This is the second of three articles discussing the urgent need for the US to get its financial house in order or face the consequences. Our objective is to help you understand the implications of this ominous trend and provide the strategy to protect your wealth.

If the U.S. were forced to account for its debts like Apple or Exxon, its debts would equal a whopping $76,000,000,000, 000 ($76 Trillion). That is an enormous number, so large that it is difficult to imagine. To understand how large this number is consider this: it equals $244,000 for every man, woman and child in the U.S. – and, it is growing at $17,000 per year.

The U.S. Government reports its deficits and debts using “cash accounting”. Under cash accounting, the government makes no provision for future Social Security and Medicare benefits in the year in which those benefits accrue. However, this is not Generally Accepted Accounting Principles (“GAAP”) which corporations like Exxon, Microsoft and Apple are required to use. GAAP basis includes year-for-year changes in the net present value of unfunded liabilities in social insurance programs such as Social Security and Medicare.
As the Obama administration prepares to finance a Fiscal Year 2011 budget deficit expected to top $1.6 trillion, the American public is largely unaware that the true negative net worth of the federal government reached $76.3 trillion last year.

That figure was five times the 2010 gross domestic product of the United States and exceeded the estimated gross domestic product for the world by approximately $14.4 trillion.

According to the U.S. Department of Commerce Bureau of Economic Analysis, U.S. GDP for 2010 was $14.861 trillion. World GDP in 2010, according to the International Monetary Fund, was $61.936 trillion

The U.S. government cannot cover such a shortfall by raising taxes, as there are not enough untaxed wages and salaries or corporate profits to do so. Other measures must be taken to reduce future expenditures (Source: The World Press).