Legendary investor Stanley Druckenmiller has given an honest assessment on the US situation in terms of the nation's debt and its social welfare programs. His speech has outlined the severe implications that if entitlements are not cut as 'demographic storm' looms, then US debt obligations will be reaching a staggering $200 trillion.

Currently, US debt stands at $31.7 trillion and does not account for the estimated social security and Medicare payments that need to be met in the future. National spending was controlled in the 1950s as the 'baby boomers' were born and debt was kept reasonable with estimates that these obligations could be met by current payments. However, these payments may not meet the requirements of the rising tide of senior citizens entering retirement.

Druckenmiller is of the view that this matter is more than just a choice, as cutting entitlements is a must. It must either done now or as a much larger exercise in the future. He worries that analysts are not being truthfully realistic with the US's level of indebtedness and are allowing the country to take a 'false pretence' out of the situation.

America needs to act immediately to avoid future consequences, he argues, and a cut of certain social programs is necessary to ensure the nation's financial well-being. While the sheer debt figures can be overwhelming, it is better to face them head on and try to make an effort to address them than attempting to ignore and rationalise the situation. report



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