Posts
The
US Government Lost $1.2 Trillion In 2017
27
February, 2018
Earlier
this month, the United States government released its annual
financial report for
the year 2017.
This
is something the government does every year, similar to how large
companies like Apple, or Warren Buffett’s Berkshire
Hathaway,
publish their own annual reports.
Unlike
Berkshire and Apple, though, whose financial reports typically show
strong, positive results, the US government’s financial statements
are a complete horror show.
Right
at the beginning of the report, the
government explains that it’s “net loss” for the year was an
unbelievable $1.2 TRILLION.
Read
that number again.
$1.2
trillion. That’s simply staggering.
It’s
larger than the size of the entire Australian economy… and
constitutes a loss of more than $2.2 million per minute.
This
is not a conspiracy theory or irrational fantasy.
This
is the Treasury Secretary of the United States of America publicly
announcing that the federal government lost $1.2
trillion on
page ‘i’ of its annual financial report.
What’s
even more alarming is that 2017 was a great year.
There
was no war. No recession. No epic financial crisis.
In
his introductory letter, in fact, the Treasury Secretary proudly
stated that “[t]he
country enjoyed a pick-up in [economic] growth in 2017. Unemployment
is at its lowest level since February 2001, consumer and business
confidence are at two-decade highs, and inflation is low and stable.”
In
short, everything was awesome in 2017.
Even
the government’s overall revenue was a record high $3.3 trillion
for the year.
Yet
despite all that good news… despite all those positive developments
and record revenue… they STILL managed to lose $1.2 trillion.
If
the government loses $1.2 trillion in a GOOD year, how much do you
think they’ll lose in a BAD year? How much will they lose when they
actually do have a recession to fight? Or another war. Or a major
banking crisis?
More
importantly, how long can something so unsustainable possibly last?
But
the fun doesn’t stop here.
Further
in the report, the government reviews its own assets and liabilities…
effectively calculating its “net worth”.
It’s
just like how an individual might calculate his/her own net worth–
you add up the value of your assets, like your home, car, and bank
account balances. Then subtract liabilities like mortgage and credit
card debt.
The
end result is your net worth. And hopefully it’s positive.
The
government’s is hopelessly negative: MINUS $20.4 trillion. (See
page 55 of the report.)
And
that’s worse than its result from the previous year’s MINUS $19.3
trillion– meaning that the government’s net worth decreased by
about 6% year over year.
To
be clear, a net worth of negative $20.4 trillion means that the
government added up the values of ALL of its assets. Every tank.
Every aircraft carrier. Every acre of land. Every penny in the bank.
And
then subtracted its enormous liabilities, like the national debt.
The
difference is negative $20.4 trillion, i.e.
the government has far MORE liabilities than it has assets.
If
the government were a business, it would have gone bankrupt long,
long ago.
On
top of that, though, the government separately calculated its
long-term liabilities from Social Security and Medicare.
As
we frequently discuss,
both Social Security and Medicare are running out of money.
And
according to the government’s own calculations (on page 58),
the “total
present value of future expenditures in excess of future revenue”
for Social Security and Medicare is MINUS $49 TRILLION.
Essentially
this means that the two largest and most important pension and
healthcare programs in the United States are insolvent by nearly $50
trillion.
Altogether,
the government is in the red by almost $70 trillion.
It’s
remarkable that this is not front page news.
There
has not been a single utterance from mainstream media about the
pitiful, dangerously unsustainable finances of the federal
government.
I’m
certainly not suggesting that the sky is falling, or that there’s
some imminent disaster that will strike tomorrow morning.
But
any rational person needs only look to the pages of history to find
dozens of examples of once dominant powers who were crippled by their
excessive debts.
It
may take several years to feel the full impact. But it would be
utterly foolish to believe that this time is different.
* * *
And
to continue learning how to ensure you thrive no matter what happens
next in the world, I encourage you to download
our free Perfect Plan B Guide.
