Reuters’ Emily Flitter asks in a recent column What is Plan B if China dumps its U.S. debt?

It is worth asking about U.S. officials’ Plan B just in case one day relations take a surprise turn for the worse and Beijing dumps its holdings of U.S. treasuries.

China is officially the United States’ biggest foreign creditor, with roughly $900 billion in Treasury holdings — or over $1 trillion with Hong Kong’s holdings included.

That means it could do severe damage to U.S. debt markets if it suddenly started selling large amounts.

This is not a “just in case” scenario. China has already been taking steps to curb their US Treasury purchases, lowering their U.S. debt holdings from $929 billion to $896 billion between November of 2009 and 2010 (Hong Kong’s year over year holdings are down as well). Chinese President Hu Jintao made it clear where the Chinese stand with regards to the US dollar of the future calling the current dollar-led global monetary system a “product of the past.” While this may not necessarily mean the Chinese will one day, all of a sudden, halt all purchases of US debt, it is certainly reason for concern to those hoping to maintain a strong and stable U.S. currency. Our major foreign creditor is reducing their exposure - that means something, or at least it should. The US dollar, as it has for the last 100 years, will continue to weaken over time compared to other major currencies, and our dollars will buy fewer and fewer goods as a result. The nation’s fiscal problems will see to it that the depreciation of the dollar accelerates over time.

The slow collapse of the dollar, in our view, would be the best-case scenario, but there is still the very real possibility that China completely pulls the plug and kills the patient. Ms. Flitter writes:

To be sure, the idea that China would suddenly sell its U.S. debt holdings is almost unimaginable to some.

After all, any weakening in the U.S. debt markets and the resulting global markets turmoil, including likely weakness in the dollar, would bounce back on China and could hurt its economy badly, especially as the United States is such a huge Chinese export market.

It is only unimaginable to some because they don’t believe it can happen here. But it can happen here - it must. The lead stories during this economic recession/depression have been about real estate, jobs, and GDP. The real story is none of those. Although it has yet to become the mainstream talking point , the real crisis facing America is a sovereign debt crisis. We have too much debt, and that’s going to get cleared out of the system one way or the other.

Any number of reasons, some of which Ms. Flitter mentions in her article, could be used as justification by China to stop the purchase of U.S. debt. Trade and resource disputes, Taiwan, or the final push to bring America to it’s knees. Sure, the Chinese economy and its people will hurt for a few years, but it would be a small price to pay by a communist Chinese government to see the world’s major super power be marginalized or perhaps even completely obliterated.

Make no mistake. The Chinese are at war. These events are not simple one or two dimensional short-term manipulations. The playing field is a grand chessboard and the Chinese have been positioning their pieces for decades. An attack on the King is imminent.

Ms. Flitter suggests several plans (packaging them into what she refers to as ‘Plan B’) to deal with the attack once it begins and be assured it will. You can be certain of it.

In an earlier report we detailed that the Pentagon and Military are Actively War Gaming ‘Large Scale Economic Breakdown’ and ‘Civil Unrest’ scenarios, going so far as to send military specialists to the floors of our stock exchanges to learn more about how a financial attack on our system would occur and to develop response plans if and when it does.

Plan B

Banks could be called on to increase their holdings of treasuries, and as a last resort, the Federal Reserve could also be called on to fill the gap, though this could risk turning any dollar weakness into a slump.

Plan B is already in effect, as evidenced by the monetization of US debt by the Federal Reserve. It started in 2008 and continues to this day, with the most recent round being some $600 billion dollars (officially). In case you haven’t heard, the privately held (by major banking institutions) Federal Reserve is the largest buyer of US debt, having surpassed China as of November 2010.

Given that we have been engaging in Quantitative Easing for quite some time, and the US dollar continues to lose strength and status, we suggest that Plan B has already failed.

Plan C

In 2009, economist Brad Setser suggested the United States could establish emergency currency swap lines with political allies if a country like China ever abandoned the U.S. debt market.

But the list of countries prepared to step in as buyers when U.S. Treasury officials try to hawk U.S. debt or seek foreign currency loans has probably changed somewhat since Europe became mired in a debt crisis.

To some extent, this plan is also already in effect. Japan and the UK have recently become aggressive buyers of US debt. The hope is, that along with Fed monetization, the dollar will be stabilized. However, as the US government continues to issue more debt, raises the debt ceiling and commits the American people to trillions more in liabilities, this strategy is doomed to fail, as well. How much debt can the UK, another nation in a sovereign debt crisis, continue to purchase? And if China pulls out, will Japan continue to throw good money after bad?

Plan D

“The U.S. government should have and maybe still could call on the people of the U.S. to invest in U.S. debt,” said David Walker, a former U.S. comptroller general who heads an advocacy group calling on the government to curb the U.S. budget deficit and borrowings.

…a confrontation (e.g. Taiwan, trade war, or resource dispute) would also make it easier for Washington to appeal to the American public to buy its debt for patriotic reasons.

If we do get to a point where the US dollar comes under attack from a Chinese sell-off, it may be hard to convince an already broke and hungry population to invest their last remaining financial life lines into a collapsing currency. This doesn’t mean that our government won’t try. They’ll appeal to our sense of patriotism and tell us that this is the only way to save our currency.

Remember, however, that if it gets to this point it means that all previous plans have failed - the Fed monetization will have done nothing and foreign buyers have dried up. Anyone getting in at this point will be setting themselves up for a total loss.

Not to worry, however, as there’s always…

Plan E

In the past, anytime a government has failed to save itself from excessive and out of control spending, it has turned on its own people. When Plan D proves to be a failure and those with money in their retirement and bank accounts refuse to buy in to the propaganda, the government will take drastic steps. Similar to Argentina and the push by some European countries as of late, the US government will set its cross hairs on your retirement and private pension accounts. We’ve written about it before, and for the time being it’s but a discussion in a Congressional committee.

But when the Federal government and US Treasury are backed into a corner, they will undoubtedly attempt a mandated appropriation of all retirement funds for the greater good. The people will be outraged, sending letters, emails and phone calls to their Congressional representatives, but as we saw with the bailout bill and nationalized health care, the people will be ignored. It will be your patriotic duty, just as it is, according to Vice President Joe Biden, your patriotic duty to pay more taxes.

Doomed

In the end, no amount of monetization or deal making with other countries, or forced appropriations of personal assets will be enough to save the dollar. Why?

Because no one in any position of influence has suggested and/or implemented a workable Plan A.

We are attempting to treat the symptoms of the disease, rather than the disease itself.

Spending is the elephant in the room that is single-handedly responsible for the sovereign debt crisis in which we find ourselves. If we continue to spend with reckless abandon as we have done for decades, then it is simply not possible to ever payoff the money we already owe. Estimates suggest we as a nation owe in excess of $200 trillion in current and future liabilities.

At what point will China and the rest of the world finally say enough is enough?

It won’t be long now.

This is a guest post from Hunter Richards of Software Advice, which provides reviews of project accounting systems and other software.

...and wealth has shifted toward the highest earners.

The less-educated workers who manage to keep their jobs are falling further
and further behind in the national income distribution as the relative value of their services declines.

Alas, high-tech industries are growing...

So how can you avoid being replaced by a machine? You’ll need to be one of the people who work in an advanced field that still requires highly-skilled human capital. Take the IT field, for example. The Tech Pulse Index tracks the growth of national economic activity in technology by combining data on employment, investment, production, shipments, and consumption. The Tech Pulse Index has risen sharply (with the exception of the dot-com bust around the year 2000), reflecting continued demand for high-tech workers. The same is true in other engineering disciplines, healthcare and finance.

...but an advanced education is required.

The U.S. economy is dead on its feet and the majority of the American people don't even know it.  Sure, most Americans understand that things are not going well right now, but the vast majority are still convinced that we will "fully recover" at some point.  After all, we have always fully recovered and gone on to bigger and better things in the past, haven't we?  Well, unfortunately this time it is different.  The very foundations of our economic system are rotting.  Yes, unemployment numbers will go up and down and housing numbers will go up and down and inflation will go up and down, but those are not the numbers you should be paying attention to.  Instead, if you want the real truth about the U.S. economy, focus on the long-term trends that are at the root of our problems.  Every single month, the United States loses jobs and economic assets.  Every single month, more wealth flows out of the United States than flows into it.  Every single month, the United States goes into a lot more debt.  Most other economic statistics are simply symptoms of those three big problems.  The truth is that the U.S. economy is bleeding, and the truth is that very few politicians in either party are doing a thing to stop it.

We were told that "globalism" and "free trade" would be so wonderful for America.  What we were not told was that U.S. workers would now be put in direct competition for jobs with the cheapest labor in the world.  We were not told that it was intended for the standard of living in the third world to go up while the standard of living in America was intended to go down.  We were not told that millions of jobs and lots of shiny new factories would go to China while many of our once great manufacturing cities (such as Detroit) become rotted-out war zones.

China has become the second largest economy in the world and a major global superpower at our expense.  If we had not agreed to "free trade" agreements with them they would still be struggling to escape third world status.

But now they own nearly a trillion dollars of our debt.

And the next time anyone tries to tell me that free trade with communist China is something that "conservatives" should support I may just barf all over my shoes.  Almost everything about communist China should be absolutely repulsive to true conservatives, and why any conservative would support making China wealthier is a complete and total mystery.

Anyway, the sad reality is that the United States is in horrible economic shape and it is getting worse every single month.  The following are 3 points that you can use to prove the truth about the U.S. economy to anyone....

#1) Every Single Month The United States Loses Jobs And Economic Assets

Many people try to convince us that trade with China and other foreign nations is so good because it fills up our stores with really cheap goods.  But there is a huge price for those cheap goods.  The United States is losing jobs, factories and even entire industries at a staggering pace.  Our lust for cheap goods is absolutely killing us.  It is kind of like tearing your house apart to get more firewood to keep your fire going.  Sure the fire is roaring quite nicely, but eventually you will not have a house anymore. 

According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies skyrocketed 30 percent to 10.1 million. During that same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.

Are you starting to get the picture?

The United States is bleeding lots of jobs every single month.

But nobody seems to care until they lose their own job.

Unfortunately, things have now gotten so bad that unemployment is at epidemic levels.  According to one recent survey, 28% of all U.S. households have at least one person that is looking for a full-time job.

So is there any chance that this is going to turn around?

No, the U.S. economy is going to continue to bleed jobs.

For example, Ford Motor Company recently announced the closure of a facility that produces the Ford Ranger in St. Paul, Minnesota. Approximately 750 good paying middle class jobs are going to be lost.

So why did Ford close the plant?

Are they going to quit making Ford Rangers?

No.

Ford is going to keep producing Ford Rangers. 

They just aren't going to do it in Minnesota. 

The people of Minnesota really wanted the plant to stay open.  In fact, Minnesota Governor Tim Pawlenty even offered Ford a multi-million dollar package of tax cuts and job creation incentives to keep the factory in Minnesota.

But Ford rejected it.

Why?

The following is an excerpt from the statement issued by Ford about the plant closing....

"Ford continues to concentrate on implementing the plan we initiated four years ago to streamline our plant operations and better leverage our global platforms. At this time, the Twin Cities Assembly Plant does not fit into our global manufacturing strategy."

Did you happen to take note of the fact that the world "global" was used twice there?

In other words, Ford plans to make Ford Rangers some place where labor is a lot cheaper.

But Ford is far from alone.  For a list of even more factories that are closing across the United States, please see the following article that we recently published on our sister site: "As Americans Celebrate Labor Day 2010, U.S. Factories Are Closing In Droves".

So why is all of this bad?

Well, these jobs, these factories and these industries are economic assets.  Once they are gone, there are less jobs, there are more Americans on welfare, there is less money being spent in our local communities and there are less taxes being paid.

A health economy has a healthy manufacturing base, but every single month the United States becomes deindustrialized just a little bit more.  An economy that is losing jobs, losing factories and losing countless other economic assets every single month is a dying economy.

#2) Every Single Month The United States Is Getting Poorer

Each and every month, tens of billions more dollars leaves the United States than comes into it.  The transfer of wealth that this represents is absolutely mind blowing.

The trade deficit normally comes in at around 40 or 50 billion dollars each month these days, and that means that by the end of the year a half trillion dollars (or more) will have left the United States.

That means that as a nation we will be a half trillion dollars poorer at the end of the year.

Our gigantic trade deficit is literally bleeding the U.S. economy dry.  In the early 1990s we were assured that the WTO and NAFTA would be so good for us.  But since then the U.S. trade deficit has absolutely skyrocketed and we are hemorrhaging wealth at an astounding pace each month.

What makes things even worse is how China is taking advantage of us.  They keep their currency pegged to the U.S. dollar at a price that is about 40 percent lower than what it should be.  This enables them to flood our shores with cheap goods and it has killed entire industries in the United States. 

Today, the United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.  They have their fangs in us and they are sucking out our wealth as hard as they can.

We end up "consuming" the massive amount of cheap goods we get from China and other nations and they end up with huge piles of our cash.  This is what has enabled China to accumulate nearly a trillion dollars of our debt.

But in the end, the borrower always ends up the servant of the lender.  We have made China rich and now they have been lending that money back to us at a dizzying pace.

How incredibly stupid can we get?

When wealth flows out of the United States, that means there is less of a pie for those of us who are Americans to divide up. 

Most Americans simply do not grasp this incredibly important concept.

At the end of this month, America will be poorer than when the month began.

At the end of the following month, America will be even poorer than that.

We are constantly getting poorer.  Imagine a giant wallet with 100 bucks in it.  If you keep taking 5 dollars more out of the wallet each month than you put into it, you are eventually going to have an empty wallet.

That is what is happening to America.  We are buying far, far more from the rest of the world than they are buying from us each month.  If we do not stop doing this, eventually we are going to be broke.

#3) Every Single Month The United States Goes Into Even More Debt

Americans like to think of themselves as "the richest nation in the world", but the truth is that we have accumulated the biggest mountain of debt in the history of the world.

Today, the U.S. government has piled up a national debt that is fast approaching 14 trillion dollars.  It is increasing by over 4 billion dollars per day.

Democrat Erskine Bowles, one of the heads of Barack Obama's national debt commission, claims that the U.S. government will be spending 2 trillion dollars just on interest on the national debt by the year 2020 if nothing changes.

Can you imagine that?

A trillion $10 bills, if they were taped end to end, would wrap around the globe more than 380 times.  That amount of money would still not be enough to pay off the U.S. national debt.

Meanwhile, our state and local governments have accumulated absolutely staggering amounts of debt.

Illinois is bankrupt.  California is very close.  Hordes of city and local governments are on the verge of default. 

So what happens if the economy gets even worse?

But it is not just government debt that is the problem.  The total amount of consumer debt that American consumers now owe stands at a total of approximately 11 trillion dollars.

As a society, we have been absolutely addicted to debt.  It has fueled the greatest party that the world has ever seen, but now the party is ending and we are drowning in debt.

In fact, if you total up all government, business and consumer debt, it is approximately equivalent to 360 percent of GDP.  At no point during the Great Depression did we ever even come close to approaching such a level.

So what can we conclude from all this?

Well, on a personal level if your bank account got smaller every single month and you went into a lot more debt every single month you would soon find yourself in a complete and total mess.

On a national level, that is the situation that America is now in.  We are bleeding economic assets, we are bleeding wealth and we are getting into stunning amounts of new debt every single month.

If anyone can explain how this is a recipe for economic success, please leave a comment and explain that to all of us....

Many of the things that Americans have been able to take for granted for decades are rapidly coming to an end.  The truth is that a growing economy that produces an ever-increasing amount of good jobs for a thriving middle class is not guaranteed to last forever.  In fact, there are lots of signs that the middle class in America is already being ripped to shreds.  The number of Americans on long-term unemployment benefits is exploding, personal bankruptcies are setting new records, foreclosures are at an all-time high and one out of every eight Americans is now on food stamps.  Meanwhile, the U.S. government is absolutely drowning in debt and America is facing a pension crisis that is so immense that it is almost indescribable.  Most Americans still assume that even if we do have hard times for a while things will always turn around and eventually get better than ever.  But sadly, that is just not the case.  The truth is that the United States is in the early stages of a devastating economic collapse, and the "new normal" is going to be incredibly difficult for a lot of Americans to adjust to. 

The New Normal: Millions Of Chronically Unemployed Americans And Not Nearly Enough Jobs For Everyone

*According to one recent survey, 28% of U.S. households have at least one member that is looking for a full-time job.

*A recent Rasmussen Reports national telephone survey found that 81 percent of American adults know someone who is looking for a job.

*Despite the fact that the U.S. population has exploded, less Americans are employed in manufacturing today than in 1950.

*Today it takes the average unemployed American over 8 months to find a job.

*The number of Americans receiving long-term unemployment benefits has risen over 60 percent in just the past year.

*Since 2007, unemployment has spread across American like a plague....

The New Normal: Americans Going Broke In Staggering Numbers

*Nationwide, bankruptcy filings rose 20 percent in the 12 month period ending June 30th.

*There were 422,061 bankruptcy filings between April and June of this year.  That was an increase of 9 percent from 388,148 in the prior three-month period, and was up 11 percent from 381,073 a year earlier.

The New Normal: A Dead Housing Market And Millions Of Americans Losing Their Homes

*During the month of May sales of new homes in the U.S. declined to the lowest level ever recorded.

*The Mortgage Bankers Association recently announced that demand for loans to purchase U.S. homes has sunk to a 13-year low.

*Construction of new homes in the U.S. and applications to build new homes in the U.S. both fell to their lowest levels in more than a year during the month of July.

*One out of every seven mortgages were either delinquent or in foreclosure during the first quarter of 2010.

*According to RealtyTrac, a total of 1.65 million U.S. properties received foreclosure filings during the first half of 2010.

*U.S. Banks repossessed 269,962 U.S. homes during the second quarter of 2010, which was a new all-time record.

The New Normal: Tens Of Millions Of Americans Living In Poverty And Dependent On The Government For Food

*The U.S. poverty rate is the third worst among the developed nations tracked by the Organization for Economic Cooperation and Development.

*Approximately 50 million Americans could not afford to buy enough food to stay healthy at some point during the last year.

*The number of Americans who are receiving food stamps rose to a new all-time record of 40.8 million in May.

*The number of Americans on food stamps has set a new all-time record for 18 consecutive months.

The New Normal: A Pension Crisis And A Social Security Nightmare That Will Fundamentally Change What Retirement Means In America

*3 out of every 5 Baby Boomers do not have enough money saved for retirement.

*Unfunded pension benefit liabilities at the state government level - the amount state governments owe in promised retirement benefits beyond what they have collected - exceed $3 trillion.

*In 1950, each retiree's Social Security benefit was paid for by 16 U.S. workers.  In 2010, each retiree's Social Security benefit is paid for by approximately 3.3 U.S. workers.  By 2025, it is projected that there will be approximately two U.S. workers for each retiree.

*According to the Congressional Budget Office, the Social Security system will pay out more in benefits than it receives in payroll taxes in 2010.  That was not supposed to happen until at least 2016.

*The present value of projected scheduled benefits surpasses earmarked revenues for entitlement programs such as Social Security and Medicare by approximately 46 trillion dollars over the next 75 years.

The New Normal: The U.S. Government Absolutely Drowning In Debt

*If you started spending one million dollars every single day when Jesus was born, you still would not have spent one trillion dollars by now.

*The U.S. government has accumulated a national debt that is rapidly approaching the 14 trillion dollar mark.

*The IMF says that in order to fix the U.S. government budget deficit, taxes need to be doubled on every single U.S. citizen.

*The U.S. government will spend an amount of money equivalent to approximately 25.4 percent of GDP this year.

*If the U.S. government does not change course, it will be paying 2 trillion dollars just in interest on the national debt by the year 2020.

Most Americans still appear to be operating under the delusion that the "recession" will soon pass and that things will get back to "normal" very soon.  Unfortunately, that is not anywhere close to the truth.  What we are now witnessing are the early stages of the complete and total breakdown of the U.S. economic system.  The U.S. government, state governments, local governments, businesses and American consumers have collectively piled up debt that is equivalent to approximately 360 percent of GDP.  At no point during the Great Depression (or at any other time during our history) did we ever come close to such a figure.  We have piled up the biggest mountain of debt that the world has ever seen, and now that gigantic debt bubble is beginning to pop.  As this house of cards comes crashing down, the economic pain is going to become almost unimaginable. 

Already, things are really, really, really bad out there.  Unemployment is at shockingly high levels.  Foreclosures and personal bankruptcies continue to set new all-time records.  Businesses are being shut down at a staggering rate, more than 40 million Americans are on food stamps, and the U.S. government continues to pile up debt at blinding speed.

There is no use sugar-coating it.

The U.S. economy is collapsing.

The following are 40 bizarre statistics that reveal the truth about the collapse of the U.S. economy....

1 - According to one shocking new survey, 28% of U.S. households have at least one member that is looking for a full-time job.

2 - A recent Pew Research survey found that 55 percent of the U.S. labor force has experienced either unemployment, a pay decrease, a reduction in hours or an involuntary move to part-time work since the recession began.

3 - There are 9.2 million Americans that are unemployed but that are not receiving an unemployment insurance check.

4 - In America today, the average time needed to find a job has risen to a record 35.2 weeks.

5 - According to one analysis, the United States has lost 10.5 million jobs since 2007.

6 - China's trade surplus (much of it with the United States) climbed 140 percent in June compared to a year earlier.

7 - This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.

8 - According to a poll taken in 2009, 61 percent of Americans "always or usually" live paycheck to paycheck.  That was up significantly from 49 percent in 2008 and 43 percent in 2007.

9 - According to a recent poll conducted by Bloomberg, 71% of Americans say that it still feels like the economy is in a recession.

10 - Banks repossessed 269,962 U.S. homes during the second quarter of 2010, which was a new all-time record.

11 - Banks repossessed an average of 4,000 South Florida properties a month in the first half of 2010, up 83 percent from the first half of 2009.

12 - According to RealtyTrac, a total of 1.65 million U.S. properties received foreclosure filings during the first half of 2010.

13 - The Mortgage Bankers Association recently announced that demand for loans to purchase U.S. homes has sunk to a 13-year low.

14 - Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.

15 - 1.41 million Americans filed for personal bankruptcy in 2009 - a 32 percent increase over 2008.

16 - Back in 1950 each retiree's Social Security benefit was paid for by 16 workers.  Today, each retiree's Social Security benefit is paid for by approximately 3.3 workers.  By 2025 it is projected that there will be approximately two workers for each retiree.

17 - According to a new poll, six of 10 non-retirees believe that Social Security won't be able to pay them benefits when they stop working.

18 - 43 percent of Americans have less than $10,000 saved for retirement.

19 - According to one survey, 36 percent of Americans say that they don't contribute anything to retirement savings.

20 - According to one recent survey, 24% of American workers say that they have postponed their planned retirement age in the past year.

21 - The Conference Board's Consumer Confidence Index declined sharply to 52.9 in June.  Most economists had expected that the figure for June would be somewhere around 62.

22 - Retail sales in the U.S. fell in June for a second month in a row.

23 - Vacancies and lease rates at U.S. shopping centers continued to get worse during the second quarter of 2010.

24 - Consumer credit in the United States has contracted during 15 of the past 16 months.

25 - During the first quarter of 2010, the total number of loans that are at least three months past due in the United States increased for the 16th consecutive quarter.

26 - Things are now so bad in California that in the region around the state capital, Sacramento, there is now one closed business for every six that are still open.

27 - The state of Illinois now ranks eighth in the world in possible bond-holder default.  The state of California is ninth.

28 - More than 25 percent of Americans now have a credit score below 599, which means that they are a very bad credit risk.

29 - On Friday, U.S. regulators closed down three banks in Florida, two in South Carolina and one in Michigan, bringing to 96 the number of U.S. banks to be shut down so far in 2010.

30 - The FDIC's deposit insurance fund now has negative 20.7 billion dollars in it, which represents a slight improvement from the end of 2009.

31 - The U.S. federal budget deficit has topped $1 trillion with three months still to go in the current budget year.

32 - According to a U.S. Treasury Department report to Congress, the U.S. national debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015.

33 - The M3 money supply plunged at a 9.6 percent annual rate during the first quarter of 2010.

34 - According to a new poll of Americans between the ages of 44 and 75, 61% said that running out money was their biggest fear. The remaining 39% thought death was scarier.

35 - One study found that as of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.

36 - The bottom 40 percent of all income earners in the United States now collectively own less than 1 percent of the nation’s wealth.

37 - The number of Americans with incomes below the official poverty line rose by about 15% between 2000 and 2006, and by 2008 over 30 million U.S. workers were earning less than $10 per hour.

38 - According to one recent study, approximately 21 percent of all children in the United States are living below the poverty line in 2010 - the highest rate in 20 years.

39 - For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.

40 - A new Rasmussen Reports national telephone survey has found that just 23% of American voters nationwide believe the federal government today has the consent of the governed.

America's national debt is exploding out of control, and still most politicians in Washington D.C. don't really seem that interested in doing anything about it.  Why?  Well, the truth is that if the U.S. government reduces government spending that will slow down the economy, and if the economy slows down then Americans will blame the politicians, and if Americans are angry at the politicians then they will be less likely to vote them back into office.  So we actually have a system where our politicians have an incentive not to do anything about the national debt.  Meanwhile, the exploding debt continues to become a colossal long-term problem that threatens to destroy not only our economy, but our entire way of life.  The federal budget deficit has topped $1 trillion with three months still to go in the current budget year.  It is projected that the final budget deficit for 2010 will be somewhere in the neighborhood of 1.3 to 1.5 trillion dollars.  But can we really afford to keep having deficits that are over a trillion dollars every single year?

No, we can't.

In fact, Democrat Erskine Bowles, one of the heads of Barack Obama's national debt commission, recently told the National Governors Association that the U.S. national debt "is like a cancer".

How much of a cancer?

Well, according to Bowles, if the U.S. government does not make any changes it will be spending $2 trillion just for interest on the national debt by 2020.

2 trillion dollars.

The entire U.S. government will only spend somewhere between 3 and 4 trillion dollars in all of 2010.

Yes, that is how desperate the situation is becoming.

If something is not done about this horrific debt it is going to swallow our nation alive financially.

The following are 11 facts about America's national debt in 2010 that should alarm us all....

*On June 1st, the U.S. National Debt was $13,050,826,460,886.

*From the founding of the United States until Ronald Reagan took office we accumulated a total of about 1 trillion dollars in debt.  Now the U.S. national debt is over 13 trillion dollars.

*It is projected that the U.S. government will issue nearly as much new debt in 2010 as the rest of the governments of the world combined.

*If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.  But somehow the U.S. government has accumulated a debt that is over 13 trillion dollars.

*If you do the math, the truth is that it is simply not possible to pay off the U.S. national debt.  In fact, if you took every single dollar out of every single bank and out of every single wallet there wouldn't be anywhere close to enough money to do it.

*According to an official U.S. government report, rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019.  That is before one penny is spent on anything else.

*Back in 1950, each retiree's Social Security benefit was paid for by approximately 16 workers.  Today, each retiree's Social Security benefit is paid for by approximately 3.3 workers.  By 2025 it is projected that there will be approximately two workers for each retiree.

*According to the Congressional Budget Office, in 2010 the Social Security system will pay out more in benefits than it receives in payroll taxes.  That was not supposed to happen until at least 2016.

*Over 40 million Americans are now on food stamps and the U.S. Department of Agriculture is projecting that more than 43 million Americans will be on food stamps by the end of 2011.

*Approximately 57 percent of Barack Obama's 3.8 trillion dollar budget for 2011 consists of direct payments to individual Americans or is money that is spent on their behalf.

*A trillion $10 bills, if they were taped end to end, would wrap around the globe more than 380 times.  That amount of money would still not be enough to pay off the U.S. national debt.

Please send this out to everyone that you can, and if you have an opinion about all this debt please feel free to leave a comment below....