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Financial Armageddon: Should a Rational, Thinking Person Be Worried?

Financial Armageddon: Should a Rational, Thinking Person Be Worried?

Monday, May 07, 2012 4:01

Financial Armageddon: Should a Rational, Thinking Person Be Worried?

By Robert Barone May 07, 2012 3:05 pm

Here are the numbers and the assumptions behind them. You be the judge.

MINYANVILLE ORIGINAL You've probably seen them in your email, or even on TV – I'm talking about the "approaching financial Armageddon" forecasts. People must be responding to them, because they keep on appearing in my email – several per week, and others I know get them too.

Some of these forecasts discuss the explosion in the Fed's balance sheet (i.e., money printing), while some talk about the risk to the dollar's status as the world's reserve currency and what that means for interest rates and the borrowing ability of the US Treasury. In reality, all of these worries boil down to the deficit, the debt, and the ongoing unfunded promises made by governments, especially the US federal government.

So, should a rational person be concerned with the histrionics of the predictors of doom? After all, even a broken clock is right twice a day.

To answer this, look at the table below, which shows the six largest categories of federal expenditures in '00, '12, projections for '16, and their associated compounded annual growth rates, or CAGR. Much of this data comes from the website, USdebtclock.org. Caution – that website is not for the faint of heart.

The six expense categories shown account for nearly $3.1 trillion of spending in 2012, represent more than 86% of total Federal spending and account for 137% of taxes collected... Read more>>Financial Armageddon: Should a Rational, Thinking Person Be Worried?



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