Us National Debt

Assumptions GDP Growth Tax Revenue Spending Inc. Debt Interest %

1.032 0.19 1.075 0.05

(in trillions) Annual Spending (2008) Social Security 0.608 Medicare 0.386 Medicaid 0.209 Welfare 0.324 Interest on Debt 0.261 Disc. Spending Total:

50 45 40 35 30 25 20 15 10 5 0

3.2% growth 19% of GDP is collected as Taxes 5% interest on debt (very optimistic)

1.114 2.902 Trillion

(in trillions) Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

GDP

14 14.448 14.91034 15.38747 15.87987 16.38802 16.91244 17.45364 18.01215 18.58854 19.18337 19.79724 20.43075 21.08454 21.75924 22.45554 23.17412 23.91569

**Numbers might be off, but this gives a general idea** Tax Rev Spending Sur/Defic Nat. Debt Defic/GDP Debt/GDP 2.66 2.902 -0.242 10.8 1.73% 77.14% 2.74512 3.11965 -0.37453 11.042 2.59% 76.43% 2.832964 3.3536238 -0.52066 11.41653 3.49% 76.57% 2.923619 3.6051455 -0.68153 11.93719 4.43% 77.58% 5.41% 79.46% 3.017174 3.8755314 -0.85836 12.61872 3.113724 4.1661963 -1.05247 13.47707 6.42% 82.24% 3.213363 4.478661 -1.2653 14.52955 7.48% 85.91% 3.316191 4.8145606 -1.49837 15.79484 8.58% 90.50% 3.422309 5.1756526 -1.75334 17.29321 9.73% 96.01% 3.531823 5.5638266 -2.032 19.04656 10.93% 102.46% 3.644841 5.9811136 -2.33627 21.07856 12.18% 109.88% 3.761476 6.4296971 -2.66822 23.41483 13.48% 118.27% 3.881843 6.9119244 -3.03008 26.08305 14.83% 127.67% 4.006062 7.4303187 -3.42426 29.11314 16.24% 138.08% 4.134256 7.9875926 -3.85334 32.53739 17.71% 149.53% 4.266553 8.5866621 -4.32011 36.39073 19.24% 162.06% 4.403082 9.2306617 -4.82758 40.71084 20.83% 175.67% 4.543981 9.9229614 -5.37898 45.53842 22.49% 190.41%

Broad Points

in Trillions USD

Point of no Return

Our National Debt

GDP

Tax Rev

Spending GDP production (goods sold in economy) Spending

Nat. Debt

Taxes collected

Final Thoughts

The reality of this data shows that spending (entitlement programs) must be cut back significantly and taxes must be increased signficantly in order to make good on our debt obligations. The political reality is that neither of these options will happen, maybe an increase in taxes, but they can only be increased by so much before the economy and jobs market take a major hit. A currency debasement must occur in order to bring the debt and deficits in line. How big of a debasement is anyone's guess, but I'll wager on a 50% to possibly 75% decline within the next decade. That sounds like a major decline, but that's only 7% inflation for the next decade for the dollar to decline by 50%. The trillion dollar question here is… what happens when you factor in declinning oil exports and the end to cheap energy? The assumption of constant real GDP growth may have been the "inconvenient truth" that Al Gore was referring to!

What's really amazing is that this doesn't include the $10 Trillion in bailouts for Freddie/Fannie and backing up countless banks! Inflation is a monetary phenomena. Ex. Feds creating more money Hyperinflation occurs when there is a loss of confidence in the currency. By debasing the dollar, our national debt decreases in real dollar terms and our products become cheaper to Foreigners which will increase our exports! By cutting back on spending,benefits and increasing taxes massively we can slowly payback our debt and realize lower living standards and higher unemployment If you were the government and wanted to remain in power, what do you do? (*Hint* Start the printing press)