The mislead country

The USA’s (and many other developed countries) current economy is built on a phony foundation of borrowing and debt. The economy should not have grown so much in the first place. In fact, the growth in the USA’s GDP has largely been contributed by borrowing more; its not due to production and savings. And this is not sustainable. No amount of government spending is going to rectify the situation. It will only lead to inflation. The government is already in deep debt and has no savings from which it is stimulating the economy. It is doing so by taking more debt and assuming that the economy will stimulate enough to get more revenue from future taxes in order to pay off the debt.

It is generally assumed that the future will always be larger than the present and that there will be capability to pay for the current debts in the future. This is an extremely flawed assumption given the crisis that we face due to the inevitable depletion of the fuel with the most ‘surplus energy’, crude oil.

The right thing for the USA to do right now is to take the pill of recession, cut the huge government spending and let the private, more efficient companies use the capital to produce goods.

A movie on USA’s huge debt

I strongly recommend this 30 minute movie on the growing debt of the USA which stands at $53 trillion as on now -

http://www.youtube.com/watch?v=O_TjBNjc9Bo

In the movie, a list of all countries arranged with decreasing trade surpluses is shown. The data is from the year 2007. In that list, China is at the top with a huge trade surplus, and at the bottom is USA with huge trade deficit! India stands 5th from the bottom!

The USA’s direct debt is $11 trillion. Add the medicare and social security obligations of the government and it balloons to $53 trillion.

This point has also been explained very well in Chris Martenson’s crash course at – http://www.chrismartenson.com/crashcourse