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.
The choice is between what someone has described as a "socialist" budget versus what might be described as a "constitutional" budget.
The very concept which was described presents a novel new opportunity for reframing the deficit/debt/budget debate!!
The so-called "progressives" will own the Obama "socialist" budget he proposes and they approve.
Going forward, real "conservatives" (those citizens who are dedicated to preserving America's Founding principles), should distinguish themselves by advocating for a constitutional budget. Such a debate would place the focus on the Constitution's limits, and how those limits were put in place to preserve individual liberty.
Let the argument for liberty and against coercive rule by self-appointed political elites begin.
Sir Winston Churchill, upon leaving office as Prime Minister in 1945, described what he believed to be the state of his country at that time:
"I do not believe in the power of the State to plan and enforce. No matter how numerous are the committees they set up or the ever-growing hordes of officials they employ or the severity of the punishments they inflict or threaten, they can't approach the high level of internal economic production achieved under free enterprise. Personal initiative, competitive selection, and profit motive corrected by failure and the infinite processes of good housekeeping and personal ingenuity, these constitute the life of a free society. It is this vital creative impulse that I deeply fear the doctrines and policies of the socialist government has destroyed. Nothing that they can plan and order and rush around enforcing will take its place. They have broken the main spring and until we get a new one, the watch wil not go. Set the people free. Get out of the way and let them make the best of themselves. I am sure that this policy of equalizing misery and organizing society--instead of allowing diligence, self-interest and ingenuity to produce abundance--has only to be prolonged to kill this British Island stone dead."
America needs to rediscover the formula for a "benign" government, if it is to recover its greatness among the nations. That formula is contained in the Founders' Constitution, as written and interpreted by them. Let today's so-called conservative members of the "tea party movement" frame an argument for liberty and against a malignant government power which eats up "the People's" labor and liberty.
Nobody describes our current predicament better than Thomas Jefferson, who warned Americans:
"To preserve [the] independence [of the people,] we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude. If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts and daily expenses, and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers." --Thomas Jefferson to Samuel Kercheval, 1816. ME 15:39
If you agree, please pass this post on to your favorite "tea party" person.
This is what the leftists want, they hope it brings communism
And we wonder why Trump is getting so much attention?
The problem is that it is not clear who would win such a battle.
Two words Smith and Wesson
We will the ones that cling to our Bible and guns
Don't think for a second that you'll get a "free house" out of this mess!
In 1923 Germany, most of the damage to owned real estate was caused by property taxes. The appraised values were raised mercilessly billions of times, causing people to abandon their homes and landlords to hand tenants the keys to their rented property. The increases and confiscations were tolerated because governments had to have something to pay police and firemen, who understandably refused to work without compensation.
My guess is it will be the side with the 88 million gun owners.....
Easy to say in hindsight.
Today, the GOP is faced with a tough choice -- hold on to political capital and just cut $38B here or there, or go for the big event (debt ceiling) and force the whole issue of runaway government spending to be faced head-on.
I suppose risking a crash might be a tactical mistake and might be like firing on Ft Sumter. But I sure don't see how we get free from tyranny by cutting $38B here or there.
Given the looming/ongoing precipitous drop in the value of the dollar, I’m strongly considering cashing in a large portion of my investments and paying off my mortgage.
I’m not sure if trading paper for real estate is even wise given what we are facing.
****4) Your payments from the government will dramatically decrease or stop altogether.****
I have this strange feeling I will see my worthless brother-in-law (If you know him he probably owes you money) show up on my porch.
He has been on the government dole since 1980.
A country’s bankruptcy can also be solved in blood. Eliminate the politicians, bureaucrats and bankers stealing the wealth and stop the thieves from receiving it. America will look like Detroit unless the thievery is stopped.
Right now we’re trying to remove the thieves via the ballot box, but time is short.
The one advantage we have is that we’re not Weimer Germany due to the vast amount of resources we sit on.
The "good" news, if you can call it "good" is your debt won't increase, i.e. already existing debt like your mortgage. If you have a fixed rate, it shouldn't be affected, you can pay for it in deflated dollars and the bank has to accept those deflated dollars in payment.
Of course because of hyperinflation on other things, you'll have less cash on hand to pay your mortgage.
It's becoming clear this morning as folks have had a chance to analyze the agreement that the real "cut" is closer to $2 billion than $38 billion. A lot of the "cuts" that are counted have appeared in previous CR's and have already been counted, $22 billion roughly of the $38 billion. The rest of the non-cuts are baseline budgeting gimmicks.
I’d argue it will be a civil war, left vs. right, as opposed to overturning our system, the US Constitution.
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