With more focus on the sorry state of affairs in Spain, the Italian economy and the delicate situation faced by Greece, Portugal, and Ireland, the $15.9 trillion of national debt of the U.S. has taken a backstage. This means that the burden on each of its citizen is $50,863. Is this figure not more than double of that of Spain? Not only that, there is a continual swelling in its national debt; which is really quite frightening! And only a miracle could make this disappear! There is some respite at least that U.S. does not have to pay out the high yields as Spain. Otherwise, U.S. would be really broke and assailed with a shocking credit crisis!
The level of the national debt is so high that it will take very many years; ten years to say the least; for complete pay-off or even become manageable! Radical efforts must be taken to tackle this mammoth difficulty or the consequences will be very bitter and far-reaching.
As per George Leong, contributor to Investment Contrarians & useconomicoutlook2013.com in his article titled America: The Land of Debt, whoever be the President: Obama, Mitt Romney (the Republican hopeful), or any other; he/she has to prioritize on deficit cuts. He/she must work up a strategy that will help to reduce the national debt and in the process, advise some states to boost up their financial state.
If there is a considerable cut back in fiscal spending, it could badly impair the economy; as per the Congressional Budget Office, which has predicted that if there is reduction in the spending in 2013, there could be shrinking in the U.S. economy by 0.5%. The rate of unemployment is quite high and there is a diminishing flow of the money into the treasury and these factors pose vital problems.
There is a possibility that the major cuts will affect the chief six areas concerned with budget: Medicare/Medicaid, Social Security, defense/wars, income security, federal pensions and interest on the debt; the last, which amounts to $225 billion! There could be additional cuts in Social Security and may be federal pensions. If we consider the matter reasonably, it makes sense to employ cuts and austerity measures.
The solution every time will not be quantitative easing! Printing more and more money cannot make the national debt crisis disappear! There is need for urgent action!
Why has the U.S. market been focusing more on the eurozone debt crisis developments, when the real spotlight should have been on its own debt and deficit issues?
As per David Dyer in his article titled "America: Land Of Indefinite Corporate Power, Debt, QE', it will be obligatory for the masses to pay up taxes, requisite fees and suffer the bloated inflation. They have to bear the reduction in their income; while the elite corporate, bribe-filled politicians and other such noteworthy public figures will be exempt from such necessary obligations. They will engage in recreation while the common man sweats it out.
In January 2010, the Supreme Court ruled that corporations are persons with electioneering rights and can attempt to sway elections by authority of the Citizens United case. Even Mitt Romney who is in the race for the President's post, said that "corporations are people".
David Dyer further writes that the liberties of individuals suffered a setback under President Obama, who was supported by Congress, when the National Defense Authorization Act was signed on December 31, 2011. By this, even in the absence of legal counsel, a judge, a trial, or a jury of peers, if the President's office decided, there could be indefinite detention of American citizens. Is it any different from the dictatorial system of control of citizens and eventually obliteration like the Stalin, Mao, Hitler and Mussolini?
Congress has increased the fiscal figures of the USA to above $16 trillion. If the unfunded figure is to be considered, it will be more than $50 trillion. There is also the internet censorship and dissent that add to the common man's blockade to right to life and liberty and hence simple happiness. The quantitative easing is not QE3; rather, we could label it as QE infinity. More the dollars that are printed, lesser will be their values.
Thus the American has been assailed with a host of problems and they are all going to mount up. After all, the basic needs for living have also risen in cost. And the sovereign debt of the USA has also been downgraded from AA to AA- by Egan-Jones rating agency. With QE infinity, there will be no limit to the deficit spending. Budgeting will take a back stage. This will propel the prices of commodities, hard assets, etc.
Will it finally contribute to the collapse of the financial situation of America?