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The Government Is Bankrupt and Will Destroy the Economy
American Thinker ^ | 08/20/2012 | Monty Pelerin

Posted on 08/20/2012 7:02:42 AM PDT by SeekAndFind

Most people don't understand the unsolvable problem the U.S. government has created for itself and its citizens. Sovereign default is beyond a likelihood; it is inevitable.

When and which (possibly all) obligations are defaulted on will be determined by panicked politicians under duress. A complete financial and economic collapse appears unavoidable. I hope that is the worst that will occur.

Official Government Debt

The official federal debt is $16 trillion. This debt represents 100% of current GDP. Ken Rogoff and Carmen Reinhart studied countries with high levels of government debt. This Time Is Different: Eight Centuries of Financial Folly contains their complete findings. The authors concluded:

"In our study "Growth in a Time of Debt," we found relatively little association between public liabilities and growth for debt levels of less than 90 percent of GDP. But burdens above 90 percent are associated with 1 percent lower median growth. Our results are based on a data set of public debt covering 44 countries for up to 200 years. The annual data set incorporates more than 3,700 observations spanning a wide range of political and historical circumstances, legal structures and monetary regimes."

Elsewhere, the authors state:

"Our empirical research on the history of financial crises and the relationship between growth and public liabilities supports the view that current debt trajectories are a risk to long-term growth and stability, with many advanced economies already reaching or exceeding the important marker of 90 percent of GDP. The U.S. has passed their danger point, and recent U.S. GDP experience conforms to their findings. The economy is growing at subnormal rates despite unprecedented stimulus efforts. A recent Rasmussen survey found that only 27% believe that the economy is improving."

(Excerpt) Read more at americanthinker.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: bankruptcy; economy; government; govtbankrupt; uscrisis; usdebt

1 posted on 08/20/2012 7:02:49 AM PDT by SeekAndFind
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To: SeekAndFind

Not only that they are out of money too


2 posted on 08/20/2012 7:03:32 AM PDT by al baby (“If Barack Obama has a Harvard law degree, he didn’t earn that. Somebody else made that happen.”)
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To: SeekAndFind

We study history not so that we won’t repeat it.

We study history so that when today’s assclowns start doing what historical assclowns have done, we know what the results are going to be so that we can prepare accordingly.


3 posted on 08/20/2012 7:06:18 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working fors)
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To: SeekAndFind

4 posted on 08/20/2012 7:07:35 AM PDT by BenLurkin (This is not a statement of fact. It is either opinion or satire; or both)
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To: al baby

RE: Not only that they are out of money too

Well as per Obama, how can we build any business if we depend so much on them? They need more money so that we can “build that”. /s


5 posted on 08/20/2012 7:07:35 AM PDT by SeekAndFind (bOTRT)
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To: SeekAndFind
The economy is growing at subnormal rates despite unprecedented stimulus efforts.

Don't know if we've passe the point of no return - but if we haven't, we're close... very close.

6 posted on 08/20/2012 7:10:10 AM PDT by GOPJ (Politics is war without bloodshed, and war is politics with bloodshed. - Mao Tse Tung. We're at war)
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To: BenLurkin

BTTT!


7 posted on 08/20/2012 7:17:32 AM PDT by Graewoulf ((Traitor John Roberts' Obama"care" violates Sherman Anti-Trust Law, AND the U.S. Constitution.))
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To: MrB

We study history not so that we won’t repeat it.


At one time that may have been true, but not today. Today, history is viewed through a politically correct prism and, as a result, is being incorrectly interpreted.

In my lifetime, we have gone from America as a “melting pot” (true) to “diversity is our strength” (absolute BS).

I predict that as the debt situation becomes increasingly unstable, you’ll see politicans promising even MORE benefits and Government programs. It seems counter-intuitive, but you have to remember that these people will say/do ANYTHING to keep their jobs & power in the short term (e.g., the next election). The mid-long term be damned. And the sheeple will eat it up until it all collapses on everyone’s head.


8 posted on 08/20/2012 7:31:25 AM PDT by rbg81
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To: rbg81

It’s the sure road to anarchy


9 posted on 08/20/2012 7:46:58 AM PDT by SMARTY ("The man who has no inner-life is a slave to his surroundings. "Henri Frederic Amiel)
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To: SeekAndFind

It’s why I moved from Seattle to a small farm in rural KY last year.

The soon coming collapse is as real to me as the pandemic was to Bruce Willis visiting the past in The Twelve Monkeys.

And like him, I know its impact but not the details.


10 posted on 08/20/2012 7:56:21 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: GOPJ

—Don’t know if we’ve passe the point of no return - but if we haven’t, we’re close... very close.—

This video uses all government money munbers but removes nine zeros from each number to compare it more “realistic” to the family in the video.

It answers your question. We are LONG past the point of no return. The only way out is hyperinflation.

https://www.youtube.com/watch?v=Li0no7O9zmE


11 posted on 08/20/2012 8:00:21 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: rbg81

I predict that as the debt situation becomes increasingly unstable, you’ll see politicans promising even MORE benefits and Government programs.


What a stupid prediction! ;-)

Just kidding, but I say that because, frankly, that is what they are already doing and have been doing for some years now. Why do you think the number of people dependent on the government is growing so rapidly? :-)

And you are dead on when you say: “And the sheeple will eat it up until it all collapses on everyone’s head.”


12 posted on 08/20/2012 8:02:46 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: MrB
“We study history so..”

That's the rub there folks.

In plane and simple terms we no longer study history at any level of education.

If we studied history in basic education ( K-12 ) the two major driving forces in education - Dr Spock and Robert J Maslow - would have regulated to the dustbin of history shortly after they proposed their idiocy.

If we studied history after graduation from high school then most of the liberal/progressive/socialist programs that have been the highlight of political activity since the mid 1970s would have never escaped the late night college BS sessions.

And don't even think about foreign policy activities even before November 1979.

It has take us over 60 years to destroy our society but by G0D we have done so.

13 posted on 08/20/2012 8:04:43 AM PDT by Nip (TANSTAAFL and BOHICA)
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To: cuban leaf

Yeah, except I think its going to get even worse. I fear we haven’t seen anything yet.


14 posted on 08/20/2012 8:11:31 AM PDT by rbg81
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To: Nip

RE: In plane and simple terms we no longer study history at any level of education.

But we do, my friend, we do...

Our schools are replete with the history of white man oppression, the contributions of ethnic minorities to the greatness of this country and very recently — the contributions of gays and lesbians to society.


15 posted on 08/20/2012 8:15:05 AM PDT by SeekAndFind (bOTRT)
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To: rbg81

—I fear we haven’t seen anything yet.—

Absofrickinlutely.

If Obama wins, it will get very nasty, very fast. If Romney wins, after holder’s people quit rioting it will get nasty slower, but in the end it will be almost as bad. There will probably be a spurt of business investment and loaning/borrowing (i.e. inflation) that will sputter out like all the stimulus.

The reason is that neither man can solve this, seeing as they are mere men. It’s way too big for that. This will be resolved by war. A big one.


16 posted on 08/20/2012 8:16:18 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: SeekAndFind

the only stimulus that means anything concrete is substantial tax AND regulatory relief.

anything else is smoke and mirrors...


17 posted on 08/20/2012 8:26:26 AM PDT by mo (If you understand, no explanation is needed. If you don't understand, no explanation is possible.)
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To: Nip

In plane and simple terms we no longer study history at any level of education.


I was on a predominantly liberal site and was “temp-banned” for linking to an article claiming the same sex marriage crowd is using the tactics of the early days of Nazism. The moderator said he was tired of comparing something so minor with something so horrific. I didn’t get the chance to explain why I was using it - that Nazism was not “horrific” at first. That’s the point.

But when all people know of history is the “highlights” and not the details, they will blindly pass through the details again and find themselves square in the middle of brand new “highlights”. Unfortunately, we will be passengers along for the ride whether we want to be or not.


18 posted on 08/20/2012 8:30:43 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: cuban leaf

Not only are they mere men, but the social forces that were set in motion long ago are accelerating. The debt is a perfect metric for tracking this. The path of least resistance has been to spend more & more & more. Anyone who stood in the way was portrayed as mean spirited and racist, sexist, etc, etc.

Meanwhile, the prosperity that made the social programs possible has long since disappeared. We kept the illusion of prosperity by putting it all on our collective credit card.

The reason why interest rates are soo low now is that they CAN’T be allowed to go higher. The System would immediately collapse due to the explosion in Federal interest payments. In fact, rates will be forced ever lower (to zero) to make keep the higher deficits “affordable”. Its all blatent manipulation. It can go on for a while, but it can’t go on forever.


19 posted on 08/20/2012 8:51:31 AM PDT by rbg81
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To: SeekAndFind

The governments insane spending has moved beyond treason and is starting to feel like wanton belligerence.


20 posted on 08/20/2012 8:54:58 AM PDT by Psycho_Bunny (OWS = The Great American Snivel War)
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To: SeekAndFind
When it comes to big broke and bankrupt government, it got that way by corruption, cronyism, greed and the elite's thirst for power. Ridding ourselves of those kinds of politicians is the only thing that is going to fix this nation. First move in the right direction is to never hire a lawyer to any public office.
21 posted on 08/20/2012 9:00:16 AM PDT by drypowder
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To: rbg81

Yup. Our elected officials are not the problem. WE, the electorate, are the problem. And as you say, anyone that could solve this would not have a chance of getting re-elected.

And I’ve been making the same arguments regarding interest rates. Anyone who thinks rates will go up in any sort of short- or mid-term doesn’t realize it would be the equivalent of putting a gun to the country’s head and pulling the trigger. I make all my “borrowing” decisions based on the firm belief that interest rates will be either stagnant or lower in the foreseeable future. Anyone who says otherwise is sellin’ somethin’.


22 posted on 08/20/2012 9:10:29 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: Psycho_Bunny

The governments insane spending has moved beyond treason and is starting to feel like wanton belligerence.


I honestly think they see it like this: The titanic is sinking and there is no way they are gonna make it on a life boat, but the bartender has not figured it out yet so they are in the bar racking up the biggest bar bill in history.

Why not? The bar bill will be the least of anyone’s problems pretty soon. They will be more concerned with staying alive.


23 posted on 08/20/2012 9:26:03 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: cuban leaf

The interest rates are being kept low by two things:
1. The Fed, which is buying debt with monopoly $$
2. Big investors and funds who are too scared to do anything but try to preserve their wealth.

If you had brough USTs, you would have done pretty well as rates have gone lower and lower. But they can only go so low and now they are negative vs. inflation.

Under normal circumstances, the Fed’s actions would have triggered much higher inflation by now. But the situation in Europe gives us room to manuever. Also, I am convinced that companies are being threatened (behind the scenes) to keep a lid on big price increases. At some point, however, a “Black Swan” event will cause the house of cards to crumble—the question is when. So far its all holding together.


24 posted on 08/20/2012 9:41:44 AM PDT by rbg81
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To: SeekAndFind
The official federal debt is $16 trillion. This debt represents 100% of current GDP.

That's the "current" debt, effectively the sum of everything we owe right now. In regular person terms, that would be along the lines of the sum of "current credit card minimum payments and monthly utility bills" that we appear to be able to pay at this time. However, we need to borrow .40 of every dollar spent, which increases that current debt.

I've read that the actually debt, including all the unfunded liabilities (SS & Medicare) is somewhere between 70 and 115 trillion dollars.

Mark

25 posted on 08/20/2012 9:48:46 AM PDT by MarkL (Do I really look like a guy with a plan?)
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To: rbg81

So far its all holding together.


Yep. And it will hold together until it falls apart. And the longer it is “propped up unnaturally”, the worse it’s gonna be when it does fall. It could literally be that one hour meltdown scenario thing I keep seeing.


26 posted on 08/20/2012 10:09:00 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: SeekAndFind; blam; TigerLikesRooster; Whenifhow; Cincinatus' Wife; familyop; 2ndreconmarine; ...
And then there is this . . .

Greg Mannarino Interview: People Are Going to Suffer on A Biblical Scale !

27 posted on 08/20/2012 10:31:11 AM PDT by ex-Texan (The Time to "Wake Up" is Over !)
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