You Owe $647,000 Because of Uncle Sam

America is bankrupt. The numbers say so. 

I was playing around over the weekend with the U.S. Debt Clock website and, my oh my, if you have arithmophobia (fear of numbers) then go ahead and skip the rest of this story. 

All in, each U.S. citizen represents $538,791 in assets. That’s household assets and U.S. total national assets. Sounds good. Richest country in the world—at least mythologically. 

But cast your eye at all the red ink. 

Not so pretty. 

Bit of a bloodbath, really. 

Social Security, Medicare, and all the various unfunded liabilities Uncle Sam and his congressional circus clowns have accumulated in our name amount to $541,737 per American. 

Liabilities exceeding assets…that’s the playground of bankruptcy. 

Now, sovereign nations don’t file for bankruptcy. They just keep on keeping on until the bond and currency markets have had enough of their debt-fueled shenanigans and walk away. At that point, it all goes pear-shaped. 

We’re not there…yet.  

Might never get there, though I am sadly betting that we do. 

But let’s continue with some numbers so I can give you a better sense of my bearish bet on dear ol’ Uncle Sam… 

The national debt now exceeds $31.5 trillion. That’s $94,273 per citizen or, more relevant, $246,867 per taxpayer, since there are a lot of citizens (like kids) who don’t pay taxes. 

Tax revenue is $4.6 trillion. But the federal deficit—how much Congress has overspent that tax revenue—is approaching $1.6 trillion. Officially, expectations were that that deficit for the fiscal year would be $1.4 trillion, but our wise and prudent congressional clowns have actually overspent their overspending amount (which helps explain why we have a debt-ceiling fight overhanging the global economy right now). 

Back to tax revenue for a moment: Each citizen represents $13,790 worth of income to the IRS. But that’s a far cry from that $94,273 in debt per citizen. 

That’s like someone with a $100,000 annual income sitting on a floating-rate home loan that exceeds $683,000 (floating rate because the U.S. is constantly rolling over its debt and is subject to interest-rate fluctuations). Managing that debt load every month is doable, but the margin for error grows thinner with each additional interest rate hike, and with every consumer purchase they make on their credit card. 

Disaster ultimately awaits. 

Back to the numbers… 

The U.S. economy is approaching $26.2 trillion in size, meaning debt is more than 120% of GDP. That’s a worryingly high number. Banana republic levels. And it’s set to expand if the U.S. economy slips toward recession because of the Federal Reserve’s devil-may-care attitude toward interest rate hikes. 

Now, let’s toss in state and local debt… 

Those legislative orcs aren’t quite as frivolous with taxpayer money, but they’ve racked up more than $3.5 trillion in combined debt or another $10,634 per citizen.  

All in, governmental debt in America is 134% of GDP. 

Right now, excessive debt seems not to bother too many people because the U.S. has (generally) paid its bills. I say generally because the U.S. has in fact defaulted before, despite mainstream media claims to the contrary. The 1933 gold confiscation episode devalued the dollar and bond holders lost out—that’s a default. Same with Nixon shutting the gold window in 1971. 

But onward… 

The typical American is on the hook for $14,176 in interest payments.  

Add in personal debts—mortgages, car loans, buying that bass boat on credit—and it amounts to a cumulative $24.3 trillion, or $72,620 per citizen. 

Again, that’s just the interest payments, not the actual debt itself. 

No worries, though. The average American family has $4,886 in savings. So there’s that. 

Median income, meanwhile, is $35,693, up just $4,000 since 2000—a 0.55% average annual increase. 

Then again, in that same period the median home price has pushed to $493,463 vs. $161,662 back in 2000—a 5.2% average annual increase…meaning home-price gains have grown 1,000x faster than income gains. Seems like a positive for those who own property, but it says more and more Americans are getting priced out of the housing market, meaning that the vaunted American Dream of homeownership is increasingly one of those dreams where you wake up and can’t remember what the dream was. 

And perhaps the most troubling number for me is this one: Currency and credit derivatives amounts to $645.2 trillion. These are the weapons of mass destruction that, on a relatively minor scale, knee-capped the global economy in the U.S.-inspired housing crisis of 2007-2009.  

If we stumble onto an event that rips though the derivatives market—like, oh, I don’t know…a debt-ceiling catastrophe promulgated by the circus clowns in D.C.—the collateral damage across the global economy is going to make 2007 look like a small-town carnival. 

Here at the end, the big takeaway is this: If you’re the typical American, you owe that $72,620 in personal debt for mortgages and loans on cars, boats, credit cards, etc. And because of state, local, and federal government profligacy, you have another $647,000 in debt overhanging your life. 

And naysayers wonder why gold is pushing up against record highs. 

Basically, what I’m saying is that the numbers tell the story of impending woe. The imbalances cannot continue.  

The beatings, as they say, will continue until morale improves. And morale will only improve after a crisis clears out crappy management. 

So…buy gold. Sit on gold. Keep it safe and secure. The day is coming when gold is going to shine like never before.