US Debt - Out of Control

The United States national debt is out of control with spending and liabilities through the roof, and the problem of not enough income coming in through taxes. The problem is that the US cannot tax people more or they will suffer an economic recession - yet, they cannot spend more either, or inflation could get out of control. This is what experts are calling a Catch-22, and there is no doubt the United States is in for a rough decade.

United States national debt now stands at $15.62 trillion (April 5, 2012), according to The US Gross Domestic Product sits at $15.1 trillion. Yup, our debt is more than our GDP, and that is certainly not a good thing! The gross debt to GDP ratio is above 103 percent.

The real problem, however, sits with the United States unfunded liabilities, such as Medicare and Obama(93023)Credit: Security. Our Social Security liability is currently $15.6 trillion, our Medicare liability is $82.06 trillion, and our total unfunded liabilities sits at a whopping $118 trillion dollars!

The biggest problem, in my opinion, is the economy - unemployment rate in the United States is above 8 percent. This leads to less tax revenue for the government. Current tax revenue is $2.26 trillion, and current spending is $3.58 trillion. To put it simply, we are spending more than we take in!

The picture of US debt does not get any better looking forward, with President Obama signing a budget that puts us out further in debt. To be fair, Obama doesn't have much of a choice, because if he cuts spending, we would go into a recession.

US DebtCredit: USDebtClock.orgFast forward to 2016 and you will see where we are header - disaster. US National debt is projected to hit $21.6 trillion by 2016, with our GDP projected to increase to only $17 trillion - a ratio of debt to GDP of 127 percent!

So the question is, if you are reading this and wondering, what do I do? There is not much we can do to stop our politicians reckless fiscal policies, unfortunately, because so much damage has already been done. But we still have our voting power, and our voices - we need to tell our politicians to get our debt under control before it's too late.

I think we are in for heavy inflation in the coming years, due to the Federal Reserve's tendency to print money in an effort to prevent deflation and increase employment. The CPI says that inflation is currently only around 2.5 percent, but anyone who has filled up their cars with gas or seen health care costs recently knows that the CPI is really full of it. Inflation is here, and only going to get worse. Don't believe that the Fed won't do another round of QE3, either. Although they said they won't do more Quantitative Easing, I strongly feel they will because they have no other choice. They can't just come out and said "yes, we're going to do more QE" - they are downplaying it now but I think they will do more QE by summer, if not sooner. 

I am a strong believer in precious metals, as a hedge against inflation and fiscal stupidity. As the dollar loses value, gold gains in value. Expect the dollar to lose much more value over the years because of QE. I also like real estate as well, although I expect gold to perform better. Gold should be over $5,000 an ounce this decade, but I urge people to consider value over price. Price means nothing, value is everything!

Besides gold, I also really like silver because of its multiple uses. Silver is used in almost everything we use today, and it is also a monetary metal like gold. Silver is currently only $31 an ounce, very cheap! Some gold experts like Mike Maloney believe that silver can reach $1,500 an ounce. It could very well be the next big bubble, bigger than the tulip bulb mania! I am unsure of that price but I think silver will definitely eclipse AT LEAST $100 an ounce this decade.

US Debt and unfunded liabilities are a big problem - how do you think these problems will be solved?