A few weeks ago in February, the United States Treasury released its annual financial report for 2017. The results were anything but encouraging. Downright scary would be a more appropriate summary.
The report starts out by sharing the federal government’s loss figure for the past year. The Treasury very openly admits that it suffered a total net loss of an eye watering $1.2 trillion (see page “i” of the annual report). This means that the government was losing a staggering $2.2 million every minute. To put the trillion dollar plus loss figure in perspective, it is about equal to the entire yearly economic output of the country of Italy.
You can not call it a a conspiracy theory either. The Treasury Secretary himself put the report together and certified it. This all occurred in a record breaking year for federal government income. The 2017 Financial Report indicated that Uncle Sam pulled in an all time high amount of over $3.3 trillion in revenue last year alone as these graphics show:
The Treasury Secretary called this a banner year for the country, claiming it:
“enjoyed a pick up in growth in 2017. Unemployment is at its lowest level since February 2001, consumer and business confidence are at two decade highs, and inflation is low and stable.”
If 2017 was supposedly such a great year economically, this begs several questions. How much money would the government lose if they had a significant war to fight or a recession to battle? What happens when another banking crisis erupts? Most troubling, how long can they keep up this unsustainable financial position?
Looking deeper into the report, the government shares its net worth. This figure is simply the value of the government’s assets minus its liabilities. What remains is supposed to be a positive net worth.
In the case of the government, the incredibly negative figure is minus 20.4 trillion (as page 55 in the report reveals). This number was up six percent from the previous year’s negative $19.3 trillion position. This over $20 trillion negative net worth signifies that the government’s liabilities are massively more than its assets.
The worst of the news is that this negative net worth does not even take into account the gaping black holes in Social Security and Medicare. The annual report reveals this data on page 58. It shows that today’s value for future expenditures that exceed future revenue is an astonishing negative $49 trillion. You could hardly make this stuff up if you tried.
Is Your Retirement Portfolio Protected from the U.S. Government Balance Sheet?
Tallying up the government’s negative net worth of nearly minus $20 trillion with the insolvent healthcare and pension programs of almost minus $50 trillion gives you a staggering total. The government has a total negative position of about minus $70 trillion. They can never hope to cover this. Fortunately you do not need to lose sleep at night worrying about how these federal government balance sheet figures will eventually impact financial markets and the real economy.
You can rely on gold to provide you with a real insurance policy as the federal government continues to financially deteriorate. Gold demonstrates thousands of years’ track record in maintaining and growing its store of value in these kinds of financial times. It will be your retirement portfolio hedge as financial markets decline.
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