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A number of commentators have estimated we are already into the bailouts to the tune of at least $14 trillion. This is in addition to last week's report in the UK Telegraph (covered in my column HERE) that a well connected banker estimated the next round of "Quantitative Easing" (or QE2 as they now call this round of bailouts) could reach $30 trillion, or about 50% of the world's GDP. Given that this money is, like all fiat currency, issued in the form of debt, how would that extra $30 trillion ever be paid back? When money is issued as debt, there is no end to the need for money to pay the interest on the existing debt (e.g.: if $100 is issued at 5% interest, another $5 of money must be created just to pay the interest, but there is interest on the interest, ad infinitum). As we explored last week, we're now beyond the point of ever paying back the CURRENT debt with anything resembling the value it had upon issuance.
Of course the CBO says we will run about $1 trillion in deficits for the next ten years. Let's presume it's five years, and we'll give it the $1 trillion, although I think that's low - maybe by 25% or more.
So let's add $5 trillion to the total, for $18.5 trillion, and apply a 5% rate to it.
That comes to $925 billion, or dangerously close to all personal income taxes, which are $1.061 trillion.
Got it folks? All personal income taxes, or if you prefer all FICA and Medicare taxes, will go only to pay interest.
It ain't gonna be pretty....
