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.
And even if the check comes, the value will be slashed down to nothing.
Thanks for the post...people need to overcome normalcy bias to understand what is coming...they just can’t seem to do that.
Like the videos from Japan where you see the wall of water coming and people looking back and just walking like...wow look at that water and wham they are dead.
You seem to be pretty naive with that statement. The fact is: we are headed to intentional government default with the government continuing.
>>>I have this strange feeling I will see my worthless brother-in-law (If you know him he probably owes you money) show up on my porch.
He has been on the government dole since 1980.<<<
There would be armies of these folks.
I’m aware of that, but some Freepers seem to think it’s a good thing that will be all roses.
Reread article, it does mention printing more.
Well, that didn't work out then did it? (Actually, I don't think that was the driving force for the Weimar hyperinflation at all.)
Germany finally finished paying off its WW I debts on October 03, 2010!!! So much for getting rid of debt by inflation (alone) - more like student loan debt that you cannot rid yourself of until everything is paid up and settled.
I’m strongly considering cashing in a large portion of my investments and paying off my mortgage.
If you have a fixed rate mortgage, pay it off with inflated easy-to-earn dollars.
Take your spare money and put them into things with tangible value (storage food, guns, ammo, gold, silver, farmland, etc.)
I believe most of those resources are already owned by China should we default.
The title says “When America Goes Bankrupt’ but then the list posted obviously is talking about monetizing the debt with hyperinflation. Bankruptcy for a country that creates it's own currency is when it is forced to issue a new currency like Russia did at the end of the USSR.
It is likely that a 2008 scenario could happen again: inflation starts threatening the economy and the Fed tries to pull back money ( is currently ending QE bond buying) raising interest rates along with high energy prices crashes the economy in which case :
1) We have even higher unemployment than now with high prices, or
2) Prices go back down as other countries run back to the dollar assuming we crash their economies again with ours, our best hope.
There are no good options here and they only will be getting worse as time goes on.
Gold will be worthless.
You can hypothesize a scenario where there is NO food, and therefore nothing will buy food.
Gold isn’t intended to help YOU survive a crisis, it’s to help YOUR (spare) WEALTH survive a crisis.
Will Americans suddenly wake up and realize what the left has done to it, or will those who were willing but unable to avert the catastrophe get trashed by the MSM, pushing America even further toward facism from the left?
It is said that catastrophes are a matter of pure chance, and there were those who would have said that the passengers of the Comet were Not Guilty or responsible for the thing that happened to them.
The man in Bedroom A, Car No. 1, was a Professor of sociology who taught that individual ability is of no consequence, that individual effort is futile, that an individual conscience is a useless luxury, that there is no individual mind or character or achievement, that everything is achieved...
http://aynrandcontrahumannature.blogspot.com/2007/10/that-winston-tunnel-scene-in-full.html
this is a Captain Obvious alert if I’ve ever seen one
Agreed....but he’s in his early 30s so he’s got several decades to rethink his position in the decline. As a Maryland resident, he’s got virtually no protection 2A wise.
Gold will be worthless.
When there are severe food shortages, those who can hunt will eat the best. Those with gold will make more attractive starved corpses.
LLS
Depends on your mortgage I’d say. If you have a 4 or 5% fixed rate, I’d hang on to it.
I’m sure the monster is making billions by shorting the dollar.
He did it once already. Soros needs to arrested and his empire dismantled.
bmfl
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