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» Bankrupt America:

Bankrupt America

Posted by on August 12, 2010 at 6:25 pm.

I remember yelling at Vern Ehlers when he tried to tell the crowd at his town hall meeting, that the U.S. treasury was going to buy back some of the treasury bonds the government issues to support the  massive debt it was accumulating. I shouted: “It’s not gonna happen Vern!”  I also remember many people in attendance looking at me like I was some kind of a nut.  That was in May 0f 2009.  Well, here we are in August 2010 and guess what? It’s not gonna happen Vern!  The total interest paid on US government debt for the first half of 2010 was 355 billion dollars. That comes to about 1100 dollars for every man, woman and child in America. That is just the interest payment for the last six months. That is at astronomically low interest rates. With about 36 percent of this debt at short term rates of less than 1 percent, and low rates for longer term debt, the deal can’t get any better.  The frightening possibility is a rise in interest rates. At current debt levels,  every 1 percent rise in interest rates will cost the U.S. treasury approximately 100 billion dollars in interest. According to Erskine Bowles (One Of Obama’s National Debt Commissioners) the interest on the U.S. Treasury’s debt will reach 2 trillion  a year by 2020.  This is a pretty rosy outlook in my estimation.  With historical interest rates http://www.federalreserve.gov/releases/H15/data/Annual/H15_TB_Y1.txt  much above the current interest rates,  the pain will only get worse as the treasury turns over this short term debt at higher and higher rates. To put things in (worst case scenario) perspective, if interest rates rose to 1981 levels (over 13 percent) the interest paid on U.S. government debt for 2010 would be roughly 2 trillion dollars. That is about 6000 dollars in interest charges  for every person in the country.  I see no good way out of this mess. As for paying off this debt; “It’s not gonna happen Vern!”  We here at Hammering Truth urge everyone to prepare for the worst and pray for the best.

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