Our federal government is spending about $10 billion per day of which about $4 billion is borrowed. If we continue on this path eventually any GDP growth will pale in comparison to the growing debt. We will reach a time when our growing debt will choke off any chance of economic growth. We are in dark uncharted waters. Our debt continues to grow 2-3 times faster than our GDP. This course, if unchecked, will run us right up on the rocks of bankruptcy.

Do not doubt that the entire debate over whether to raise the federal debt ceiling limit is nothing more than a cynical charade. The debt ceiling limit will be raised ( for the 75th time in 50 years) because if we do not raise it we can no longer deficit spend. If we can no longer deficit spend we would have to cut $ 1.6 trillion ( this years projected deficit) out of the $ 3.6 trillion budget. This amounts to a cut of 44%. Trying to find a cut of this magnitude is next to impossible, and even if we did, it would cause an 11% decrease in our GDP, ( $1.6 trillion cut out of $14.8 trillion GDP) a one time contraction larger than any other time in our history including the Great Depression.

Nor is the debate about defaulting on our debt obligations. There is sufficient current annual income (about $2 trillion) to service our current annual debt interest payment ($214 billion) and continue to pay our creditors.

So, soon our Great Leaders will announce a phony compromise calling it a Great victory for both sides. The debt ceiling limit will be raised by a couple of trillion dollars and in a year and a half or so we will have the same cynical non-debate.

Unless, of course, we are on the rocks and bankrupt by then

Roy F. Grieder, a retired airline Captain, Henniker, NH

Copyright © 2011 Roy F. Grieder - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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