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National Debt

Posted by Joshua Lerch on June 22, 2011 at 11:26 PM

The Economic Collapse

06/22/2011


It really is hard to find the words to describe the true horror of the national debt.  The U.S. government has been on the greatest debt binge in all of human history, and a day of reckoning is coming that is going to be so painful that it is going to shock America to the core.  We have lived so far above our means for so long that none of us really has any concept of what "normal" is like anymore.  The United States has enjoyed the greatest party in the history of the world, but now this decades-old party is ending and the bills are coming due.  It was Dick Cheney who famously said that "deficits don't matter".  Well, try telling that to the nation of Greece right about now.  The horror that Greece is just beginning to experience is a preview of what is going to happen to us as well.  Only when it happens to us it is going to be so much worse, because when we go down we are going to bring the entire global financial system down with us.


What we have done to future generations is beyond sickening.  Previous generations entrusted to us the greatest economic machine in the history of the world and we destroyed it.  Now we are leaving to our children and our grandchildren an economic future that has been totally wiped out and a national debt of more than 14 trillion dollars that we expect them to repay.


In Washington D.C. these days, there is a lot of talk about the debt ceiling.  But whatever the politicians do, it is not going to solve our debt problems.  If the debt ceiling does not get raised, we move the financial pain into the present.  World financial markets would crash and that would be followed by a devastating economic nightmare.


If we do raise the debt ceiling, that will "kick the can down the road" a little bit farther.  However, world financial markets will still crash eventually and our eventual economic nightmare will be even worse.


Well, can't we just "inflate our way" out of debt?


No, unfortunately things are just not that easy.  If we try to inflate our way out of debt, interest rates will likely rise just as quickly as inflation does, and that would be absolutely catastrophic.


Before interest rates even reached 20% we would hit a point where it would take every single dollar taken in by the federal government just to pay the interest on the national debt.


Meanwhile, rapidly rising inflation would devastate the value of all of your bank accounts and every other single financial asset that you own.


So no, inflating our way out of debt is not going to work.


At the moment, the U.S. federal government is able to borrow gigantic quantities of money at super low interest rates.


When that changes, all hell is going to be unleashed.


Read Full Article Here



Categories: Economic News

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