Wednesday, April 6, 2011

2037 CBO Economic Implosion - It Could Happen Alot Sooner!!

The interest payment on the National Debt in 2010 was over 400 Billion dollars. That was with an average interest rate for the year at about .025%. This interest rate controls how much the Federal Government has to pay on the debt, kinda like a credit card, a low rate makes the payments lower and a high rate makes the payments higher. The Federal Tax Revenue for fiscal year 2010 was 2.345 Trillion dollars. So roughly about 17% of the total tax revenue of 2010 was used to pay just the interest on the National Debt. Compared with total expenditures of other programs: NASA 6 Billion, The Department of Education 31 Billion, and The Department of Transportation 26 Billion dollars. The bad news is the historical average interest rate is 6.45% with an all time high of 20% in March of 1980. Can you imagine the dire consequences if the interest rate was to just go up to the historical average? If the interest rate climbed back to just the historical average the interest payment on the National Debt would be more than the total tax revenue for the entire year! This would leave the Federal Government with just two options: to default on the National Debt or to resort to devaluing the dollar. Brazil when faced with a similar crisis several years ago devalued their currency. When you devalue currency this lead to hyperinflationism. This would lead to the quality of life in the U.S. dropping by at least 25% if not a whole lot more. The western European nations would have a higher quality of life than the U.S. America as we know it would cease to exist, but this is a worst case scenario. Lets hope and pray that our politicians wont let it get this bad. What we need is honest leadership in Washington on this, and we need it NOW!


2037 Predictions-Motivation for Law Makers
CBO Budget Model Predicts Crash Of US Economy in 2037

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