I love our country and its social programs, and I wish we could pay for them.
If our country were like a family, it would have an income of $22K/yr and expenses of $38K/yr. If we cut out the wars, we’re still in the hole because before we started borrowing the $16K/yr difference from China we were already borrowing from our retirement funds, (or social security trust funds).
Have you known anyone who borrowed from their 401k to save their house? I see it almost daily. And the wars cost our family less than the $16K/yr so we’d still be negative.
Here’s the kicker, our little family has $140K in credit card debt to the bank of China, and several other major banks around the world.
If it was a client of mine I’d say file bankruptcy; but only after you have found a way to cut your budget so that your expenses are less than your income first.
Once you file a bankruptcy what happens to your credit, no one will lend to you anymore. That’s about to happen. We can’t file as a country but our creditors have noticed we’re printing play money to pay the debts. That causes the value of the money we make our payments with to drop. If our hypothetical family printed counterfeit money as their “income from home”, then they’d all go to federal prison. Our president does it and people want to reelect him?
In any case, creditors are figuring out our country’s diabolical plan and they’re now moving to charge us more interest and in a short time, they’ll cut us off. Like a bartender kicking a drunk out the door.
The extra printed money means that if our family’s creditors expected to receive a $100/mo payment, well guess what, now they’re getting $89/mo. But we’re telling our creditors to look at the paper the money’s printed on and that the paper says $100. But they know better. Meanwhile the value of the money is still dropping because we keep printing more.
A country’s currency has a fixed value based on imports/exports/GDP and the like, but it’s relatively fixed. It’s like having a bowl of peanuts. The bowlful is worth $100 no matter how many nuts are in the bowl. 100 peanuts and each is worth a dollar. Add 100 more peanuts and the value of each drops down to 50cents. We’re constantly adding more peanuts.
Eventually they’re going to treat us as though we’ve filed a bankruptcy and stop lending us any money.
Then the reserve currency status is going to go away. Basically it means that when a country buys oil it must first buy dollars and then use the dollars to buy oil. We just print more in the US. But when we have to turn around and buy Euros or Yuan to buy our oil, our price for gas in the US is going to equalize to European prices or something like about $6 to $8/gallon.
A lot of people say buy gold, but if you do and anything like what I’ve described happens, then the US government will do something like what it did in 1933, historical fact I’m not making this up; the US Gov made it illegal to own more than 5 oz of gold. They didn’t buy it from you they just took it. They literally went bank to banks and emptied out safe deposit boxes.
This is coming my friend. It’s happening all around us right now.
The US Gov’s credit rating is already slipping, it’s already been downgraded. We couldn’t pay off all that debt if we wanted to. When China stops lending us money, even if the wars are over, we won’t have the money to pay for most of the social services that the government is paying for. Anyone whose parents are on social security is going to be moving in with them because it’s going to be cut, maybe by a 4th, half?
They didn’t kick 4% of the prison population out for good behavior, they just can’t afford to house those prisoners anymore.
The least bad thing that will happen, and perhaps the best we can hope for, is that they will start charging us a much higher interest rate which will drastically increase our government’s monthly/weekly operating expenses.
Have you had any friends whose mortgages adjusted up 1% or 2% ? Their mortgage payments went up from $1200 to $1400 or $1600 or even up to $1800/mo. In my experience my client’s monthly payments we up an average of about $300/mo.
If the government’s monthly expenses went up by 10% then automatically 10% of our government services would be cut that month. Some more than others. Of course we could try to borrow even more money, but I don’t think the lenders would approve the credit increase.