What do these budget deficits mean for you and your finances? The federal government is expected to borrow $1.6 trillion this year, or about $15,000 for every household within the country.

Over the next 10 years it is expected to borrow a total of $8.5 trillion. And also the government was already deeply in debt to begin with.

Deficits are certainly not always bad for the economy. And it creates sense for Uncle Sam to borrow heavily in a crisis, like now. But these figures are enormous. And they’re expected stay big well down the road. The Obama administration forecasts deficits of $1 trillion in 2020.

Be very wary of long-term bonds. Whether we pay for these deficits by issuing bonds or by printing cash, we run the risk of inflation in due course. Longer term bonds are most at risk. Yet the prices right now are not compensating you for that risk. Ten yr Treasuries yield 3.65 percent; 30-year Treasuries, 4.57 percent.

Remarkably, the Treasury industry has not yet panicked about the deficits: Yields have barely risen this week. Embedded within the industry is really a long-term inflation forecast of about 2.5 percent. I call that a dangerous complacency. (I usually recommend inflation-protected government bonds, but right now they are looking a little pricey).

The danger might be nearer than numerous realize. Our deficits are financed by savers in emerging markets, particularly in China. But many emerging markets are now seeing rising inflation. If that continues they will need to raise interest rates at home. We will have to do the same here if we want to maintain attracting their money.

Make sure you’re globally diversified and not entirely dependent on the U.S. economy and the dollar. There is really a danger of a dollar slump. Those most convinced it happen ought to appear at having some gold exposure, but it is volatile and that’s not the only way to reduce your dependence on the greenback. It creates feeling to maintain plenty of money in overseas stocks and bonds. Many U.S. blue-chip stocks–from Kraft to Apple to Exxon–are truly global as well.

Make the most of the tax shelters. Give as much as you are able to your 401(k) or equivalent, your IRAs, 529 college savings plans for that children and perhaps even low-cost variable annuities, if appropriate for you. Sooner or later taxes need to go up to narrow the spending budget gap–especially as the interest about the debt skyrockets.

These who think we can escape this just by cutting spending should think about that two-thirds from the federal spending budget goes towards Social Security, Medicare and Medicaid, defense and debt attention. They won’t be cut.

Secure a cheap fixed-rate 30 year mortgage on your house while you can. These rates are closely linked towards the interest rate on 10 year Treasury bonds. You would expect them to rise a long way if bond yields do.

Take a hard look at the risks in your portfolio. The issue with share prices right now isn’t that they’re egregiously costly. They’re not. It is that they aren’t cheap–and we live in risky times. Also few investors are getting compensated for the risks they are taking.

Depending on your circumstances, this might be a time to think about cashing in some of your riskier chips–especially if you are sitting on big gains from the last year.

Am I being too gloomy? But in light of the gridlock in Washington and the deep divisions in the country at large, I’m skeptical about our ability to solve this issue.

It creates sense to be prepared.

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