Houston, We Have a Major Economic Problem on the Horizon!

Karl Denninger, who is the author of the Market-Ticker, had some very sobering words about the Federal Budget over the next ten years. (Please read his last paragraph.) 
 
“Last year Medicare and Medicaid had an unbridled explosion in expense, as I've documented previously and which is a continuing pattern, not a one-year or two-year aberration.  This year, thus far through May, it has continued with the two programs up 8.93% in spending against this time last year.  And no, it's not just about people getting older; Medicaid block grants are up 5.5% this year so far.

Let me remind you that federal receipts (income  to the government, which the rest of us call "taxes") this year are up only 1.68%.
That's a growth rate of spending on these two programs that is 5.3x that of tax receipts.
These two programs are 32.5% of the total expenditures of the government thus far this year; 1/3rd, almost exactly.  Social Security increased 3.2% over last year; and while that exceeds the tax revenue increases as well it is not Social Security that will blow up the government and the economy, it is the medical scam system.

Folks, at a nearly 9% rate of increase (last year's full-year increase was 9.25%, or statistically identical) within the next four to five years the federal budget will collapse.
It will collapse because Medicare and Medicaid will grow to require $1,830 billion ($1.8 trillion) or an increase of more than $500 billion annually within the next four years while tax receipts will only accelerate at present rates by less than half that amount. Social Security will consume a huge chunk of that revenue acceleration all on its own.  
This will blow a roughly $400 billion and exponentially accelerating deficit hole in the budget; a 10 year projection will show that hole to be not a $400 billion deficit hole but closer to $2 trillion annually.

That is, within 10 years Medicare and Medicaid will require more than $3 trillion annually out of $3.8 trillion in projected federal revenue.  Adding in Social Security will exceed all federal revenue.  There is no possible way to fiscally survive this event and within the next President's term it will be evident to everyone in the market for both government and private securities along with all business executives that this outcome is inevitable.”