Note, i sent this as a newsletter to subscribers and friends yesterday but, since a major bank in Silicon Valley just went bankrupt perhaps more people might believe my projections.
The country is far, FAR beyond bankruptcy.
The republicans want cuts which would bankrupt many Americans.
Legally States can't run deficits so they can't make up for Federal Cuts.
We are likely headed to a natioinal depression, possibly a worldwide recession or worse.
Anyone see any way out of this short of a shooting revolution where the country
changes to a new country and repudiates all debts of the former US?
Faced with this challenge in the past, what have countries, including the US have done in the past? Two basic moves, not counting declaring war on someone which is always a popular choice and still, unfortunately, open to consideration at the highest levels.
1.>Borrowing from the world bank or the US
2.>Devaluing the currency - can't happen here, right?
For the first choice we have already borrowed massive amounts from China - abt $1T and are not likely to get a good rate on a new loan. We are the major supporter of the world bank.
So getting a $30 to $50 trillion loan to tide the US over for two years seems unlikely since it would actually come from us.
Second option - devaluing the dollar.
(Devaluing a currency also reduces the true size of loans and other debt.)
But that couldn't happen in an advanced country, could it?
The UK devalued the pound by 40% in 1949 , again in 60. again in 70 and
in 1972 George Soros made $1B in one day as the pound was devalued again
Since 1900 the Pound has dropped from $5/pound to $1/pound while the dollar has
also been plunging by 900% or so.
Benjamin Franklin pointed out the revolutionary war was
essentially paid for by the devaluation of the colonial dollar by 99%.
In 1834 the "treasury" reduced the amount of gold in coins by 6% (devaluation.)
In 1853 the amount of silver was reduced in US coins.
Roosevelt officially devalued the dollar by 40% in 1933
and outlawed private ownership of gold.
Nixon again officially devalued the dollar 40 years later and
made gold ownership legal again and took the US off the gold standard
temporarily (45 years and counting).
Those were "official" devaluations.
Inflation is informal devaluation - from 1971 through 2023 inflation lowered the US Dollar's
value by 90%+ (a 72 Corvette sold for $5,200.) Does that make it easier to understand
how Clinton could balance the budget?
Devaluing a currency makes it easier to repay loans since they are denominated
in currency, not precious metals.
So, my question is, can anyone suggest a possible way the government might
decide to reduce the national debt OTHER than hoping for continuing and increasing inflation?
Or they could be honest and just have an official devaluation.
Does anyone still have a savings account? Paper money in the house? Bonds?
If so at least you won't have a shortage of toilet paper if we do have a
major depression or just a long-term fiscal default by the Federal Government.
Remember, raising the debt ceiling ONLY pays for money the country has ALREADY spent, it doesn't make it easier to spend more money next year.
I could be wrong.
