Does the ending of ''QE2'' signify an end to U.S. economic and debt problems?
*Investor's Business Daily, June 23, 2011:
'The Congressional Budget Office's Long-Term Budget Outlook has new,
alarming projections that should be a warning to all.
The ratio of debt to GDP has reached 69%, up from 62% last year.
In 2010, the CBO's worst-case scenario said the debt-to-GDP ratio would
rise to 87% by 2020. Now, with the economy failing to revive and
the ongoing surge in stimulus spending, the total level of public debt
will reach 101% of GDP by 2021.
Does it matter? You bet. Recent studies show that when public
debt hits 90% of GDP, economic growth slows significantly -- by 1% a
year or more. That means literally millions of lost jobs over the
coming decade.
And things get much worse after 2021.
Under the CBO's so-called Alternative Scenario -- the one that CBO
Director Doug Elmendorf believes is the most likely policy path
Congress will take -- debt hits a stratospheric 187% of total U.S.
output by 2035.
'An aging population and rapidly rising health care costs will sharply
increase federal spending for health care programs and Social
Security,' said Elmendorf.
The debt from all this, the CBO warns, could cost us as much as 18% of
our total economic output over the next 25 years -- about $2.5 trillion
a year, in current dollars. If that's the case, the U.S. would
see the greatest relative decline ever in its standard of living in
history.
How do we get out of this mess? Over the last 50 years, total
federal spending has averaged 18.5% of GDP. Today, it's
24%. But by 2035, due to soaring entitlements, the government
will spend one of every three dollars in our economy.
Unless we reform Medicare, Medicaid and Social Security, we will almost
guarantee a lower standard of living for our children and
grandchildren. Is that really what Americans want?''
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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