The US Spirals the Drain, the Endgame Is In Play

Denninger runs the numbers -

Our total debt service is projected (it's not quite over!) to be 4.63% of the budget, or about $165 billion. That's approximately 7% of revenues, incidentally.

That's an effective interest rate of about 1.27%.

Yes, 1.27%.

Now what happens if we take no more debt at all but rates normalize to 5%?

That would be $672 billion, or about $500 billion more than it is today. Incidentally, that's fifty-two percent of all (personal and corporate) income taxes, up from today's thirteen percent.

Of course the CBO says we will run about $1 trillion in deficits for the next ten years. Let's presume it's five years, and we'll give it the $1 trillion, although I think that's low - maybe by 25% or more.

So let's add $5 trillion to the total, for $18.5 trillion, and apply a 5% rate to it.

That comes to $925 billion, or dangerously close to all personal income taxes, which are $1.061 trillion.

Got it folks? All personal income taxes, or if you prefer all FICA and Medicare taxes, will go only to pay interest. 

We won't get there. Before that day comes the world, which buys our debt as a "safe haven", will discern this math and cut us off. It is a certainty. Look at what happened with Greece, where literally within days short-term interest rates went to 10% - a rate that, were it to happen here, would cause The United States to blow up monetarily and politically right here and now.

Even Ambrose Evans-Pritchard sees the wall now -

I apologise to readers around the world for having defended the emergency stimulus policies of the US Federal Reserve, and for arguing like an imbecile naif that the Fed would not succumb to drug addiction, political abuse, and mad intoxicated debauchery, once it began taking its first shots of quantitative easing.

My pathetic assumption was that Ben Bernanke would deploy further QE only to stave off DEFLATION, not to create INFLATION. If the Federal Open Market Committee cannot see the difference, God help America.

The Real Effect
What individuals don't get, is that when it becomes obvious that we are screwed as a country, it's too late to do anything about it. For instance, when CNBC comes on the air and basically states 'Welcome to the American Union" do you really think that you are going to have a dollar to spend? Let me rephrase, you could have a million dollars in your hands, is anyone going to accept it?

Let us consult the whipped horse of prognostication, circa 2008 -

The long and short is they are bleeding the real assets out of the United States and passing them into foreign control. Make no mistake, they will bleed this country dry. Savings, checkings, 401K, gold, assets, they want it all and will not stop until they get it. The only companies that survive will be those that primarily serve the industrial military complex. Overnight this country will be transformed into the new prison state for the Global Order. Get food, get water, get a gun and get ready to defend yourself.

We're running on fumes folks...