Is the United States Government Going Bankrupt?

Bankruptcy for any organization comes when it can not pay its debts with the assets it has. If this is the situation then the organization will go bankrupt. Governments are no exception to this. However, when a government can not pay its debt it is said to go on default." Default may be a different word but it means the same it is "going bankrupt."

What are the chances of the US government going bankrupt? Well right now very high. Alan Greenspan and Pablo Guidotti, published in a 1999 academic paper, a secret formula that can predict when a country government will go bankrupt (or default as they say).

The formula is actually very simple. It is known as the Greenspan-Guidotti rule. The rule says that in order to avoid a default a country should have hard currency reserves equal to a minimum of 100% of their short-term foreign debt maturities. The concept is actually very simple. If a country can not pay all of its debts in the following 12 months, the country is at a high credit risk. Default is almost certain Under these conditions since speculators Hill target bonds and currencies making impossible for the country to refinance debt.

So how is the United States is right now with the Greenspan-Guidotti rule? In pretty bad shape. The U.S. has gold, oil, and foreign currency in reserve. At current dollar values, the US has a 300-billion worth of gold reserves. Then, there is oil reserves which are at about 58 billion and according to the International Monetary Fund The US has 136 billion of foreign currencies reserves. So if you add all together that gives you around 500 billion in reserves. Do you what is the estimated short term debt for the US (within the next 12 months)? The U.S. Treasury has $2 trillion debt that will mature in the next 12 months. SO the US has 4 times more debt than its reserves. According to these data and the Greenspan-Guidotti rule, the US is headed to an obvious default (bankruptcy) within the next 12 months.

So how this will affect you? The US government will probably not go bankrupt. What it will do is print more money. This will bring more inflation. Salaries will be devalued as it will the dollar.

Source:

http://www.thedailycrux.com/content/3455/Porter_Stansberry/eml