Submitted by Simon Black of Sovereign Man blog<\/a>,<\/em><\/p>\n

Truth can be a damn difficult thing to digest sometimes.<\/strong><\/p>\n

Some of us have been there. You get that news from the doctor that you, or a loved one, has just been diagnosed with a serious disease, and it hits you like a ton of bricks.<\/em><\/p>\n

Several years ago my father was diagnosed with a brain tumor known as a Glioblastoma (GBM). A GBM diagnosis is essentially a death sentence\u2013 it\u2019s one of the most aggressive tumors in existence, and it grows in the part of the body that modern medicine understands the least.<\/em><\/p>\n

I clearly remember the neurosurgeon telling us, \u201cThere have been some miraculous advances in medicine over the last 20-years related to the treatment of cancerous tumors. Unfortunately, this tumor is not one of them.\u201d<\/em><\/p>\n

It was a tough pill for everyone to swallow\u2026 especially my father.<\/em><\/p>\n

Our natural defense mechanism as human beings is to deny reality. These sorts of things happen to other people, not to us.<\/strong><\/p>\n

It\u2019s this same defense mechanism that leads people to ignore the obvious fiscal realities of their home country despite overwhelming objective evidence.<\/p>\n

After all, debt-fueled collapse happens to other countries. Not to us.<\/strong><\/p>\n

We go our entire lives being told that our country is different. We\u2019re special.<\/p>\n

We have televised \u2018experts\u2019 going on TV explaining why our debts and deficits don\u2019t matter. And Nobel Prize-winning pseduoscientists complaining that our debts and deficits aren\u2019t big enough.<\/p>\n

But deep down you know the truth.<\/strong><\/p>\n

In the Land of the Free, the Government Accountability Office (GAO) recently released its 2013 Financial Report of the United States government.<\/a><\/p>\n

This is the government\u2019s best attempt at an honest accounting of its books. And even though they use a different accounting system that gives them special advantages, the picture is still remarkably bleak.<\/p>\n

We all know that the US government has racked up a substantial debt; as of this morning, total outstanding public debt is $17,546,814,482,078.90. ($17.5 trillion)<\/p>\n

But it\u2019s not all about the debt. Debt is not necessarily evil\u2026 and it\u2019s important to look at the situation qualitatively in addition to quantitatively.<\/strong><\/p>\n

Let\u2019s drop a few zeros and consider this in terms of personal finance.<\/p>\n

Assume you had $1.75 million in total debt. That sounds like a lot to most people.<\/p>\n

But if you had $3 million in liquid assets to offset the debt, plus $500,000 in annual income to pay interest, living expenses, and just about any contingency that could come your way, you\u2019d be in great shape.<\/p>\n

It would be even better if that $1.75 million in debt financed a lucrative real estate investment which was generating a 25% cash-on-cash return for you.<\/p>\n

But that\u2019s not the case for the US government.<\/strong><\/p>\n

Despite the Obama administration touting a budget deficit of \u201conly\u201d $680 billion in 2013, the GAO\u2019s more accurate accounting shows a total government cost of $3.8 trillion on total revenue of $2.8 trillion.<\/strong><\/p>\n

In other words\u2013 the administration wasn\u2019t exactly honest with the American people\u2013 the deficit was more like $1 trillion, not $680 billion. But it gets worse.<\/strong><\/p>\n

The GAO added up ALL the US government\u2019s assets in 2013. Aircraft carriers. The highway system. Land. Cash and financial assets. The total is $2.97 trillion.<\/p>\n

The liabilities, on the other hand, total $19.88 trillion. This includes the official public debt, plus all sorts of IOUs and loan guarantees.<\/p>\n

This means the net EQUITY of the US government is minus $16.9 trillion.<\/strong><\/p>\n

Moreover, the US government\u2019s cash position is a mere $206 billion\u2026 roughly 1.1% of its public debt. This isn\u2019t enough to cover net interest payments for the next year.<\/p>\n

Unlike a savvy investor who borrows cheap money to purchase productive assets, the US government borrows money to pay interest.<\/p>\n

Quantitatively AND qualitatively, the data point to an inevitable conclusion: despite all the propaganda, this is NOT a risk free environment.<\/strong><\/p>\n

And understanding these trends and consequences is absolutely critical to your long-term financial survival.<\/p>\n

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