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John Williams: The US Has $100 Trillion in Debts & Obligations

With so many questions surrounding the stability of the financial system, John Williams of Shadowstats issued this warning in his latest commentary: “Annual Deficits of $5 Trillion Are Not Sustainable. Significant space was taken up in the government’s latest financial statements to assess the sustainability of the current system. Most of the material covered was overly misleading nonsense.”

John Williams continues:

“Those looking at the current $80 trillion of government debt and obligations, who think such is stable, need to consider that the circumstance is getting worse each year by at least $5 trillion. Taxes cannot be raised enough to bring the system into balance for one year, let alone for the ongoing future.

Every penny of government spending—except for Social Security and Medicare—could be cut and the system still would be in annual deficit. Massive cuts have to be put in place (an absolute necessity with the social insurance), if there is to be any hope of restoring long-term solvency for the United States government....

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“There is no political will apparent among those currently controlling the White House and Congress to do so. Accordingly, the U.S. will be doomed to an eventual hyperinflation, as the government prints money to meet its obligations. That process already has started. There is little time.

The next Fed action to help the economy (a.k.a. prop-up banking system liquidity), easily could be the one that pushes the U.S. dollar into the abyss. Much greater detail, again, will follow with the new hyperinflation report.”

Regarding US debts & obligations, Williams revealed the frightening truth about the situation: “Where the “Alternative” data used here (by the GAO) show $80.9 trillion of U.S. government debt, obligations and the net present value of the unfunded social security liabilities, as of September 30, 2011, that likely is shy of reality.

Adding estimates of government liabilities in, and exposures to Fannie Mae, Freddie Mac, the PBGC and FDIC easily could take that total into the $100 trillion range. Publicized estimates of U.S. government exposure beyond the $100 trillion mark usually included gross unfunded liabilities, which are not adjusted for net present value (NPV). NPV reflects the amount of cash needed in hand today to be able to cover a future obligation.”

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Eric King

KingWorldNews.com

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