printTHE ROAD AHEAD IS SERFDOM. (Bloomberg) — “President Barack Obama is poised to increase the U.S. debt to a level that exceeds the value of the nation’s annual economic output, a step toward what Bill Gross called a ‘debt super cycle.'”
It’s also a reaffirmation of the thesis of Vox Day’s book, The Return of the Great Depression. This depression is going to be worse than the first because of unprecedented levels of debt—government, business, household.
The politicians have sold us down the river. They have made promises the taxpayers (what’s left of us) cannot possibly keep.
The only rational solution at this point is to repudiate the debt. A lot of creditors would take it in the shorts, and millions of American welfare addicts would wake up to a very different world. So be it.
The alternative is to inflate our way out, in which case we all lose. Read up on the Weimar Republic, the former Yugoslavia, Hungary, Argentina, Mexico, and most recently Zimbabwe. This is what awaits us if we don’t wake up and demand some semblance of integrity from our ruling elite.
There’s also national bankruptcy, which is just a legal and orderly means of repudiating debt.
Yet another “solution,” which I think is uppermost in the minds of some politicians, is draconian tax increases a la Greece. They will come about under the guise of an “austerity” program, and sold to folks as a way to keep us in the good graces of the international banksters. It’s why Bill Clinton is already talking about a VAT.
Higher taxes equal more claims against your income and fewer freedoms as a result.
It’s all been carefully choreographed by the elites.
Watch for it.
In theory, a little bit of debt could be beneficial – private companies do that (it is called venture capitalism) – but ONLY if wisely invested. If the government spent one dollar and cured cancer with it and saved billions, it might be a smart idea. However, the reality of politics is that government is an extremely lousy investor. Perhaps a few items like the 1950’s interstate highway system paid off in terms of an economic return – since the highways were heavily used.
Now, ask yourself how the US has benefited economically from the War in Afghanistan, ethanol subsidies, the F-22 airplane, slum housing projects, the Leave No Child Behind Act, or the GM bailout??? These are the things that our Social Security “contributions” have been invested in. Tens of trillions of dollars have been malinvested, the deficit is behaving like an exponential on an exponential (the rate of doubling of the debt is itself increasing), and the Day of Reckoning is very close.
There’s also the option of a Coup D’etat. The rationale being that the new government has no obligation to honour the ousted government’s debts.
It’s just theory of course, lest I incur the wrath of the Men In Black.
Roger – higher taxes merely takes money that could be used for investment or paying off private debt and sending it to the government – it doesn’t solve the problem and is akin to an animal eating its young. Again, it may make the balance sheet a little better but it does not erase the ills of malinvestment.
Back in 2007, I posted a short essay listing five reasons why World Depression II will be much worse than World Depression I, which might as well be our new name for the Great Depression. Debt was only one of the five reasons.
There’s no good way out of this mess. Default and hyperinflation are equally bad, and really tantamount to the same thing. We could and should abolish socialism (entitlements being the lion’s share of government spending), but considerable urban violence would ensue, and the project would require suspending the normal electoral process for a decade or two. America is socialist because Americans voted for socialism, so we’d need to restrict the franchise to tax-paying property owners when elections resumed, if ever. There being no real patriots among our present ruling class, we’d need to dispatch them to their eternal reward, if they don’t succeed in dispatching us first.
You mean we haven’t gone through all of the other peoples money yet. Oh yeah, China.