Why Prices Will Rise Exponentially Over the Next 10 Years

In 2013, the U.S. budget deficit came down to $680 billion. Finally, after four consecutive years of annual budget deficits of more than $1.0 trillion, the government got its annual “hole” under the trillion-dollar level, and it seemed as though we were headed in the right direction. 

But stop. The government is now reversing its track… 

According to the Congressional Budget Office (CBO), the budget deficit of the U.S. government will decline to $492 billion in 2014, but from then on it will increase and reach more than $1.0 trillion annually again by 2024! The CBO projects that between 2015 and 2024, the accumulated budget deficit for the U.S. government will be $7.6 trillion. (Source: Congressional Budget Office web site, last accessed April 30, 2014.)

 The biggest expense increases for the government, Social Security payments are projected to almost double by 2024, and annual healthcare expenses are going to increase from $936 billion in 2014 to $1.7 trillion in 2024. 

What this means is that the national debt will rise to $24.0 trillion by 2024 if everything goes as planned—if we don’t have another war between now and then, if we face no natural catastrophes that would require federal support, and if interest rates don’t run up too much (all three of which I believe will happen)! 

My personal projection is that 10 years from now, we will be looking at national debt in the $30.0 to $34.0 trillion range. I believe annual budget deficits of more than $1.0 trillion will become the norm, not the exception. 

When I look at this and the fact that China has been noticeably selling U.S. debt, the big question becomes: who will buy all the U.S. Treasuries the government will need to sell to finance its debt? I believe the Federal Reserve will need to get back into the money printing business in a big way to fund that debt. 

It’s the same old thing: big budget deficits, more debt, more money printed, more inflation. So get used to rising prices; they are not going away. 

This article Why Prices Will Rise Exponentially Over the Next 10 Years was originally posted at Profit Confidential