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A Debt Default is Not the Real Problem for the US
Many
commentators are discussing the collapse of the US today. Indeed, the most
common theme I see one of “it’s all over,” usually focusing on the math/ debt
problems in the US.
Debt is a
major problem, but it’s not always one that destroys everything. History is replete with countries that
defaulted on their debt… and the world kept chugging along regardless.
So, the idea
that the US will default on its debt and we’ll somehow re-enter the stone age
is false. Human ingenuity and survival skills are far better than that. Indeed, the human race was in much worse
conditions when we were hiding in caves and running from prehistoric monsters.
We somehow survived
that situation and evolved to make peanut butter and jelly sandwiches and drive
cars… so I’m sure we’ll figure out how to deal with the collapse of the US
empire and the end of the Dollars status as world reserve currency.
So rather
than freaking out about our debt problems, I think we need to address the real
issue that LEAD TO our disastrous debt situation. And that issue in the the US
today is that the people making the major decisions are not problem solvers but
politicians.
Let’s
consider this for a moment.
Problem
solving requires critical analysis and flexible thinking. Anyone who’s tried to
tile a bathroom or even balancing their personal finances knows that the
process is not linear in nature. That is, there is no one single correct
answer.
Instead,
there are endless solutions and the real issue is one of picking the solution that
best utilizes what’s on hand in a realistic way to create the best outcome.
This
involves being able to accurately assess the situation/ problem, taking account
of the resources at hand, and then coming up with creative or traditional
approaches to use the latter to address the former.
In contrast,
a politician has one primary goal: election. Consider that the perceived problem in this situation is not
actually a problem at all, but an issue of ego, “I must win.”
These people
are not problem solvers. As we find out regularly, they often cannot organize
their own personal finances (or cheat on them), their personal lives are a
shambles (how many members of Congress leave their wives for lobbyists?), and
in truth they don’t even understand the issues they are debating/ need to
address if elected.
Instead, all
of their efforts are aimed at saying the right things so they can get in
office. And once elected, the
focus is on getting re-elected or preparing to run for a higher office.
Consequently,
their focus never actually shifts to address or implement real change or
solutions to the problems facing the country. The reason for this is:
a) none
of them have a clue how to fix these problems
b) taking
a risk with implementing a real solution could result in too much career risk
If your
primary concern is getting re-elected, you’re not going to go out on a limb and
implement some policy that could go wrong. Instead you’ll look for
half-measures, small moves that could produce small changes, band-aids for
society’s wounds rather than actual healing.
However, as
bad as Congress is, the US Federal Reserve is much worse. These guys don’t even
actually address reality, but are stuck in a world of models and formulas. Seriously,
they can say with a straight face that inflation is contained, fill their gas
tanks at the pump (with $5 gas) and not connect those dots.
You can see
it in their policies. The Fed really only has one policy: printing money.
Everything the Fed’s done revolves around this (interest rates, are secondary).
Every time a problem surfaces, the Fed’s answer is to print more money.
Small wonder
then that the US Dollar is falling off a cliff. And it’s only going to get
worse. The idea that somehow these guys are going to wake up one day and think,
“maybe we shouldn’t print money” is delusional. And any public comments they
make about considering this as an option is just posturing by those looking for
political points.
Which is why
the US is set to enter a period of mega-inflation in the coming months. The Fed’s
going to keep printing GUARANTEED. And we all know how this will turn out: the
Dollar collapses.
So if you’ve
yet to take steps to prepare your portfolio for the coming inflationary
disaster, our FREE Special Report, The
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Investing!
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Summers
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We may as well have Amexiconada soon to compete against EU and BRIC.
There are no longer superpower countries, but super super power nation-state alliances.
I don't like pols so buy my product pitch is worn out.
We will see cultural marxism fly out the window faster than the last solid feces that collect in the unflushable toilets of the starving ubran masses. Gods law called tribalism will reign supreme once more. I lie awake at nights gnawing my fingernails in terror for the young white females caught within the eeirly silent - save for the occasional gunshot and scream - fueless and foodless concrete jungle after dark. And when you think about it, that pretty much describes the cities as they are today. I can't imagine them in a collapse.
http://www.youtube.com/watch?v=gh5ogOH82Aw
Make sure your nails are clean then, naughty onychophage. You might need them to claw at your adversary's eyes. However, one could harvest pinworms during those long nights without Sterno.
http://en.wikipedia.org/wiki/Nail_biting
<<< So, the idea that the US will default on its debt and we’ll somehow re-enter the stone age is false. >>>
There is zero chance the US can service its unfunded liabilities. The Fed can not print enough money, and the US tax base can not produce enough revenue to meet those obligations. The US may not revert back to the stone age, but default (of some sort) is certain.
does a government that has no problem throwing its Generals and Admirals and the soldiers, sailors, airmen and Marines who serve them under the bus actually have any liabilities? For example "look at Greece." They have a huge military courtesy of the European Union, European Banks and European defense contractors "and yet the country must fire all it's civil servants before it is allowed to give up all those other people's military contracts." THAT strikes me "as a liability" and if I were Greek "i would say nyet." Indeed "they may already have."
The unfunded liabilities I am talking about include Medicare, Social Security and Medicaid. The US can not pay for the projected cost of these entitlement programs.
This was/is the most boring and obvious piece written in the last month or so. "Key insights" equal to "If my aunt had balls she'd be my uncle...".
In my opinion, the real problem is that a group of men who call themselves leaders can empower another group of men to print bank liabilities created out of thin air, and call this "money", which is then used to steal real wealth from the people.
An act of ultra vires.
We should have learned by now that printing money will not get us out of a debt spiral depression. The commodity blip that so enthralls will end, not least because at contract expiration, someone has to pay for the overpriced crap. There is still a settlement process, except for silver for which all rules of law, exchange, gravity, and conservation of energy, have been temporarily suspended.
Chin Chan Chao would definitely NOT agree with your analysis. He may decide its time to pull the plug on Uncle Sam who uses all the money he borrows from Chin to make power plays in derivatives/commodities and military ventures, none of which are in Chin's interests..."I want my money back!" Chin could get as mean as Mrs Thatcher!
Mohamad Porkintheass wouldn't like trading all his oil for confetti either
If they refuse to raise the debt ceiling, then the budget is force balanced. I agree that default is unlikely because the USSA still has income and plenty of assets.
If the US doesn't raise the debt ceiling, it can't make payouts of bonds interests.
That would cause a default.
All the rest of the US assets wouldn't matter anymore.
A US default would be disastrous!
About 85% of it's people's wealth would go up into smoke, Retired people would no longer get a pension, sick people wouldn't get anymore care, the police would not have anymore resources to operate...
Do you think you can protect yourself with a shotgun against a mob of armed looters if it happens?
99.5% chances you'll be killed if you try to defend yourself and if your wife and daughter are lucky they only get rapped.
My Belgian friend....
"99.5% chances you'll be killed if you try to defend yourself and if your wife and daughter are lucky they only get rapped."
Here is proof to back it up:
10 Best Rappers
Agreed, getting killed would ruin one's day, but actually getting rapped?
Now that would just really, REALLY suck!
You are wrong. Interest payments on the debt is under $200 billion per year. The IRS collects over $2 trillion per year. They can make the interest payments and have $1.8 trillion left to fund the government without defaulting.
Wrong. I don't know what propaganda site you got our information from. Sorry, tax receipts after tax breaks/loopholes/refunds is under 400 billion.
Get a clue. Your numbers are way off. The federal budget was $3.7 trillion and we ended up with a $1.5 trillion deficit. Do the simple math if you're capable.
i find that hard to believe given that the govt spends arnd 1T on defence alone. not to mention SS, medicare etc.
Bullshit. Bring it on, the mobs will be confined quickly and in areas like mine where we have our own resources and thousands of like minded (well armed and trained) neighbors, we will be fine. Life and Nature make no promises and the planet is finite. Either the economic model we use reflects this, or it will be forced upon us from time to time. I, and my many neighbors (many who served like myself) are prepared. bring it.
Compensation will not return to productive people until the fraud (at all levels) is prosecuted. Since we all know this will not happen, I say crash the fucking system already. The sooner we sort this all out, the better off our children will be. I remain optimistic, but I continue to watch the margins of my business collapse. Eventually, it becomes pointless.
I need to find a new neighborhood -my neigbors are a bunch of selfish old farts-most of whem think guns are bad, and either Obama/Bush are good. On the other hand, my three sons (15 to 25) and 9 year old daughter can shoot straight. We have been in the process of planning on leaving the cit and moving out to the country if the shtf.
People in this country have no clue how bad it could get - they have no understanding at all of recent history -and I'm referring to just the last century where over 200 million died in government induced starvations and revolutions in nealry a dozen countries
"where do you live exactly" and "am i one of your neighbors?"
!
Nah, there's plenty of AK knockoffs out there. Way cheaper, so is 7.62 ammo -- plus it performs better at the Zombie Apocalypse distances one would encounter. Hell, Joe Six is probably best off with a shorty Mossberg.
Yeah, I agree. Thats going to happen. Buy ammos/AR-15s!
I nearly always agree with you SD, but old people in the States have political power. It's the children who will starve. And yes, all the women in the States are getting "rapped", and it isn't doing them a damn bit of good;)
:)
I agree with the fact that most young people will be the first victims. Most of the older generations just don't care about anything else besides themselves. I even see this in my own family. The older people always complain about the lack of attention but don't every give attention to anybody else. They want extra of everything, expect the entire infrastructure to be adopted to them...
And with the last part... I agree, some are such tight asses no dick would actually get trough without throwing a pound of butter on it and heating it with a blowtorch :)
My 25 year old son asked me what would happen to old people when the system collapsed - I told him that they can forget about social security, thousands of dollars a year of prescription drugs they don't need and which we pay for giving the pharmaceutical companies a blank check -or spending 50 grand a year in a convalescent home - we can't afford it. If your family won't take care of you, and you lose your health -you die. No more spending a half million on some 90 year old's cancer treatment. The babyboomer generation screwed this country -They screwed their children and grandchildren -they will pay. There will be no more gutless politicians around catering to these old fools crying about their social security. These criminal bums will either be retired, in jail, or lynched by the angry mobs.
You mean the young generations with their twitter, facebook, ipods, oboxes, and MTV will lead us to a wonderful new future? The younger generation who refuse to get their hands dirty? I'm not that old (37), but when I was in highschool I was washing dishes and unloading trucks. How many teens do you see doing physical labor these days?
I see plenty, but maybe thats because the ones I know have to. What you see on tv, and in the subburbs/malls, shopping districts, isn't everyone by far. There are industrious people in the younger generations, they just don't get airtime because they aren't good consumers/advertisements.
In general my perspective is pretty skewed, so maybe the vast majority of teens-20's are just whiney little fucks who'v never worked a day in their life.. but all the guys I've ever worked with weren't, or if they were, didn't last long.
I guess I didn't notice this side of you before, but you are beginning to sound awful whiny yourself...
Most of the older generations just don't care about anything else besides themselves. I even see this in my own family. The older people always complain about the lack of attention but don't every give attention to anybody else. They want extra of everything, expect the entire infrastructure to be adopted to them...
Maybe it's just my family, but I seem to remember that a lot of those older people actually built that infrastructure you mentioned, a lot of sweat and blood went into it. A few actually died doing it. I don't remember too many of my older relatives demanding attention. They didn't have to. They got it because they earned it, by giving us a chance to have a better life than themselves.
And with that last part...
I get the idea that you probably wouldn't need the butter yourself.
I guess I didn't notice this side of you before, but you are beginning to sound awful whiny yourself...
Most of the older generations just don't care about anything else besides themselves. I even see this in my own family. The older people always complain about the lack of attention but don't every give attention to anybody else. They want extra of everything, expect the entire infrastructure to be adopted to them...
Maybe it's just my family, but I seem to remember that a lot of those older people actually built that infrastructure you mentioned, a lot of sweat and blood went into it. A few actually died doing it. I don't remember too many of my older relatives demanding attention. They didn't have to. They got it because they earned it, by giving us a chance to have a better life than themselves.
And with that last part...
I get the idea that you probably wouldn't need the butter yourself.
Moody's says Q1 rating changes point to tough year ahead for US state and local governments
After, missing the boat on mortgage-backed securities, NOW these ratings agencies want to state the obvious? How are these assholes still in business? Fuck the whole financial sector! Crash the system, the sooner we do, the sooner compensation finds its way back to folks that are actually worth a shit.
Munibonds are the dynamite....
HardCommodities just the spark for selloff.
Agree with ur commentary Johny2.
Thanks Phoenix for Post
It is a big question what will happen when the USA defaults, but one thing is for sure. China, Japan and other holders of the USA debt and currency are going to be left holding worthless paper. I do not think they deserve much better either, for their holding of this debt was a part of the problem all along. The USA itself could benefit from default in a case that masses finally turn off the MSM propaganda and start again. Otherwise, who knows.
China, Japan, GB and others are continually mentioned regarding default. But what about te implications pertaining to the Fed? Is the Fed going to grant a jubilee? The US can tell the rest to F O, but how will the Beast react?
This really puzzles me.
USA default is real problem for China and Rest of the World.
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To pick up your copy today, go to http://www.gainspainscapital.com and click on FREE REPORTS.
Good Investing!
Graham Summers...
I love you like a brother but don't you think the self promo cheapens the message?
See, I even re-promoted you!
Cheers!
Why would the US care about the rest of the world?
They should first feed their poor and hungry before engaging abroad.
What would be best for the US?:
Spend 700 billion on warfare?
Spend 700 billion to help their own needy people?
they didn't and that is partly why the empire has fallen. turns out you can't bomb every continent without pissing people off.
Best is do neither
warfare is not for helping others, but for helping US politicians to create jobs in the energy and defense sector.
dollar collapse does help bring down unemployment, although it is sort of cheating for leaders who don't know how to create quality jobs, because inflation negates any buying power of wage earned. But for the elites, it is better to have the masses do something for the bread instead of just being given out through welfare.
For majority of Americans, havinga job only allows them to have freedom to choose which useless crap they consume at the mall.
So having a job isn't about feeding your family? Where do you think the welfare comes from? No farmers, carpenters, electricians, utilities workers, truckers and we all starve to death or become neanderthal hunter gatherers. Fools think that the entire population can sit on their asses all day while the wealthy provide for them.
The welfare is coming from borrowing (stealing)from future generations. The wealthy aren't providing shit, they are just taking. And taking a lot.
I never said the wealthy provide for us. I said fools think that the wealthy should or could provide for us.
Wealthy must provide enough for the labor to be productive.
Sending a poor but high IQ prodigies to work the farm fields rest of their lives due to lack of educational investment is not the optimal growth model for society. And that investment can only come with wealthy.
I think you have it a little backwards, aldous. TPTB don't care about creating jobs, They only care about making money. Quality jobs? since when has that been on anyone's agenda. We're going down, and no one and nothing can stop it. This article was just an advertorial by someone trolling for clients. don't take it seriously...
they have given themselves an "F" on that one..."and are retooling."