March 11, 2014, by Ken Jorgustin
Even with the recent FED tapering, the fact is that ‘we’ are still borrowing many tens of $billions each month to maintain the illusion that our economic system is healthy. It may be fooling some of the people, but it’s certainly not fooling everyone.
There are only a few ways this game can go – and they all lead to severe pain…
CONTINUE TO BORROW
Borrowing more money (printing more money) is the easiest way to continue supporting this nation’s massive overspending. As long as there are enough of those willing to purchase our debt, this will continue to be the preferred way to kick the can down the road.
The problem is – when entities purchase the debt of others, they prefer to minimize their risk and maximize their return (interest).
The more that America continues to decay (the middle class is already stripped of all the good meat and the poor have been stripped to the bone long ago), and the weaker that the nation becomes on the global chessboard (we’re broke, war fatigued, and filled with a population of dependent sheeple), the more risk is associated with our national debt.
Interest rates have been held to essentially zero by ZIRP (zero interest rate policy), so there’s nary a return for the investor of our national debt.
Something’s got to give, but higher interest rates will topple the house of cards.
Nation-entities are buying less and less U.S. debt (Treasury securities). As this trend continues, we are forced to absorb the difference (more money printing – or, dare I say it, ‘austerity’).
More money printing is eventually inflationary. The FED is in a trap and must continue ZIRP, else the entire house of cards fall down as interest rates rise.
So that leaves the the following few remaining chess pieces on the board…
Cut spending (for real). Not illusionairy spending cuts for the mainstream media to lap up and proclaim that all is well – but REAL cuts that not only balance the budget, but include revenue to begin paying off our debt.
The problem with this is that we’re in it so deep, and so many people now rely on the government, that cuts of this magnitude would send our nation into social chaos.
Arguably this may be the bitter pill that is needed – but the resistance is so great and the results so painful for so many (even though it’s necessary), that it won’t happen (for real). There will be ‘window dressing’, but that’s about it…
When the government can no longer loan out enough of it’s debt to sustain itself, then it will turn to you for liquidity – the populous.
YOU will be the target (you already are). They will force you to buy Treasuries in your 401k’s and IRA’s. They will levy high taxes (confiscation) on your wealth by any means necessary (tax your savings, liquid assets, etc..). They will raise existing taxes and implement new taxes.
Of course these measures will continue to accelerate the spiral downward as fewer and fewer have less disposable income due to higher taxation and government confiscation.