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America’s Ticking Deficit Time Bomb

Posted by Larry Doyle on September 10, 2012 8:35 AM |

A few weeks back as my son was preparing to go back to college for his second year we discussed the prospects for America’s future. As with many within his peer group, he is very interested in a wide array of social and economic issues of the day.

After touching upon some of these issues, I then directed his attention toward the clock just to the left of this commentary that runs every second of every day. That clock measures our collective level of indebtedness without incorporating the costs of our entitlement programs.

I informed my son that the compounding cost of the debt was nothing more than a choke hold on opportunities for him and all of those in his generation and other generations to come. 

The hacks in Washington on both sides of the aisle who display little regard for these debts do my son, your children, and all of us a level of disservice that is indescribable.

Last week President Clinton informed America that managing a budget and the deficit is about arithmetic. What is the math game being played with our entitlement programs? It is spelled P-O-N-Z-I. Many a politician will continue to play the fear mongering that is core to the continuation of the Ponzi-style financing for our entitlement programs. Ponzi schemes ALWAYS fail and nations fail along with them. Who will be the adults in Washington and elsewhere who will introduce meaningful budgetary and entitlement reforms for my son, your children, and the future of America?

On that note, I encourage you to take the mere few minutes to view this clip which highlights the critical issues and numbers embedded within our nation’s deficit.  Watch this clip and share it with your friends, families, and neighbors.

Politicians DEFINITELY lie BUT the numbers NEVER lie.

Tick, tick, tick, tick, tick . . . . (I encourage you to expand the screen so you can view the data and fully appreciate the impact of this clip)

Navigate accordingly.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.


  • Rob

    The next generations have all been sold out by the runaway and wreckless spending.

  • Peter S.

    tick, tick, tick…a tell-tale heart.

  • fred


    And if that ain’t enough, from John Hussman’s commentary over the weekend….”On the subject of Fed leverage, it is one thing to purchase long-dated bonds when yields are high. It is another to purchase them when yields are at record lows and very small yield changes are capable of wiping out all interest income and leaving the Fed in a loss position when it is already levered 53-to-1 (2.9 trillion of assets on 54.6 billion of capital, according to the Fed’s consolidated balance sheet). At a 10-year Treasury yield of just 1.6% and a portfolio duration of about 8 years (meaning that a 100 basis point move causes a change of about 8% in the value of the securities held by the Fed), it takes an interest rate increase of only about 20 basis points (1.6/8) to wipe out a year of interest on the portfolio held by the Fed and push it into capital losses. It would then take another 24 basis points to wipe out all of the capital on the Fed’s balance sheet. Of course, they don’t mark the balance sheet to market. So the public might not be aware of those losses, but that would only mean that we would have an insolvent Fed printing money on an extra-Constitutional basis to fund its own balance sheet losses instead of public spending”.

    • Andrew

      An outstanding analysis, thank you for sharing. If you wouldn’t mind, a link to the article so that I could read the rest?

      • LD


        I will help out here. I believe Fred is referring to,

        Late-Stage, High Risk

        • Andrew

          LD, Thanks. Your analysis is spot on, too.

  • coe

    A problem deferred is not a problem solved…pretty simple analysis of a very complex financial scenario…I think that step one in the fix – i.e. acknowledging the problem – has become a third rail issue and is one of many that trips the wire of partisan politics – consider how Ryan has been demonized by the Democrats for his “unfeeling” attempt to bring some sort of discipline to the budget. Too many sacred cows are embedded in every single line item – even in this sweeping summary – cut pensions – the hue and cry would be loud and strong from those who believed their career work had earned them the contractual right to this safety net; cut the various entitlement programs in medical care and social services – don’t get me started; cut the operating budget – too many “discretionary” programs have become so thoroughly embedded in the fabric of the budget it would be unthinkable to pry them out; cut defense – the military would be apoplectic/and the country might indeed be vulnerable to forces that would try to destroy us; cut the “people” line item – sacred cows in headcount and “necessary” government service would scream bloody murder; so that leaves revenue generation – in the absence of an economy that is growing, the only place to turn is to raise taxes – never a popular solution and one filled with controversy…the author of the clip has indeed made a simple case and pointed us in the right direction – will anyone see the light – doubtful…

    I’m not sure that the comparison to Greece is a fair one, however…sadly, we may actually be alive to witness the future shock…if not us, then maybe our kids; if not our children, then maybe our grandchildren…the fix must start now – somehow we must stop the exponential growth in borrowing that is dangerously unsustainable…the solution screams for new leadership – last i looked Obama has always stood for bigger government/more entitlements/and gimmicky budgetary accounting – it isn’t working – let’s try something/someone new!

  • Ted

    Larry- my daughter is getting ready to head back to UCLA next week for her sophomore year and we had the same discussion about debt.

    California is already preparing a targeted ponzi scheme with an income tax ballot initiative this fall.

    The worst part of all this is that if something isnt done about it, the separation between the haves and have-nots will only more dramatically widen.

  • Chris

    I thank the kids every day for their loans to my generation. I look at the youth as a free credit line. And until they create a voice, with votes, they can’t disagree with it. So, thank your children for me too.

  • Chris

    LD-I was being sarcastic. That is not my mentality.

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