America's Ticking Debt Bomb

ARTICLE

ARTICLE   (Medicare bankrupt by 2016)

We need to face the facts. America is already bankrupt. We may not believe it. We may not yet feel its full effects. But we are effectively bankrupt. Our debt now exceeds the size of our entire economy. Our payments on our obligations – our unfunded liabilities – exceed our income as far as the eye can see. No amount of obtainable growth or tax revenue will be enough. There simply is no possible way we can finance our long-term liabilities without fundamentally reimagining what government can do in the twenty-first century.

If current patterns hold, we’ll hear increasingly dire warnings and more earnest promises to do something, but no one will act decisively until we experience more economic pain.

A debt crisis would likely move through the following stages.

Stage 1: Congress tries to maintain the status quo on spending and entitlements

Stage 2: The United States faces additional credit downgrades

Stage 3: Interest rates markedly increase, harming consumers and sending interest payments on the national debt soaring

Stage 4: Inflation soars, and the value of the dollar declines

In this final stage borrowing enough money to fund our military and other programs will become much more expensive. Because we will be spending more on interest payments, it will be virtually impossible to balance our budget with spending cuts and revenue increases. The hole will be too deep and the sides too steep to climb out.

Meanwhile, the so-called solutions government would turn to at this point would make the problem much worse. Politicians would essentially try to save themselves by destroying the middle class with a tactic leading economists Carmen Reinhart and Kenneth Rogoff call “financial repression.” Financial repression happens when, to solve a debt crisis, the government uses tools that rob working families. One of the time-honored tools of financial repression is the debasement (devaluing) of currency and inflation.

Inflation will make government debt seem smaller by shrinking the value of the dollar. Yet, for individual Americans, inflation will be an insidious hidden tax increase that will make everything you buy more expensive, and everything you own worth less. If our government tries to inflate its way out of a debt crisis, much of your life savings will be wiped out.

Meanwhile, other nations will see this as their chance to make what could be a decisive move against the dollar and the value of the dollar would fall even further.

Finally, the bottom would fall out of the middle class. Unemployment would soar, while the cost of living would increase. Real wage growth has already been stagnant in recent years, and it will be the middle class and lower-income families that pay the price for Washington’s refusal to act.

4 years or less folks.  This is NOT A FANTASY that's just going to go away.   That 16 Trillion of debt is not Monopoly money.   

Not Leona Lewis    (last night)

also our welfare system is a joke, you should have 6 months max to find a job, I found a job in 2 weeks, all you have to do is apply to a lot of places, but people are lazy and get free money from the gov't for years which makes them lazier. Yes there are some people out there trying but i would say 75% dont give a shit about finding a new job and dont want to work for 10$ an hr bc they made 20$ last year. Tough shit you get 6 months on welfare and take a drug test and YOUR OUT ON YOUR OWN. LAZY ASS PIECES OF SHIT

yep screw them, I now work 45 hrs a week and yes i dont make as much as i did but it will work till i find another job. Everywhere i go i see now hiring signs and i wonder how in the hell is there so much unemployment??? bc people cant suck it up and work for less, well screw them you get nothing then

don't worry they won't take away your food stamps and guv't cheese gayhound

This prediction is going to be about as good as your horse racing predictions.       

good i hope they take your fuckin food stamps and welfare away

you's a poosy

it's easy to pop into someones losing thread and talk shit...

why don't you try posting a fuckin winner one time dickhead?

I actually had a really good day last friday at the track.. pulled in over $1,400...

I could out cap you in any sport any day any fuckin time kid...

oh wait.... i forgot

you don't post any fuckin picks...

Quote Originally Posted by be easy:



what year is this, 1981? Inflation ran rampant over the entire course of my 30 years on this planet, it just manifests itself in different venues. gas went from .23 cents to 5.00 in just over one generation. thats more then a 20 bagger

How about housing? starter homes were bought with cash for less then a years salary just over a generation ago, now, noone can afford one via a mortgage and a lifetime of work

wanna go to school? post secondary education costs have moonshotted

How bout if you get sick, wanna get some health care? eee errr, good luck finding the credit to mortgage your health

We are smack dab in the greatest bouts of deflation in over a century. It is the phony monetary base inflation that scare people into thinking that inflation is coming. If the M2 graph goes parabolic, but no economic activity is abound to put it in circulation, does it make a sound? Not to mention, if the banks were forced to come back to reality and mark their assets to reality, rather than the current gov solution of mark to myth, what would those money supply graphs look like then?

ARTICLE dated 3-29-12   "Why We Don't Need To Worry About Inflation"

"Economists know that rapid money growth causes inflation. Milton Friedman put it best when he wrote: “Inflation is always and everywhere a monetary phenomenon.” Unfortunately, this quotation is often misunderstood and misapplied to economic events and used to make false analogies between, for example, Weimar Germany in the 1920s and the United States today.

Thomas J. Sargent , who won a Nobel Prize last fall, made this point thirty years ago in a famous paper, “The Ends of Four Big Inflations.” He examined hyperinflations in Austria, Hungary, Poland and Germany after World War I and pointed out that indeed these episodes were caused by high rates of money growth.

But Sargent went a step further and asked an important question: Why were governments allowing the money supply to grow rapidly? He then demonstrated that in all these cases governments printed money to finance government expenditures. They were forced to do this because they could no longer collect enough taxes or issue sufficient quantities of interest-bearing bonds to cover their spending. The only thing left to do was to fire up the printing presses.

These inflations stopped when governments got their fiscal houses in order and cut the link between government spending and money growth. Thus, it was not the money growth itself that caused inflation but the inability of governments to tax and borrow to cover their expenditures that caused inflation. Rapid money growth was a symptom of the disease, not its primary cause.

There are no signs that the United States money growth is driven today by federal government deficits. Tax collections remain healthy, financing over 90 percent of spending. High government bond prices both indicate that the federal government is having no trouble financing its deficits. And the government has not turned to the Federal Reserve to make up the difference between tax revenues and income from borrowing. Rather, the Fed acted independently to increase the money supply in response to a financial crisis in which households and businesses wanted to hold the safest of all assets: cash and bank deposits.

Theory and history: handle with care

Rapid inflation is not a looming threat. The money supply grew rapidly because households and businesses got a terrible jolt in 2007-2009 and now want to hold larger reserves of cash and bank deposits than they used to. This type of money supply growth does not lead to increased inflation today, and I am confident that it won’t do so in the near future."

That guy seems to agree with you Be Easy.   

But as we approach 20 Trillion in debt, which is projected to be before 2016, things are going to change quickly.    He said 90% of our expenditures are STILL paid with taxes.   What happens when that moves above 100% and beyond?   What happens when our credit gets downgraded again and the interest rates go up?

It's going to be a chain reaction of things as listed in my original post and the house of cards is going to come crumbling down.       You might be right at the moment although I buy groceries and I've seen sharp increases in almost everything in the last year or so.   Coffee, meat, produce, etc     

"These inflations stopped when the government got their fiscal house in order."         

Good luck with that one America.