"This is not a fictional scenario conjured up by a gloomy economists with a murky crystal ball. Nor does it represent a third-party diatribe against Democrats and Republicans. It accurately represents the actual numbers just released by the nonpartisan CBO on January 8."  —— Martin D. Weiss, Ph.D.   01-12-09

by Martin D. Weiss, Ph.D.   01-12-09

The government has just released one of the most shocking federal budget reports of all time.

Even if you overlook the gaping holes in their economic assumptions, it’s obvious the federal deficit is going to deliver a punch below the belt of the economy.

And once you unveil the shaky assumptions, it’s equally obvious the deficit could be the last nail in its coffin.

First, Look at the Government’s
Own Shocking Numbers!

The Congressional Budget Office (CBO) estimates that …

• The 2009 federal deficit will be $1.186 trillion! Even after adjusting for inflation, that’s more than the combined cost of the Vietnam War ($698 billion) and the Korean War ($454 billion) … 4.6 times more than the entire S&L bailout of the 1980s … and 5.5 times larger than the Louisiana Purchase:

• In sheer dollars, the 2009 federal deficit will shatter every record deficit of every nation in history.

• Even in proportion to the larger U.S. economy, the 2009 deficit will represent 8.6% of GDP — more than four times the average under Bush, nearly seven times the average under Clinton, and 1.4 times the post-World War II record of 6% under Reagan.

• After you factor in the additional deficit spending and tax cuts proposed in the Obama stimulus package, the deficit will surge to 10% of GDP.

• Federal spending will reach 25% of GDP — the highest level in American history outside of World War II. But during World War II, most of the money was spent on war-related production, creating entire new industries and keeping millions of Americans in uniform or on the job. In contrast, most of the 2009 deficit spending will be for corporate bailouts, unemployment benefits, Social Security and Medicare.

• Already, in the first quarter of fiscal 2009, the federal deficit has ballooned to $485 billion, an unprecedented increase of 353% compared to the previous year. If it continues to grow at that pace, it will make all the above estimates look small by comparison.

This is not a fictional scenario conjured up by a gloomy economists with a murky crystal ball. Nor does it represent a third-party diatribe against Democrats and Republicans. It accurately represents the actual numbers just released by the nonpartisan CBO on January 8.

[John K. Matyi] You can now go to the actual article and read the rest here. I highly recommend that you do. This information is non-partisan. If you agree that we need to keep borrowing from China to pay for all of this (and our children, and their children, and so on) then just sitback and wait for your next 'stimulus' check from the government. If not, here is where you start calling your senators, congressman, friends and relatives... and let them know that you will be watching every move they make. Remember, I said everyone needs to do this, no matter what party affiliation (and you Independents). The time is now.

Here is the disclaimers and the author information:

Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Michelle Johncke, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

I hope everyone sleeps well tonight. (smile) BTW, guess where all that money is coming from.