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THE PUBLIC DEBT
The Outstanding Public Debt of the world’s super power – the
United States as of 8th day of July 1998 is $5.5 trillion or US
$5,530,290,097,783 up from $5,368,022,982,421 in July 1997. Here is where it
gets confusing. The Treasury Budget for March claimed a budget surplus of $50
Billion. The Treasury gives the explanation of the "Deficit" as the
amount the government goes into debt each year (a surplus is the opposite),
while the "Debt" is the accumulation of all those deficits.
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NOT THE 1st
TIME
In 1996 President Clinton reported the deficit that year to be $107 billion
but the public debt increased that year by $261 billion. Were did the extra
$154 billion accumulated debt come from? This year’s reported $50
billion surplus actually accompanied yet another increase in the official
public debt of $162 billion or $435 million per day.
In 1996
President Clinton reported the deficit that year to be $107 billion but the
public debt increased that year by $261 billion. Were did the extra $154
billion accumulated debt come from? This year’s reported $50 billion
surplus actually accompanied yet another increase in the official public
debt of $162 billion or $435 million per day.
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HOW DOES IT WORK?
The documentary "Millennium Money" reported that for many years
government have been using creative accounting and incorrect and misleading
reporting to get around laws and give the appearance that things are better
than they really are. This is done by shifting projects off the balance
sheet, applying for temporary budget extensions, raiding the Social Security
Trust Fund or simply transferring excess spending into the next fiscal year.
These methods all create the illusion of reduced spending without incurring
the pain of actually making cuts. CONFUSION ON THE STREETS
With an estimated population of the United States of 270 million, each
citizen's share of this debt is therefore over $20,000. It is worth
remembering that the public debt belongs to the public – every man,
woman and child. The government accumulate this debt on your behalf.
In Australia and
the US there are a lot of people that just don’t understand the
difference between deficit and debt. During our last trip to the US, as we
traveled around and spoke with the "man on the street", many
believed that the reported surplus meant that President Clinton had in some
mystical way dealt with the "Public Debt" and making it simply
disappear.
THE INEVITABLE
QUESTIONS
When thinking about the non-sustainable nature of this mess, some unanswered
questions remain; We are in a period of a strong growing economy (currently
in the longest economic expansion in peace time history), lowest inflation
rates in over 20 years and a booming stock market. The government is
collecting the largest federal tax revenue in all history, yet it cannot
prevent the national debt from growing. Will they be able to prevent
exponential growth in the debt at the next economic downturn when revenue to
the government starts to dramatically deteriorate? Or how will they cope if
Y2K precipitates a even greater lose in revenue when the IRS computers start
to hiccup or go down? If the government can’t survive without raiding
Social Security and Pension trust funds now, what happens baby boomers start
to retire? What happens when people come looking for their pensions and
social security? People get angry when they don’t get paid. The US
Treasury bond market like every market relies on confidence. People buy
government debt on the understanding that one day the issuer of those bonds
and bills will honour them - with interest. What happens to the confidence in
that market when it realises that government is hopelessly broke and must
continue to issue new bonds to cover old bonds?
Philip Judge
Anglo
Far-East Company
Also
by Philip Judge
Philip Judge is the 3rd generation of a family that has had
substantial involvement in the Precious Metals markets. He has researched,
written and spoken on the gold, silver and commodities markets for over a
decade. Philip works in the marketing and operations department of The
Anglo Far-East Bullion Company, an internationally based Bullion Banking,
Investment Management and Financial Services Company
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