Obama Admits: America is Out of Money

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Barack Obama has admitted what everyone knows: America is out of money. Over the weekend, an interviewer asked him, “You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?”

“Well, we are out of money now,” Obama said. It’s kind of shocking to hear a politician be so direct. Surely it must have been a slip up. But the man is right. America, along with Britain, is financing a hodge-podge of corporate welfare and classic handouts with deficit spending, otherwise known as borrowing.

If they can’t borrow the money-which is getting more and more expensive as interest rates rise and investors fret about sovereign credit quality-they will print it. What happens when “quantitative easing” is expanded on a greater scale is anyone’s guess. We’ll have more on that tomorrow.

Dan Denning
for The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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10 Comments on "Obama Admits: America is Out of Money"

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Lachlan
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Deflationary depression came first, now QE then hyperinflationary depression then new currency. Using one event to justify the following action. The fallout from that action is used to justify the next action. So its not suprising at all that Obama is being so honest….now it seems to be too late.

Dan
Guest

It would have been more amusing if Obama had said “Gaaaaack! We’re broke! We’re all freakin’ doomed!” and then jumped out of the office block window. That’s what people tend to do when they care about being broke.

But the fact he is not doing that is, in a way, the dog that did not bark. It seems he’s just making sure the US economy is a proper train wreck, so that whatever eventuates thereafter definitely happens. I have no idea what that could be, however.

Biker Pete
Guest

He was dealt a lousy hand, Dan. While Clinton launched the debacle, The Bushes oversaw a longer period of ruinous economic policy. I agree that Obama has done little to address the true position, but can you imagine George W ever making a bottom-line admission (We’re broke!) like Obama has? Time will tell… .

Coffee Addict
Guest
“All the King’s horses and all the King’s men couldn’t put Humpty together again.” … well if I were in Obama’s position couldn’t fix it either … though I’m yet to reach a conclusion on what Obama’s actual long term policies are (other than to stay in office for at least one term). Yeah … Obama is accountable for accellerating the Bush stimulous policies, thereby making this crisis worse. I think that is Dan’s point. I don’t actually blame any of the US Presidents for the reality of economic cycles or indeed for responding to economic crises in populist ways.… Read more »
hal
Guest

I’ll tell you what, this holiday weekend news continues to raise my cause of concern for the country.

I’ve been tracking the price of gold with the widget http://www.learcapital.com/exactprice and it’s been interesting to watch the price of gold rise in the May when typically it doesn’t. And now I’m wondering just what’s going to happen to the price tomorrow at the opening of the markets with this news from the President?

More or less he’s basically said the dollar is worthless. That’s sent a striking message to all those holding US debt.

Tomorrow is going to be one interesting ride.

Ross
Guest
CA, your characterisation of the political process and having it following populist responses is on the money. But when everybody is on the money and it is already in the wheelbarrows look out. it is like Weimar except Joe citizen hasn’t seen it yet because its either all being debt sourced (on the never until someone calls foul on treasuries) and dumped into balance sheets and/or half still sits in the off balance sheet vehicles not booked by the insolvent banks and the long overdue FASB regulation doesn’t start til 1/10. When it tips over into the real world Bernanke… Read more »
Lachlan
Guest

Gidday Hal.
I a gold watcher also. For extra infusion of fun/terror I’m watching the USD fall off a cliff too. Things got pretty critical early last week as this inverse relationship cranked up a gear or three. I’ve put my bets on gold amongst other things but to actually see this happening for real just blows me away. Maybe there are many negative elements in the US but theres a lot of really nice people living there too. I hope the fallout from this doesnt get too nasty.

Hal
Guest

Well, the fallout I was thinking would show in the DOW today didn’t happen at open. Gold actually lost a few dollars and the DOW rallied up right now something like 2%. Seems the consumer confidence report for may is taking things up. And it’s like the news of the President’s comments were buried.

I certainly don’t want our country to fail but I’m getting real nervous by the moves away from freedom I’m seeing in our country by the enslavement via finance and debt that our government seems to have it’s hands all over.

Lachlan
Guest
Im certain golds in a major leg up and the USD falling away. I think DR was eluding to this a little while back with their USD/Fork In The Road thing. Im no tech expert but the analyses I use shows that we’ll probably look back at this USD chart soon and see a double top confirmed. Still, what a sterling performance by the Dow. All this volatility just proves how many tummy aches the system truly has. As for Australia. Youd think our commodity dollar could benefit enormously from all this USD fallout. It remains to be seen just… Read more »
Greg Atkinson
Guest
I think the USD is already pretty weak especially if you look at it compared to say the JPY. In any case we need to remember that the $AUD is actually gaining strength now that markets are factoring in that commodities demand is still around. (Although the miners are having to give up their over-the-top 2008 prices) Of course if the RBA cuts rates again then this will push the $AUD down for a while. As for gold I just do not see what the attraction is at these prices. Sure it might go up a bit but I reckon… Read more »
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