Politicians can only do two things: cause problems and spend money. With the new debt plan, they’re doing both. I don’t generally like to bring up politics here, but even a buffoon can see the idiocy in what has been passed.
You can’t solve your debt problem with more debt. It doesn’t work at the individual level and it doesn’t work at the government level. Anyone who says different is either lying to you or ignorant.
The markets tanked today, even though we have a new debt “plan.” Why? Because the other economic indicators show that we’re screwed and going into further debt is going to make it worse.
Let’s think about this. The federal government just increased the legal amount of money they can “borrow.” That’s like you not being able to pay your credit card bill and asking Visa to increase your credit limit so you can make payments on the bill they sent you. There are only 3 ways to get rid of that bill: you either make more money, cut back on your spending, or you default (stop paying and claim bankruptcy).
Assuming you don’t want to default, it’s simple math that there’s no possible way that you can pay off your credit card bill unless you make more money or cut back on your spending so you have more dollars to put towards the amount you owe Visa. There are been numerous blogs and YouTube videos showing that even if they taxed all the richest people and companies in the country, they still couldn’t raise enough money to pay more than one year’s worth of interest.
It’s pretty clear that there won’t be any significant increase in revenue for the federal government. Now that we know that we can’t generate enough tax revenue to solve this debt problem, our other two choices are to either cut our spending or go default.
Since the self-lauded debt plan increased the debt ceiling, I think it’s pretty safe to say that the federal government has no intention of cutting their spending. If I recall correctly, our government is currently spending approximately 10 billion dollars everyday. Now that the debt ceiling has been increased, we can expect this to go up.
At this point, we have determined that we can scratch off the first two solutions, which leaves us with the third: default. Can we then expect the federal government to suddenly stop paying their bills? Hardly. As we have just seen, despite the dog and pony show, there weren’t enough spines in Congress to do the right thing and, instead, chose to go deeper into debt. All they learn from this is that they can keep spending and no one will stop them. I mean, the worst that can happen to them is that they “retire” from either the Senate or House and live the rest of their life comfortably at the taxpayer’s expense. (Wouldn’t it be nice if we had an amendment that stipulated that no congress critter gets any benefits if they leave without balancing the budget?)
So, what does this mean? Can the government continue to spend billions of dollars everyday without impunity? Seems like it, doesn’t it?
How are they going to repay this debt? They can’t raise enough money to pay it off. They’re not going to cut any real spending, and they can simply raise the debt ceiling whenever they want? Can this last forever? Since the debtors are going to want their payments, how is it that the federal government going to pay off all this debt?
Hyperinflation. The answer is hyperinflation. That’s how they plan on paying off the debt; with worthless dollars. I now believe that has been their plan all along. Do the dance, pay lip service to the people, but in the end, they did what they wanted to do anyway, which was stick it to the American population and raise the debt ceiling. The debt is insurmountable and they know it. Politicians don’t care about you; only that they get elected again.
Hyperinflation. If you aren’t completely familiar with what it means, it’s time for you to do some research. Though I suggest that you don’t start this research until Friday night, as you’re sure to lose sleep as you learn what’s in store for us. To start, look up “Weimar Republic” and “Argentinian Crash” and “Zimbabwe Gold” in your favorite search engine.
It doesn’t matter whether the US loses its credit rating by Moody’s or Standard & Poor’s, as I doubt there is anyone left that trusts these institutions anymore anyway. To think that they have any credibility is ludicrous. No thinking person who has ever had to balance a checkbook could possibly believe that the US still has a AAA credit rating.
The outlook for us is not so good. We have been hit by a little bit of inflation this past year, and it’s going to get worse. Probably a lot worse. The course has been set. All that’s left to do is ride it out. how well you can ride it out depends on how much preparing you do now.
If you’re reading this and thinking, “How the heck can I do that?” then you need to head on over to PrepCast.info and start listening to the podcasts. If you’re not currently preparing for this, you are already behind the curve.