Monday, July 18, 2011

What would it be like if the United States goes into default?

In case you haven’t kept up with the latest news, there’s been a lot of talk about such a possibility these last few weeks.
It’s almost as if they are testing the waters, seeing the people’s reaction, but most of all making sure they are completely terrified of such a possibility so as to make sure the mass goes along with them in their decision.
Investors protect against U.S. default
Why Wall Street doesn’t seem worried about default
Bernanke: U.S. default would cause ‘major crisis’

What would it be like if US Defaults?

For one second lets suppose the mad debt race is halted in August 02. What really happens?
From our own experience we know that defaulting on your countries debt is indeed catastrophic as Wall Street and the politicians that work for them predict. What happens is that the US would fall into the feared 3rd world economy status Americans never want to experience. Worst of all, credibility is lost in a way people just don’t comprehend. When that sort of trust shatters, it’s like trying to put together a crystal cup: You can glue it back together but it will never be the same, the illusion is lost. Make no mistake, defaulting would cause poverty and a significant decrease in the American lifestyle for decades to come.

But on the other hand you can’t avoid asking yourself, why do the creators of the greatest economic crisis known to man kind want to continue rising the debt level? What’s in it for them? Well my dear friends, it’s the mechanism they have been using to grow rich beyond their wildest dreams and doing so on by sending that debt to the American’s middle class through inflation and higher taxes, while the bailout money goes straight into their pockets.

You may think billionaires are done for,t hey don’t care about money, and you’d be wrong. Few billionaires retire and spend the rest of their lives with their families in some far away beach paradise. The nature that made them rich in the first place makes them keep going for more and more money in spite of not needing it.

Continue doing what has caused the economic crisis in the first place could hardly be called a solution. Would you fix your own debt situation by getting yet another credit card to burn and go further into debt? Of course not, we all know the hard choice that must be made. Cut down your expenses, save money and get out of debt. We all know thats the solution on an individual case and it’s the same thing here.

If America puts an end to its ever growing debt not everything would be bad.
First of all, on an elemental level it would stop the vicious debt cycle, both on an economic and political level. The greedy criminals that have caused this would have to find other ways of getting richer. The political cost would likely end the current administration in the next elections. That is if social unrest can be controlled and they don’t take the easy way out by resigning, forcing anticipated elections like it happened here.

Second, a cheaper dollar would mean that America is at another level compared to foreign economies. A more competitive dollar would mean that “Made in USA” is viable on a broader spectrum, small and medium companies could be started and strive.
The horizon looks bad either way. The decisions to be made aren’t easy and none offers a good, let alone ideal solution, but you still have to ask yourself if going further into debt is the right choice.
I never knew anyone that got out of a hole by digging down even more or stopped a fire by throwing gasoline at it.

What should you do to prepare?

These clearly are times to speed up your preparedness if you have been slacking.  On an economic level I’d keep even more of my money out of the banks and put it into precious metals which will keep going up in price either way.
After writing this post I did some googling, wondering “what does Ron Paul think about all this?” As usual the man doesn’t let you down. Ah, what a president he would have been.
Read here “Ron Paul: U.S. Government Is Defaulting on the Average American All the Time
so as to know why Dr. Ron Paul will vote NO on raising the ceiling and going further into debt.

Join the forum discussion on this post


Anonymous said...

In the Fall of 2008 a sudden and suspicious surge in the price of gasoline guaranteed Obama's election as voters believed the hype that Bush (and by extension McCain and all republicans) were responsible for the gasoline price increase. This surge in the price of gasoline magically disappeared after the election. Someone(?) engineered this event to allow a coup to take over the government. After Obama took office the price of oil, food and everything else continued to rise and the country was plunged into a depression. The budget deficit was pumped up to 10 times what it had been under Bush and the money was given to friends and supporters of Obama. Now as we begin our second year of the great depression with record deficits and record debt and printing press money supply Obama is fighting for oppressive taxes on the middle class. There is no hope of reprieve prior to the 2012 elections and even then no guarantees that the voters will see through the fog and haze being thrown up around the critical issues. The U.S. government may not survive until 2012 and the economy will be "officially" lost once we are no longer able to borrow to pay off the unemployed and perennial welfare dependent class. The only questions are when, how and will it end with a whimper or a bang...

Chris said...

Dr paul has always had great ideas,morals,and values. I got behind him all the way the last election "cycle".

He has NO chance whatsoever again. He is laughed at and ignored by our politicians and the "media" here. And he's really just another career politician regardless.

These people in DC ALL NEED TO GO. The ballot box has been broken now for decades.



Anonymous said...

Fixed income folks, being screwed now anyway, would be ultra screwed post default. Also, the U.S. would be much more vulnerable to election of a nut like Michelle Bachmann or someone else who would send us even further down the road to religious fascism.

S said...

The U.S. debt ceiling has been raised 102 times since 1917, so no one should be surprised if it happens again shortly. My guess is that Congress will keep raising it until we hit the proverbial brick wall. No default just yet, but certain problems down the road.

DaShui said...

The debt ceiling drama is just for politicos to show how important they are.

Anonymous said...

The debt ceiling will be raised by one means or another (Obama can always invoke the 14th Amendment and let the courts decide to ruin the country sooner rather than later). It is all just political posturing.

But it doesn't really matter as it only postpones the inevitable. $14 trillion, $16 trillion - it's pretty much all the same at this point as we couldn't possibly pay it off in the next several decades.

Ron Paul will only continue to be laughed at if things don't fall apart rapidly. If that happens, a lot of very desperate people will be willing to try something radical and new. Even so, he would have an insane uphill battle with Congress at every turn.

All we can do is keep prepping and hope our efforts and luck get us through the collapse.

Bill in NC said...

We'll just look to the past and inflate like it was the 1970s all over again.

That will substantially reduce the real value of our outstanding debt.

Too bad for China and others holding our dollars.

And Grandma whose SS COLA will never be above 3% again.