This month, the U.S. government released a financial report for 2017. Basically, this is what the U.S. government does every year, just as large companies like Apple or Warren Buffett's Berkshire Hathaway publish their own annual reports.
However, unlike Berkshire and Apple, whose financial reports tend to show positive results, the US government financial reports are a real horror movie.
At the very beginning of the report, the government explains that the "net loss" for the year amounted to $ 1.2 trillion. This is more than the size of the Australian economy.
This is not a conspiracy theory or some kind of fantasy. This is the US Treasury Secretary, who publicly states in the pages of his annual financial statement for the year that the federal government has lost $ 1.2 trillion.
The most interesting thing is that 2017 was a great year: there was no war, there was no recession, there was no financial crisis.
In his opening letter, in fact, the Minister of Finance was proud to say that "the country has seen economic growth in 2017: unemployment is at its lowest level since February 2001, consumer and business confidence is at 20-year highs, inflation low and stable. "
Everything was amazing, even total government revenue was a record $ 3.3 trillion per year.
Nevertheless, despite all the good news and record levels of revenue, they managed to sustain a loss of $ 1.2 trillion.
If government losses totaled $ 1.2 trillion in a good year, how much will they lose in that year when a real recession or war, or a major banking crisis?
What is even more interesting: how long will such an unstable state last?
But that is not all. Further in the report, the government analyzes the state of its own assets and liabilities, effectively calculating their "net worth".
The US government has “net assets” hopelessly negative: minus $ 20.4 trillion (p. 55 of the report).
And this is worse than the result of the previous year: minus $ 19.3 trillion, which means that the "net assets" of the government fell by about 6% year on year.
To finally clarify the situation, negative $ 20.4 trillion in net assets means that the government has taken into account the value of all its assets. Of each tank. Each aircraft carrier. Every acre of land. Every penny in the bank. And then they deducted a huge amount of their obligations, as well as public debt.
If the government were business, it would have gone bankrupt long ago. In addition, the government separately calculated its long-term obligations in the field of social security and medical insurance. And in this and in another sphere money runs out.
And according to the government’s calculations (on page 58), the "total cost of future expenses besides future income" in the social security and medical insurance system will be minus $ 49 trillion.
In fact, this means that the two largest and most important programs – pension and health insurance – in the United States are insolvent by almost $ 50 trillion.
In total, government debt is almost $ 70 trillion. It is noteworthy that this news will not appear on the front pages of newspapers.
The media has not yet made a single statement about the miserable state of the dangerously unstable finances of the federal government. Of course, tomorrow morning the sky will not fall on our heads, and no terrible catastrophe will happen. But it’s worth remembering the story to find dozens of examples of once dominant powers paralyzed by excessive debt.
It may take several years to fully experience the consequences of this. However, it is foolish to assume that this time everything will be different.