Out of Control, Out of Money, Out of Time
The federal, state and local government debt has been out of control for at least 20 years. Does anyone in any level of government understand or recognize what has been done to our dollar value? Our government has overspent at the pace of a drunken sailor with little consequence. However, the debt will eventually destroy the financial system of the US and of the world. The US government has been able to sustain this insanity by increasingly printing money. This printing of imaginary money is called quantitative easing. It is easier to deceive the populace by saying quantitative easing.
You ask, why is this a problem? Each time the government prints money, your dollar value diminishes. The overall money supply has increased four times in the last eight years. The simple answer is due to the world economy being on the dollar standard and tied to oil purchasing by other countries. Worldwide oil has to be purchased using dollars since the late 1970’s and this allows the US to magically print money. The increased money supply means your purchasing power has significantly decreased.
The government wants us to believe that the inflation rate is only 1.5% per year. Everyone who purchases necessities knows this is simply not true. You can check prices of building products, food, or necessities over the last 10 years. The money supply was increased to bail out the banks, government, and special interest groups (example, General Motors) in 2008. So now, it is your problem as well as the world’s problem. This cycle is not only in the US since other countries have begun the same process of printing money.
The US debt is almost $20,000,000,000,000 (yes, 14 digits) and is increasing billions per day. That much in hundred dollar bills will stack to the moon and back. Why is this significant? The US must pay interest on the debt which today is at a low rate. When the interest rate increases, the amount of interest the government must pay also increases. The US and the numerous countries are on a death spiral due to debt.
Why does the government not act responsibly? The answer is simple. The government is on a one-way train to financial insolvency. The government cannot decrease spending. This would put the US and the world economy into a deep recession or depression. Politicians have created this problem over decades of promising things they cannot deliver. Each successive generation of politicians seems to continue to exacerbate the problem. Each does not want to be in power when the crisis finally occurs. Each wants to exit before being held responsible. In truth, both political parties at every level are responsible.
The US government’s spending is so out of control that a solution does not exist. Each president hopes the financial disaster will not happen on his or her watch, but each massively contributes to the same problem. The government’s plan is to hope for a miracle of technology in business to stimulate the economy. What a laugh!. You and I could come up with a better plan. Each political party wants to blame the other. Both are equally responsible or rather irresponsible. Senator Coburn of Oklahoma tried to warn the government and the general population in his many interviews before retiring from congress. Congress heard the pleas for action but continued and continues on the same path. Senator Coburn completely understood the stakes and the dire consequences of these irresponsible actions. Nothing has changed.
What is the magic number of debt at the state and federal level that will start the collapse? No one knows or is prepared to discuss this. How much longer will the insanity continue? The financial disaster will start insidiously but will rapidly evolve. No one will be prepared except those at the highest levels.
The treasury secretary will make a surprise announcement on television. He or she will say that the US will never devalue the dollar. Within two weeks after such announcement, the dollar will be devalued and the financial crisis will start. Severe business failure, bankruptcies, unemployment, and chaos will occur. We will survive but the good ole days of excesses will be over. People will adjust to a decreased standard of living. The US citizens are resilient and have faced other disasters and will recover over time. But how long will it take?
I have no solutions. I am selling nothing. I only offer knowledge of what will eventually occur.