Skip to comments.The Coming Financial Disaster
Posted on 11/14/2012 11:51:04 AM PST by Starman417
We, the people of the US, are heading for a disaster of epic proportions. And when it hits, due to the US influence abroad, the world will feel the hurt at the same magnitude. Why? Fiat currency, thats why. Combined with rapidly increasing national debt, and interest rates kept artificially low, with massive infusions of "cash" into the market place, the foundation holding up the confidence in the US dollar is starting to crumble.
Given more credit ratings downgrades by the various international credit foundations and agencies, the point of irreversible damage is quickly approaching. When that happens, hyper-inflation will implode the dollar nearly overnite, and nothing the government does will be able to stop the fall. Nothing. And the reason the government can do nothing, at that point, is that our standard of currency, the US dollar, is based on nothing but the confidence of the marketplace, both at home and abroad. When that confidence goes south, the dollar will become worthless as a method of exchange between people, leaving tangible assets and items, along with gold and silver, as the preferred methods.
Given the the sheer number of people living "paycheck to paycheck", and holding essentially worthless material goods, when that disaster hits millions upon millions will starve off and die out, particularly within the inner city areas. Doom and gloom? Maybe. Maybe not. We will certainly know soon whether or not the US governments credit rating gets downgraded further. These credit downgrades didnt happen due to low taxation. They happened because neither of the major political parties seriously addressed the real problem. Spending. And yes, I said both of them, even as the first credit downgrade happened under the watch of the Democrats. Bush lowered taxes, but that arguably created economic growth, resulting in at worst, a wash revenue-wise, but likely a revenue increase. Liberals will argue the contrary, but history doesn't support their assertion.
What Bush did that made conservatives cringe is to spend. With the help of a Republican congress to boot. A medicare prescription drug plan. The Patriot Act. And "No child left behind". Liberals might wish to include Defense spending, particularly with two wars, but neither of those wars were added to the Federal baseline budget like the previous three items. Then along comes Obama. With a progressive leaning Democrat Congress. $841 Billion Stimulus, give or take a few billion, in which much of that was rolled automatically into the baseline budget. The Omnibus bill, again rolling more spending into the baseline budget. And Obamacare, which by definition, is part of the baseline budget, even as most of the spending hasnt kicked in yet.
Those baseline budget additions became entrenched in the general federal funding for various programs, agencies and departments, and include an automatic 4-7% increase, annually, due to inflation. For reference, that means $10 Billion added to the baseline budget in 2002 would, due to the automatic increases, cost the taxpayers $17.1 Billion dollars this year, assuming the average automatic increase of 5.5%. A $7.1 Billion increase in spending. And we are talking about hundreds of billions in baseline budget additions. Contrast that with static tax rates over that same time period, but growth of only 3%, on average(and that is probably a very liberal estimate of GDP growth).
There is no possible way that revenue, even with unprecedented continuous growth for that long of a period could ever catch up to spending. And our government only continues to add additional spending to an already bloated budget. This is why there have been, and will continue to be, credit downgrades.
(excerpt) Read more at floppingaces.net...
I’ve been reading posts with this heading since the last century.
Well, I don’t think you’ll have to read them for very much longer...
I read something last week that was interesting: if 100% of the current revenue was applied to the existing debt, it would take 387 years to pay it off, due to the amount of interest involved.
Anyone know if that’s accurate?
The only thing keeping us above water is there is no other place to go but the American dollar. But a change in perception that it is a safe currency can cause a sudden and dramatic collapse, it would require other currencies to have a much better fiscal climate in their country than ours. So far, no one can really surpass us enough to cause a loss of confidence.