Home > eNews Article > Washington's Dirty Little Secret

Washington's Dirty Little Secret

from the August 19, 2008 eNews issue
http://www.khouse.org (visit our website for a FREE subscription)

It would seem the United States' economic troubles are far from over. In the month of July consumer prices jumped significantly. When compared to last year, it is the biggest increased in more than 17 years. Rising inflation has forced most American families to tighten their budgets. Meanwhile, mortgage statistics show that US foreclosure activity rose 55 percent in July compared to a year ago. There are currently more than 750,000 properties on the market that have been repossessed by banks - that's almost 20 percent of all existing homes for sale.

Professor and former chief economist of the International Monetary Fund, Kenneth Rogoff, recently warned that the crisis is far from over: "The US is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say the worst is to come. We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper, we're going to see a big one — one of the big investment banks or big banks."

David M. Walker, former Comptroller General of the United States, has also warned that the nation is on the path to financial ruin: "What they don't talk about is a dirty little secret everyone in Washington knows, or at least should. The vast majority of the economists and budget analysts agree: The ship of state is on a disastrous course, and will founder on the reefs of economic disaster if nothing is done to correct it."

The United States' national debt is already more than 9.5 trillion dollars - about 130,000 dollars per family of four. However that amount does not include the Social Security deficit or the Medicare budget shortfall. If the US government conducts business as usual over the next few decades that total could reach 50 trillion or more when adjusted for inflation. According to some projections, just the interest payments on a debt that big would be as much as all the taxes the government collects today. And every year that nothing is done about it, the problem grows by 2 trillion to 3 trillion dollars (yes, that's with a "t"). Put another way, the national debt is currently growing at a rate of more than 1.85 billion dollars a day! It doesn't take a genius to recognize that an economic upheaval is in the making.

Our current economic predicament is consistent with the Bible's description of the end times. The black horseman of Revelation 6 calls our attention to, not just famine at the onset of the Tribulation, but also to an economic condition where a man's daily wages are so small, he can barely support himself much less his family. What kind of condition would produce that? The answer is one which has emerged today and which, for the first time in the history of mankind, is for all intents and purposes universal: monetary inflation.

If the United States is indeed facing a financial crisis, what should we do about it? How can we prepare for times of economic uncertainty? Chuck tackles these tough questions in his briefing titled The Vortex Strategy.