“Eventually a bankrupt government has no choice: either default on their bondholders, or default on the obligations they made to their citizens. Or both.
This could take the form of a ‘selective default’. For example, the US government could default on the $2.4 trillion that it owes the Federal Reserve. Or the $1.2 trillion that it owes China. These are both possibilities.
But the prospect of default on ‘risk free’ US government bonds would throw the global financial system into a tailspin; not to mention it would be the final nail in the coffin for the US dollar’s dominant reserve status.
Fortunately there are easier options for Uncle Sam.
The biggest debts that are owed by the US government are the obligations they owe to you. Specifically, all the benefits like Social Security and Medicare they promised to American taxpayers. The US government’s own numbers estimate these obligations at nearly $42 TRILLION, completely dwarfing what they owe China, or anyone else.
Then there’s the obligation they have to preserve the purchasing power of the $12 trillion held by the American people. That’s the current value of the money supply in the United States right now.
History shows that debasing a nation’s currency is one of the easiest and most effective ways for bankrupt governments to plunder their citizens’ wealth, little by little over time.
As I explain in today’s podcast, the hard reality that most people don’t seem to get is that the US government is bankrupt. This isn’t some wild assertion or conspiracy theory; their own financial statements show that the government’s ‘net worth’ is NEGATIVE $17.7 trillion.
And yes, the US is already borrowing money just to pay interest. In fact the combined expenses of interest on the debt plus mandatory entitlements like Social Security nearly exceed their entire tax revenue.
In other words, you could eliminate nearly everything we think of as government– the EPA, the IRS, Homeland Security, etc. and it wouldn’t make a dent in the national debt.
When things get this dire, it doesn’t matter who sits in the chair. You might as well elect a chimpanzee in the hopes that Mister Bubbles might accelerate the decline.
Donald Trump may very well be that chimpanzee. Especially given his unparalleled experience in declaring bankruptcy.”
