This is going to be sad.
To start with, because of the decline, next year’s tax revenues are going to be down by double digits. And there is no commercial money left to buy T-bills, so forget about deficit spending. If they want to spend more than taxes, the Treasury will just say “no money left”. The last time the US government about went bankrupt was in 1895.
The real fun will begin when unemployment hits double digits, the credit card companies collapse (it was just announced that they can’t sell the bonds they need to cover their cardholders purchases, for the first time in 15 years). Millions of Americans live month-to-month on this credit, so won’t be able to pay rent.
Millions will probably then overdraft bank checking, so either the banks will halt checking, or retailers will refuse it. The only currency left will be debit cards and cash. This will cause massive cash deflation, as there is only enough paper money to support 5% of the daily retail.
Meanwhile, there won’t be any money to pay for Social Security, Medicare or Medicaid, and Defense will be lucky to get just Barney Frank’s 25% cut. Of course, if a war starts against the US, they will have no choice but to put money into Defense.
Sorry, Granny and Gramps baby boomers who voted for Obama, you are at the head of the line to get shafted in this deal. On the plus side, you can probably get government euthanasia.
And no Frank Roosevelt bail outs this time, because that is what started the problem in the first place. The best that impoverished people can hope for is government housing and free food. Health care will be minimal.
The fools in Washington will raise the income tax to 100%, but not get a spare dime out of the deal, so they will try a “wealth tax”. And that won’t work, either, because even the rich are going to lose their shirts in the downturn. A “rich” person will have a few thousand dollars in cash at home, that the government doesn’t know about.
Wealthy people, if they can, will leave the country and take their money with them.
Yep, this or parts thereof are going to make this a heckuva ride.
We’ve hit the iceberg, so Obama has been made the honorary Captain of the Titanic. He gets to go down with the ship.
Thats one of the best damn analysis i have seen written here on FR. I see it pretty much the same as you. The gig is up. We have been living in la la land for too long. Reality is about to set in. I just hope these idiots who voted for Obama starve first so i can laugh. Maybe it will make me forget about my own hunger.
ping