Posted on 04/12/2011 9:10:41 AM PDT by Kaslin
"Madness is rare in individuals - but in groups, parties, nations, and ages it is the rule." -- Friedrich Nietzsche
Does it seem too strong to call the way America deals with its debt "madness?" If not madness, then what? Denial? An addiction? However you phrase it, we're a country that's in deep trouble, but so many of us seem unable to deal with it.
Liberals in this country, for the most part, will admit that we're running up "unsustainable" deficits. Yet, these same liberals adamantly oppose any and all serious efforts to do anything about it. Once you move out from liberals to the general public, once again you'll find plenty of people who admit that this nation has a huge problem. Yet, when you leave generalities, get down to specifics, and start looking for programs to cut, then suddenly everyone gets nervous and says, "never mind." It's like the old saying, "Everyone wants to go to heaven, but no one wants to die."
Sadly, this is a natural outgrowth of ladling out public funds to special interests. There is so much collective money that few people feel or appreciate it when even billions are saved. Yet, if we yank even a few million away from special interest groups like PBS, Planned Parenthood, or the unions, they squeal like pigs that are about to accidentally be put in the wolves’ pen at the zoo.
In the face of that, people have to realize that this country is on pace to go bankrupt -- and it could happen relatively soon if we don't start taking serious steps to control our spending. Mike Pence thinks we could just be ten to fifteen years away. Tom Coburn is less optimistic and thinks it could happen in as little as five years. If that happens, we're not a tiny country like Greece -- we're the biggest economy in the world. That means there's no cavalry coming to pay our bills for us because we ARE the cavalry.
What happens then? Well, we don't know for sure, but we can make some educated guesses about what COULD happen and how it will impact YOUR life.
1) Your life savings could be reduced to nothing almost overnight. Inflation is a fact of life. As Thomas Sowell has noted, "As of 1998, a $100 bill would not buy as much as a $20 bill would buy in the 1960's." That's under normal circumstances.
However, the thing governments have traditionally done when they simply can't pay their debts is print more money. The problem with this is the further you expand the money supply, the less the money you already have on hand is worth. This can wipe out the savings of a lifetime in a relatively short period. Imagine spending billions of dollars just to buy a loaf of bread. Sound far-fetched? Well, guess what? That has happened in the Weimar Republic, which was crushed under debts from WWI and decided to pay it off by printing more money. It could happen here, too, and all the money you've scrimped and saved could become worthless in a short order.
2) Your taxes will skyrocket. We've been conned into thinking that we can fund a massive government on the backs of the rich. This is simply not so. It's not working today and it's not going to happen in the future. We cannot tax the rich enough to pay off our debt or even enough to keep the government going long-term. Even if we could, the rich have the resources to flee the country for greener pastures if they're being taxed into oblivion. The middle class? Not so much.
What that means is the more desperate the government gets, the more the average American is going to be hammered with new taxes. How much more of your income can you afford to send overseas to pay China for the money they've loaned us to keep PBS, Planned Parenthood, and the National Endowment of the Arts going? What about if the country goes bankrupt and your income tax rate shoots up fifty percent? How are you going to pay your mortgage? How are you going to feed your kids? When the government runs out of cash and it can't borrow any more money, then it will start leveling massive taxes on the American people.
3) Your life could be in danger. If the government goes bankrupt, you'll have an extremely angry, confused, and frustrated populace that has little faith in its leaders -- combined with a horrific economy and a reduced ability of the government to keep order. Under those circumstances, widespread rioting and violent crime seem entirely plausible.
When Argentina had its crisis, violence went up 142% and "young men began looting supermarkets."
Here's some of what happened during the German hyperinflation of the currency in Weimar Republic after it started printing money night and day,
The flight from currency that had begun with the buying of diamonds, gold, country houses, and antiques now extended to minor and almost useless items -- bric-a-brac, soap, hairpins. The law-abiding country crumbled into petty thievery. Copper pipes and brass armatures weren't safe. Gasoline was siphoned from cars. People bought things they didn't need and used them to barter -- a pair of shoes for a shirt, some crockery for coffee. Berlin had a "witches' Sabbath" atmosphere. Prostitutes of both sexes roamed the streets. Cocaine was the fashionable drug.
4) Your payments from the government will dramatically decrease or stop altogether. Contrary to what some people believe, Medicare and Social Security are paid out of the same fund that pays for everything else. In other words, if the government goes bankrupt, there is no money set aside to pay for these programs. So, if you're receiving Social Security, Medicare, welfare, food stamps, or any other similar programs, those checks could stop or be slashed down to nothing. That seems unthinkable to people, but if the government doesn't have any money, then it can't pay it out to people. As they say, "You can't get blood out of a turnip."
5) You will have a dramatically reduced standard of living. If taxes and inflation escalate dramatically, both of which are very likely if we go bankrupt, economic activity will slow to a crawl and we'll go into a depression. We're not talking about a "This is the worst economy since the Depression" situation that we hear every time there's a mild downturn in the economy; we're talking about a REAL depression. Businesses will close left and right, the stock market will tank, unemployment will soar to heights not seen since the thirties, and the government won't be in a position to help very much.
If that happens in a country like America, where people have been so prosperous for so long, it's going to produce utter misery. It's not a lot of fun to be poor under the best of circumstances, but it's much worse to go from having a comfortable life with a bright future to growing vegetables to eat in the backyard and wondering how you're going to keep warm in the winter.
Exactly. Too bad more Americans are not familiar with these '60s Marxist bastards' strategy.
“I believe most of those resources are already owned by China should we default.”
If you have proof that the criminal politicians used our resources as collateral for bonds, let’s see it.
That is prima facie treason. If that’s the case, the second American Civil War starts now.
A little complicated to follow....but...it will make you think about what I said and its meaning.
here ya’ go: http://www.heritage.org/Research/Reports/2009/02/Chinese-Foreign-Investment-Insist-on-Transparency
Yes, but you or anyone else try to get another mortgage. No can do. There will be no mortgage industry henceforth.
we have a HELOC...should we dip into our retirement and pay it off now?..the rate is low...prime rate like 3.25%....we’d take a 10% penalty...
Best start living frugally now because the future looks painful.
bttt
It would demand that they actually do what needs to be done and what they refuse to do.
LLS
The HELOC is undoubtedly variable, and what you pay down, you can pull out (like if gold drops to $1200 per ounce).
So treat your HELOC like a savings account. Put cash there unless you have a better place to put it.
Oh, and DON’T pay OFF your HELOC and close it down. You’re better off having that borrowing power available for a catastrophe (like medical or job loss) than worrying about qualifying for a new loan in a future economy. Even if you have to pay an annual fee.
I too believe it is inevitable. There is absolutely no way any politician of any party will willingly give up power in order to bring about more Liberty for the citizens. Terrible times lie ahead; be it within a year, two, or ten. It's a certainty.
The powers that be know Obama is their man, they're going to crash the dollar under his watch with his help, he is their useful idiot. Obama thinks that he is ushering in a Marxist Muslim era but the powers that be hate Islam as much as they hate Christianity, they're just using the Islamic world for their benefit for now.
Before the end of 2012, the dollar is crashed in my opinion.
He's wrong, gold will not lose it's value. There have been worse times than hate we are going to go through and gold did just fine. Gold and silver is one's best material hope for not having to participate in the marxist economy that these people are trying to implement. That's the whole point of crashing the dollar, to control people.
Or the idiots who think Trump will save them.
Or cw2.
hate = what
Really? If you refi'd recently, check your mortgage and see if there's an escalator clause in it -- an "inflation" clause.
Bet you two old bottlecaps it's got one in the fine print.
So equities don't work in a hyperinflationary economy, either.
What you would see instead would likely be a move by the Usual Suspects (China, Russia, other enemy states) to foment civil war in the U.S. using the Mexicans as catspaws.
They would then bring in a U.N. resolution to break up the U.S. by restraining the U.S. (or trying to) from reestablishing its authority in the Southwest, under the rubric of opposing "ethnic cleansing". They'd:
- Assert the rights of Mexican nationals in the U.S. to live here,
- Assert their right to have a government of their own in places where they have a working plurality or majority (Texas, California, Arizona, N.M.),
- Affirm their right to secede from the United States without U.S. interference or "retaliation" or "race war" or whatever baloney language you like, and
- Assert the U.N.'s obligation to protect (oh so recently and deliberately endorsed in Libya by the Obama Administration) both ethnic Mexicans and illegally immigrated Mexican nationals from evil ugly whiteyes and
- Pass a force resolution through the Security Council authorizing military intervention by interested powers.
Something like that.
Argentina collapsed in 2001 and confiscated private savings in 2008.
Obama convened a working group (list of names needed) to look at how to do this in the States. Mechanism would be a public law (or decree), seizing your IRA and replacing existing assets with federal (worthless) promissory notes.
The assets would be commingled with Social Security funds (i.e. instantly liquidated and stolen).
See the post above, which you apparently missed, which predicted that the Fed would move to "protect the system" by allowing banks to change our mortgages from fixed-rate to variable-rate and pumping up the balances, i.e. "adjusting for inflation". The Fed will do whatever it takes to protect the banks and screw you -- hard. Guaranteed.
I got screwed in gold, and the Fed did it to protect the dollar, and their Eurobanker buddies and the Eurobanker buddies' best depositors. Done deal, zip, zam -- screwed!
s/ A Knowing Screwee
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