Friday, February 04, 2011

How Bad Is It?

US Financial Picture Is Hopeless

"I'v studied the US finances backwards and forwards, and as I see it the US's financial position most definitely is hopeless.

The actual posted national debt of the US is $14.1 trillion.

However, the US reports its finances on a cash basis while omitting its unfunded obligations in such items as Social Security, Medicare and Medicaid and various other entitlements. If the entitlements are included, the total national debt including unfunded obligations would be over $100 trillion.

Wait, it gets worse. Entitlements, defense and interest on the national debt takes up 80% of the entire budget of the US. That leaves just 20% that can be sliced away if the US wants to actually cut into its deficits. So what's left to cut? Actually, nothing that's politically feasible.

To make the picture even more grotesque, the first group of baby boomers is now reaching the retirement age of 65. As they leave the nation's work force, the problem of financing Social Security becomes more difficult if not impossible.

So what in God's name is the answer to all this? How will the US's finances be handled? There are only two ways that I can come up with:

The first is -- to default, just declare that the nation is dead broke and it can't meet its obligations. That would be tantamount to admitting that the US is less than a third-rate power, a dying banana republic. Unthinkable.

The second way would be to devalue the currency to the point where obligatory dollar debts would be financed or paid off with dollars equal to pennies or nickels.

It's now really a question of timing. With the national debt compounding at rising rates, the problem of financing the debt becomes ever-more pressing. For this reason, I believe the process of devaluing the dollar will have to be
speeded up.

From the government's standpoint, the deliberate devaluation strategy must be kept secret from the public. They must not be allowed to know that the currency they've worked so hard for, that the currency their savings are in, is to be crushed into a shadow of its former self. Ultimately, the awful truth
must come out.

At some point the government may be forced to be honest. The phrase will be three words that I coined many years ago: Inflate or die. And, the government's answer will be, "You wouldn't want this nation to die, would you?"

We have no choice, but to pay off, or carry, the debts, with a currency that must be devalued down to ten cents on the dollar."

Mexico Finishes Shedding The American Dollar

"The Mexican government had made it clear that they will no longer allow ANY businesses to accept US dollars including American companies regardless of the operation or who is paying in American dollars. That’s right, this means if you’re a US citizen and fly into Mexico for vacation or business your hotel is no longer allowed to exchange cash dollars into pesos at the front desk which was customary up until 2011.

Also in Mexico if you travel to a local bank regardless of the bank name or national origin including HSBC from China which is the fastest growing bank in Mexico you are no longer able to exchange US Dollars for pesos."

Even Donald Trump Is Warning That An Economic Collapse Is Coming


Anonymous Nz said...

There are ways to fix the problem which have been suggested yet are being ignored by the feds. One is to cut the DEA, which wastes away $5 billion every year now in a complete fiasco, the "war on drugs".

Two, legalization of marijuana and hemp could create a whole new field of jobs and economic demographics.

Three, cutting the Pentagon and the Prison Industry, both of which are huge hogs draining the tax-payer pools.

I'm sure there are plenty of other changes which could make a big difference, but the feds; the corporate ruling-class likes things just the way they are, so long as it continues to get its huge piece of the pie.

So long as only poor and middle-class Americans suffer, the corporate ruling-class won't support the changes which are necessary to save the country. This is the crux of the problem.

5/2/11 10:29 AM  

Post a Comment

<< Home

Cost of the War in Iraq
(JavaScript Error)
To see more details, click here.