To believe that the chances of financial calamity are non-existent is a fool’s fantasy that’s just begging for people’s life savings to get wiped out.
This is an edited & abbreviated version of an article (see original article* HERE) by Simon Black.
No nation is immune to the powerful gravitational pull of debt – and stupidity – both of which are in abundance in government [and especially in the government of the U.S. which,] by its own financial statements…is insolvent…
Governments, like many individuals, no longer follow the Universal Law of Prosperity: produce more than you consume. Instead there’s a sense of entitlement. Politicians seem to believe that because the U.S. is the dominant superpower, its balance sheet doesn’t matter, and the government can spend as much as it wishes.
All of this is enabled by a financial system where unelected central bankers conjure money out of thin air and loan it to the federal government so that no hard choices ever really need to be made…but this is incredibly dangerous and short-term thinking.
By its own financial statements, the government of the United States is insolvent. Several of its major trust funds and institutions are already insolvent, or quickly heading that way:
- The United States Highway Fund is insolvent.
- The Disability Insurance Trust Fund of Social Security is scheduled to become insolvent within months.
- The Pension Benefit Guarantee Corporation, a sort of FDIC for pension funds, is insolvent.
- The FDIC itself, which is supposed to insure the entire U.S. banking system, is pitifully under-capitalized, with an insurance fund that fails to meet the minimum statutory requirements set forth by law.
These examples don’t even scratch the surface, and the total level of government insolvency, just at the federal level, goes into the tens of trillions of dollars. In response, the people in charge of this mess have continually and habitually ignored it.
- There was the incredibly embarrassing debt ceiling crisis of 2011 when Congress maxed out the national credit card. Back then the debt was ‘only’ $14 trillion – and they dealt with the problem by ignoring it.
- Then in 2013 it all blew up again in yet another debt-ceiling crisis when the national debt hit $17 trillion. Yet still they slapped an absurd band-aid fix on the problem, enabling them to kick the can down the road once again.
- Now here they are again in 2015. Congress hit the debt ceiling back in March, and ever since, the Treasury Department has resorted to “extraordinary measures”, i.e. stealing from pension funds, to keep the lights on.
Their solution is to have once again waited until nearly the last minute to kick the can down the road– this time with a ‘stopgap funding measure’ that will make the issue blow up again in early December, barely two months from now.
It’s not like they didn’t have six months, or two years, or four years, or several decades to figure this out but it never happens… because the culture in banana republics like this is to ignore problems until they become so enormous they are beyond solving.
This gang of sycophants has had innumerable chances to fix the problem that they themselves created and they failed at every occasion. Expecting anything different from them is foolish.
Here’s how this ends: one day they’re going to kick the can to the end of the cul-de-sac and there will be no more road remaining. That’s when real action will need to be taken but at that point, the only options on the table will be default, confiscation [and/or] capital controls, all of which are enormously destructive and have the potential to tear through society like a wild boar…
Are the chances of a complete meltdown 100%? Of course not…but to believe that the chances of financial calamity are non-existent is a fool’s fantasy that’s just begging for people’s life savings to get wiped out. These are major risks with a likelihood that is far higher than people expect. They should be treated as such with sensibility and reason, not panic.
There’s no downside risk in ensuring that you don’t become a victim to such obvious financial dangers and certainly no benefit in pretending they don’t exist.
America was once the world’s model democracy. Now it’s a global laughingstock with a government that can’t keep the lights on and is threatening to renege on its debts. How did this happen?
Going over the debt ceiling would mean the US government legally can’t pay its bills and would default on the national debt. This would be catastrophic in ways that would make Lehman Bros look like a walk in the park.
The United States debt limit is explained in this 3:09 satirical video which takes a look at the national debt from a family perspective. Very amusing – very insightful – very troubling.
July 26, 2011: Gold may rally further from this month’s record if President Barack Obama wins lawmakers’ agreement to raise the U.S.’s debt ceiling, weakening the dollar and boosting demand for the precious metal as a store of value, according to Korea Investment & Securities Co. [Below is a chart which shows this quite clearly.] Words: 360
July 18, 2011: The ceiling will be raised from its present horrendous $14.3 trillion – that’s 14.3 plus 11 zeros (00.000,000,000). That’s guaranteed! [Otherwise,] the alternative would be the U.S. defaulting on its debts, losing its Triple A credit rating [and being] unable to pay the seniors their benefits, or the military [or its] creditors beyond Aug. 2. [There’s more! Read on.] Words: 565
July 18, 2011: The ridiculous posturing by Democrats and Republicans in the U.S. over the imminent rise in so-called borrowing makes it almost embarrassing to be human. They can’t even get out of the way of their own political agendas to solve a problem threatening to make politics obsolete. Certainly, I’d be embarrassed to be American – or English, Irish, German, French, Swiss, Portuguese and especially Greek, Italian or Spanish. Stand close to any of the Davos men who constitute these nations’ finance ministers and you are immediately struck by the impression that you’re in the presence of the best-dressed con artists walking the globe. [Let me explain.] Words: 1375
July 18, 2011: The probability that Congress and the Administration fail to raise the debt ceiling before the Treasury runs out of cash has risen substantially… [Frankly,] it seems the height of policy folly for elected officials, intent on a game of budgetary chicken, to chance this downside risk during an economic recovery that was sub-par to begin with and lately seems to have faltered further. [It is important to remember that] sometimes in a game of chicken, people get injured—seriously. [Let us explain.] Words: 608
May 17, 2011: Many novice observers may wonder why we have a debt ceiling at all when our government has never shown the slightest inclination to respect its prior self-imposed limits [and, as such, why all the] seeming urgency to Congressional negotiations to raise the debt ceiling. [Let me explain in no uncertain terms.] Words: 1073
May 17, 2011: The [current] big fiscal fight [in Washington is] over when and how to increase the debt limit i.e. whether [or not] the Obama administration will be allowed to spend this country into oblivion. The administration has been hard at work trying to shape the message and public opinion. Unsurprisingly, much of that message is less than 100 percent accurate. [Let me explain.] Words: 946