Originally posted at NewsMax Money News
After watching with intense interest the drama in Washington unfold over the last couple weeks, I am amazed at one simple fact. If you were an alien landing in America two weeks ago, you would be under the impression that the only issue is one party threatening to default on our debt if they don’t get what they want.
What I find shocking, absolutely shocking, is that NO ONE in the national press has been discussing the real issue — the approaching insolvency of the United States of America.
Our deficit is still obscenely large, the Federal Reserve has blown out its balance sheet to keep rates artificially low, and Obamacare costs have not hit yet.
If interest rates rise, even only a small amount, the insolvency of this nation will be revealed. Looking out into the future a couple decades, we will be $40 trillion in debt. We won’t be able to service it. That’s when the real default will happen.
No matter what your feelings are on Obamacare, everyone knows it will raise our required expenditures by a large amount. You can’t have millions of people added to the entitlement system and expect expenses will be lowered. That just doesn’t make sense.
Entitlement reform is a must because entitlements are the drivers of our mounting debt.
I won’t suggest a motivation for the lack of focus on the real issue, but if anything positive can come out of this recent fiscal tumult, let us hope it is a real national discussion in the media about American long-term solvency.
If we don’t deal with this, at some point Atlas (read bond market) will shrug.