Ali,
you are missing the point entirely. The US can't technically default, because we can print money forever. However, we can default in a more meaningful way.
Exactly what do you think inflation means? When Thanksgiving Dinner for most Americans costs 15% more than it did a year ago, and yet, our government statistics bureaus and Fed continue to claim there's no inflation, exactly what do you think that means?
Here's what will happen. There won't be a technical default where we have a failed Treasury auction, because our government will just print whatever money is needed to buy its own debt. The increase in money supply will continue to drive inflation up as it dilutes the purchasing power of the dollar. This acts as nothing more than a stealth tax on the citizenry, which is very bit as destructive as a tax hike or spending cut.
Meanwhile, since our government is flat out lying to everyone that there is NO INFLATION, they won't keep increasing your Social Security payments to keep pace with actual inflation. In fact, this is not speculation, as we have already seen exactly that in the last 3 years.
So if you get $1,000 from SS every month now and can use that to feed yourself and pay rent, but then 10 years from now, you need $5,000 per month to accomplish the same thing, exactly how do you think you are not impacted by the government's destructive policies?
Conclusions:
Folks this country is in so deep that there are only three possible policy responses, or a combination of these three:
1) Raise taxes
2) Decrease spending
3) Print money to finance the ongoing deficits
Those are all unavoidable outcomes. All of them amount to austerity, the first two are direct austerity measures, and the last is a stealth austerity measure in that it means you can buy less with what you have, which is another name for a combination stealth tax and spending cut.
Many of you, and most Democrats, think we can spend our way to prosperity. Well, that means item # 3, which means actually no prosperity at all, because all you've done is sliced the pie into more pieces and given everyone a smaller piece. The size of the pie has not increased.
Democrats and many Independents think we can simply raise taxes to balance the budget, but we all know that raising taxes enough to close the deficit will be very painful in the short run.
Republicans believe we can cut our way to prosperity, but that means cutting many of the programs millions rely on and will also be very painful.
All choices now lead to a major contraction in GDP. My point is a simple one. The pain can NOT be avoided folks. We are all going to feel the pain of the Great Depression 2. It's only a matter of time. The only question now is do we do it by throwing away capitalism and the goose that laid the golden egg or do we do it by allowing capitalism to wipe out the criminals and have our prosecutors put the criminals in jail. I vote for the latter.
My Solution (and Ron Paul's):
Even before we worry about the deficits, we need to stop bailing out the big banks and put the criminals in jail. Then once that is done and confidence in capitalism restored to the 99%, because we have applied the laws on the books and brought back sensible laws like Glass Steagle that protected the 99% for 50 years, only after all of that, do we need to look at the deficit and BOTH increase taxes and cut spending to get the deficit percentage down below the long term rate of growth in GDP. Under no circumstance, EVER, should we devalue the dollar and undermine confidence in the US currency's reserve status. Any Treasury or Fed action that undermines the currency should be declared a Traitorous event and the perpetrators should be put in jail. |
