G&G Investment Society (GGIS)
e-Newsletter
Debt Gone Wild!!!
Karibu (Welcome) G&G Readers,
In my never-ending attempt to bring to light the glaring problems of our ever increasing deficit, I do tons of reading and research to show you the mess we're in, and why it is such a good idea to diversify and allocate a portion of your investment portfolio outside of the dollar.
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** SIDENOTE: Oh…should I mention "Gold & Silver" hit all time highs this week. Never mind that I've been telling readers since Feb 2007 to purchase these two commodities. Well, it's still not too late. Stand-by for my report this weekend I'll be releasing to G&G Investment Society (GGIS) members my next long term 1000% investment pick. If you aren't a GGIS member, you better sign up today so you don't miss out on this one as well.
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I came across the breakdown you are about to read below and thought it was a good illustration of the problem we have in this country with financing our deficit spending.
(What appears below is from Jeff Berwick at dollarvigilante.com).
Remember, if you want the truth about America's financial state, you must go outside America and look at it from the eyes of those financing our debt to get the truth. I surely hope you don't think you will get the truth from CNN and FOX. Hint…Hint…check out the spin they put out right after the S&P said they were going to downgrade the US Dollar.
The definition of insolvency is having liabilities or debts in excess of their assets and being unable to service payments on the debt with existing income. The U.S. Government certainly qualifies in terms of having much more debt than assets. As for being able to service the debt, the time when they cannot is now drawing near.
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The U.S. government released their "official " numbers for 2010 recently and so we can update our chart of total U.S. government dent as calculated by GAAP ( Generally Accepted Accounting Principles)- the same accounting principles to which all U.S. companies must comply.
Total GAAP federal obligations rose to $76.3 trillion in 2010, up an astonishing $ 5.8 trillion since 2009. That is an increase of federal debt of $18,709 for every man, women and child in the U.S. in one year.
Versus liabilities, the U.S. government, on its own balance sheet, records assets of $2.667 trillion.
That's quite a glaring disparity. What are the chances they can make it up on income (taxes)? Zero. {pay attention here…}
Here is the 2010 income for the United States government:
• $1.061 trillion - Individual income taxes
• $940 billion – Social Security and other payroll tax
• $222 billion – Corporation income taxes
• $77 billion – Excise taxes
• 23 billion – Customs duties
• $20 billion – Estates and gift taxes
• $22 billion – Deposits of earnings
• $16 billion - Other
Note that they include Social Security payroll tax as "income". This is highly "fraudulent." Theoretically, these payments are supposed to be held and/or invested on behalf of the payee. But the U.S. government just includes it as revenue and immediately spends it (which is why, under GAAP, the U.S. now has such a massive unfunded liability).
So, if the $940 billion in Social Security payments are, rightfully, taken out of "revenue", then the actual income of the U.S. government was $1.44 trillion in 2010.
Mandatory Spending: $2.184 trillion
• $677.95 billion – Social Security
• $571 billion – Other mandatory programs
• $453 billion – Medicare
• $290 billion – Medicaid
• $164 billion – Interest on national debt
• $11 billion – Potential disasters costs
Non -Mandatory Spending: $ 1.368 trillion
• $663.7 billion – Department of Defense (including Overseas Contingency Operations)
• $78.7 billion – Department of Health and Human Services
• $72.5 billion – Department of Transportation
• $52.5 billion – Department of Veterans Affairs
• $51.7 billion – Department of State And Other International Programs
• $47.5 billion – Department of Education
• $42.7 billion – Department of Homeland Security
• $26.3 billion – Department of Energy
• $26.0 billion – Department of Agriculture
• $23.9 billion -- Department of Justice
• $18.7 billion – National Aeronautics and Space Administration
• $13.8 billion – Department of Labor
• $13.3 billion – Department of Treasury
• $12.0 billion – Department of Interior
• $10.5 billion – Environmental Protection Agency
• $9.7 billion – Social Security Administration
• $7.0 billion – National Science Foundation
• $5.1 billion Corps of Engineers
• $5.0 billion – National Infrastructure Bank
• $1.1 billion – Corporation for National and Community Service
• $0.7 billion – Small Business Administration
• $0.6 billion – General Services Administration
• $19.8 billion – Other Agencies
• $105 billion – Other
The numbers are pretty simple. The U.S. government had total real tax receipts of $1.44 trillion in 2010. This only pays for 66% of the Mandatory Spending, even if you got rid of 100% of the "Non-Mandatory" spending.
In other words, in order to balance the, the government would have to cut 100% of Discretionary Spending and 34% of Mandatory spending by 34%. What would that look like?
To do this, they would have to close every military base and lay off every serviceman in Armed Forces, shut down the Department of Transportation, the Department of Homeland Security and every other government agency, as well, and cut all Social Security, Medicare and Medicaid spending by 34%.
And that is just balance the government deficit. To actually start to pay off the government debt that they would have to cut 100% of the government and 100% of all Social Security and Medicaid spending.
To summarize, in order for the U.S. government to even have any chance of paying off any of it debts, it would have to completely disappear!
And even that doesn't take into account the possibility of greatly increasing interest expense. In 2010, the U.S. government paid $414 billion in interest expense. But that was at historically low interest rates. Considering the U.S. had approximately $13 trillion in "official" debt in 2010, which implies a 3.1% interest rate. At what interest rates interest payments on current debt outstrip total current government revenue (minus social security taxes) of $1.44 trillion? 11.1%.
Well, that's an ugly picture any way you want to look at it. If you were an investor, would you invest in a company that has a balance sheet like this? Whether you realize it or not, I guarantee 95% of you reading this newsletter are and don't even know it. You have other options:
Make a choice to today to exercise that option. You can start to learn how to insulate your financial portfolio to protect yourself from the dollars ultimate decline.
Sign up today to become a GGIS paid subscriber and finally take control of your finances. Stop doing what everyone else is doing because the masses are clueless of what's about to occur. Again, to sign up for GGIS: just send an e-mail to GGIS@gngassoc.com and/or visit our website at www.gngassociates.net and click on the "Products & Services" link and we'll get you signed up right away.
DON'T WAIT ANOTHER DAY!
- 1 year subscription - $99
- 2 year subscription - $189
- Lifetime subscription - $399
*** Membership Guarantee ... If you don't make your back from being a GGIS member by the end of your subscription...we'll refund 100% of your money back. That's how confident we are that this will be one of the best financial moves of your life.
So, Sign up today!!!
If you need a one-on-one consultation to learn how to implement these investments or any other on the GGIS portfolio, feel free to contact me to setup an appointment.
Until the next time!
Ankh Uja Snb (Life, Health & Strength)
Asar Gary Gray
Tax & Financial Consultant, RFC
G&G Associates
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866-361-3872 toll free fax
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LEGAL NOTICE: This work is based on SEC filings, current events, interviews, corporate press releases and what I've learned as a financial consultant. Nothing herein should be considered personalized investment advice. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
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