Global Government Debt: The Ultimate Bubble

As the US is the largest economy in the world and US $ is the global reserve currency, the world looks to it for direction.

But the US, along with many European countries and Japan, has been living beyond its means.

Robert Fisher, the President of the Dallas Federal Reserve Bank, made a speech in May 2008 acknowledging that the total unfunded US liabilities for Medicare and Social Security exceed $ 99.2 trillion. Which, of course, it doesn’t have.

That works out to $ 888,750 per family. These are funds that the US government needs to have sitting in cash in order to meet its obligations to American citizens.

And things are not getting better. The deficit in 2009 was $ 1.4 trillion, up from a record $ 485 billion the year before. The deficit in 2010 will likely be higher.

The bottom line: the US has lived beyond its means for decades and is going broke.

The same is true for many other countries. Dubai has defaulted on its debts, Greek debt has been downgraded, with Spain and the UK at risk of similar re-rating.

The consequences of this are likely to eventually be higher inflation, higher interest rates and the inability to intervene with even more debt if the financial crisis re-emerges.

Gold and silver are a hedge against these possibilities.

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