Since this book's contributors last met in early 2009, the stock market has risen, but the financial fundamentals have gotten worse. The U.S. federal government has entered "tilt" mode, racking up $1.5 trillion in annual fiscal deficits for each of the latest two fiscal years, 2009 and 2010. That is an almost unbelievable number, inconceivable just two years ago. The previous record for a single-year's budget deficit was $455 billion, set in 2008.
In addition to a bankrupt federal government, at least 40 of our 50 states are in similar financial shape, running record deficits. There is one major difference. States are not allowed to print fiat money to make up the shortfall. Most states are not authorized to run budget deficits, so they must face harsh realities. Meanwhile, our federal government shows no signs of facing its irresponsible deficit spending addiction, as the following analysis makes clear.
What we see in the news reports is only the tip of the iceberg. The official deficit calculations we see in the press vastly underestimate government's total obligations. Economist John Williams of Shadow Statistics (
www.shadowstats.com) calculates that the actual annual federal fiscal deficit in 2008 was more like $5.1 trillion, not the $455 billion reported. Using the kind of generally accepted accounting principles (GAAP) that apply to any other ...