As I am writing this post, the US national debt is a staggering $11,602,003,207,535. Since 2007, the national debt has continued to increase an average of $3.90 billion per day! But even that $11 trillion debt is dwarfed by the real debt, which includes unfunded liabilities that the government has promised to pay, such as retirement benefits to government workers and Social Security obligations, which by some estimates put the actual debt closer to $75 trillion!
Just as one might think that our predicament could get no worse, . . . It does! The impending disaster which will result from our runaway debt will occur at the same time that the baby-boomers are retiring. As of 2008, this huge group of Americans, who have been paying into the Social Security system for decades, are finally reaching retirement age and are beginning to draw from the system instead of paying into it. Since the politicians have already stolen all the money that the baby-boomers have paid into the system, to spend on social programs and pork barrel projects that insured their reelections, the unfunded Social Security system is sure to bankrupt a nation that is already past the point where any legitimate business would have long declared bankruptcy.
The Obama administration is accelerating the onslaught of this massive disaster! President Obama’s misguided corporate and bank bailouts have resulted in billions of dollars of new debt. For now the massive inflation of this new money creation and debt is waiting in the wings, because the velocity of money (how quickly it is spent) has been drastically reduced by the recession. But soon that velocity will catch up to the new money creation and its effects on the value of the dollar will become apparent. And that is not all. Just when we can afford it least, Obama’s social programs, such as socialized health care, promise nothing more than additional bureaucratic waste, more governmental intrusion into our lives, and trillions of dollars of new debt over the coming years. Obama has made it perfectly clear that he is willing to sacrifice the dollar in order to achieve his social agenda. He mistakenly believes that the end will justify the means. But socialism did not work in Russia and China and it will not work in America either. Will the USA suffer the same fate as the USSR? Why won’t our politicians learn the lessons that history can teach?
Many economists believe that the only solution for a government that is hopelessly in debt is to hyperinflate its currency, and the U.S. government has clearly shown that it intends to do just that. As I explain in Chapter 15 of my website, http://www.thenewsurvivalist.com/, as more dollars are created, each dollar becomes worth less and less. In this way the government can reduce its debt to a more manageable size. It will pay at least part of its Social Security and other obligations, but it will be paid with dollars that are nearly worthless. Hyperinflation will erode the wealth of every American citizen who is holding assets in dollar denominated instruments. But there is an even bigger problem, which stems from the fact that the U.S. dollar is the reserve currency for many foreign nations. Our trade deficit has created a huge demand for dollars on the part of foreigners. This demand has over the years been able to soak up many of the excess dollars created by the Fed, and has also helped to keep inflation in the U.S. artificially low. But what will happen when the dollar begins to tumble in value as a result of hyperinflation?
It is only a matter of time before foreigners realize that it will no longer be wise for them to hold their national reserves in U.S. dollars. We are already seeing this happening today, with more and more governments each year choosing to diversify some of their reserves into other currencies as well as commodities like gold and silver. As foreigners dump their dollars (increasing the supply of dollars on the market), the immutable law of supply and demand will cause the value of those dollars to decline even more. Rapidly declining dollars will cause more dumping, creating a vicious cycle and even greater hyperinflation. A complete collapse of the dollar will be the result. It is only a matter of time. The only question remaining is how long will it take for this crisis to reach the critical mass required to cause a complete collapse of the economy.
How to survive an economic crash depression: Think the worst is over? It hasn’t even begun! We are on the verge of a global economic disaster unlike any that the world has ever known. On my web site I explain how you can protect yourself and even profit from this government-created disaster, no matter how much nor how little you have now. Don’t be an armchair survivalist—Take action now! What Can You Do to Insure Your Economic Survival?