was $164 billion, a hefty 12% more than the $147 billion paid during the same period last year.  If we estimate that the U.S. interest expense in 2019 is going to increase by 12% for the entire year, that turns out to be $580 billion [which is] very close to the estimated $562 billion shown in the chart above.

Now, some individuals might not agree with my estimated 3% average interest rate by 2025, but we must remember that the low 2.2% rate in for 2016 took place when the Fed Funds Rate was 0.25%…When the Fed lowered its interest rate down to nearly zero, the lowest the average interest rate paid for U.S. Treasury Debt was 2.2%.  Hell, my 3% interest rate by 2025 might be too conservative.

Conclusion

Either way, the U.S. Debt Bomb is much higher than most Americans realize.  When the U.S. economy finally starts to implode investors need to understand that ASSET values will evaporate while DEBTS stay the same.  That is a recipe for disaster…Gold and Silver, [however,] are not backed by debt, which is why they will be some of the best safe havens when the value of most assets disintegrate.”

(*The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.)

For the latest – and most informative – financial articles sign up (in the top right corner) for your FREE bi-weekly Market Intelligence Report newsletter (see sample here).

Scroll to very bottom of page & add your comments on this article. We want to share what you have to say!

If you enjoyed reading the above article please hit the “Like” button, and if you’d like to be notified of future articles, hit that “Follow” link.