As we noted earlier this year, the United States’ current national debt is now at about$16.7 trillion and increasing at about $0.6 trillion a year now. It was increasing at about $1trillion year, but the automatic government cost cuts and increased taxes have slowed the bleeding some, though it is still a very significant shortfall. In fact, these amounts are such large numbers that it is difficult for us to understand, so I wanted to give some examples to help us understand it. The government's current situation is similar to a family that makes $100,000 a year, but spends$106,000 a year, with a credit card balance of$160,000 and adding $6000 a year to their credit cards. As you can see, this deficit spending could not continue for long. Eventually the credit card companies would stop lending them money. To continue the example further, the US government does own about
$250 trillion dollars in assets, so this hypothetical family would be living in a $2.5 million dollar home that they don't want to sell or can't sell. Our government does not want to have to sell the
Grand Canyon, for example, to China. If this family were a client of Magnolia, we would recommend that they cut their spending and grow their salary(s) and start to pay down their debt.