Skip to comments.5 Things That Will Happen To You When America Goes Bankrupt
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.
Just exactly what the socialist in the white hut has had in mind all along.
Also why the idiots on FR who advocate intentional government default have no idea what they’re talking about.
Obozo and his minions will be delighted!
Two words “Adolph Hitler”.
Well you forgot one thing to cite, they can print more money.
I would hope that with the coming crash, people will realize the nature of government, and that the quickest way to lose a future election would be for a politician to say, "Here's what I will do for you ..."
What politicians ought to promise is, "I will preserve your rights, and make sure that no one messes with you, or your stuff." If people conclude that this is all government is good for, then perhaps the coming Crash will be worth it.
RE: # 1
Inflation, this is the process by which your purchasing power is removed from you by the devaluation of the currency that you carry. Inflation has been deemed a Hidden Tax because the government uses inflation to continually fund their projects, while taking that money out of your pockets. You dont even see it happening, Washington never sends you an additional tax bill, the money you have just doesnt go as far as it used to.
“Why Socialists Love Inflation”
Yup...Little Stevie Dunham’s Dream Come True.
bump! Need to show this to the wife when I get home...
Two more words “Nazi America”.
For example, my vegetable garden and chicken flock become "communal property" (To each according to his needs from each according to his abilities!).
Open warfare develops as those who planned ahead have to defend themselves and there property from those who didn't, but are egged on by the socialist leadership.
Also the start of the second American Revolution could very well begin.
Cloward-Piven explained in a nutshell..
In the not too distant future, I’ll need two wheel-barrows. One to haul the cash to pay off my debt and mortgage and the other to buy a loaf of bread.
Just exactly what Soros told the socialist in the white hut to do.
I’m sure the monster is making billions by shorting the dollar.
That's addressed in point #1. Printing money is inflationary, unless it is done with respect to an economy that is expanding as quickly as the money supply is being increased.
The politicians should be scared of this scenario more than anyone else. It will be open season on them and no one will shed tears when they die.
Your mortgage shouldn’t be a problem. Let’s say you have a fixed rate mortgage and pay $1500 a month on it. Well, with hyperinflation and a few paltry cost of living adjustments, you might find yourself earning $1000/hr. Now, given the skyrocketing price of bread, you may have trouble buying food for your family (at a mere $1000/hr, you may not earn enough to buy food) — but that $1500 monthly mortgage payment? Pfffttthh! Not a problem.