US 'could be going bankrupt'

As most of us immigrate to the U.S. for its superior life style, The Telegraph has a report on how the U.S. might be in for bankruptcy according to research conducted by Boston University Professor Laurence Kotlikoff

According to his central analysis, "the US government is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who, in this context, are current and future generations to whom it has explicitly or implicitly promised future net payments of various kinds. If these burdens exceed the resources of those generations, get close to doing so, or simply get so high as to preclude their full collection, the country's policy will be unsustainable and can constitute or lead to national bankruptcy."

Most of you may know that the U.S. government prints money based on selling U.S. Treasury bonds to foreign investors one of the biggest of which is the Chinese government.

The scenario has serious implications for the dollar. If investors lose confidence in the US's future, and suspect the country may at some point allow inflation to erode away its debts, they may reduce their holdings of US Treasury bonds.

What this means is that inflation and a depreciating dollar may burn out all your savings 10 to 20 years from now as you are getting ready to retire. At that point there may not be a lot of difference between what you have and what your friend who is in your home country has in terms of wealth.