| | | Historically, they always pay, but there are different ways they can pay.
Not delving into this too deeply, one of the main ways is to screw the people overtly. North Korea did this a few years ago with a new currency, worth... 1/100? of the old. But the key was you could only exchange about $50 worth of the old for the new. Bam... stolen wealth.
Argentina play book: Remember in the late 80s and or 90s, more than once I believe, when they froze everyone's bank account? Two months later, they unfroze. Devaluation of their dollars vs. $US was somewhere between 80 and 90%. The elite and banks got what they wanted. Others who might have had enough saved to buy a car when the freeze occured had just 10% of what they needed when the unfreeze arrived.
Currency crisis: This can occur in as few as hours, or a few days, but generally a bit longer. Accompanying a crisis (usually preceding it to trap ensnare the peons) are currency controls, so that as things devolve, only the well connected can get out. Others are trapped. Also accompanying a currency crisis can be massive defaults and bank failures and sometimes outright theft (e.g. grab people's gold).
But usually, it works via the stealth tax. The monetary inflation takes the form of 'new money' and it is handed to the well connected -- the banks, military industrial complex, corporations that 'donated' to the administration etc. This is 'hot money' -- no inflation yet, but billions or trillions of new spending will occur. That will create stock market inflation, RE inflation, and/or retail inflation (all symptoms).
SO after a year or two of 5-10 percent inflation, the peons start clamoring for raises, and finally get 3-6%, falling behind in both time and value. So in a nutshell, their purchasing power decreases, as the national debt 'inflates away' and thus, they are the ones who've paid.
And as Heinz Blasnik (pater t.) has said, gov't often will balance the books on the weak. Hence the calls to cut social security and medicare (outright, or by privatizing it). Is my aunt going to write letters or join a march to protest that? No... she's 94 and in assisted living. They already get SS increases that lag inflation by 1-2 percent year after year. We both know that in a typical retirement, after twenty years, purchasing power will have decreased 40-50%.
And lastly, the stealth tax part... even if your savings 'keep up' with inflation, e.g. you have enough to purchase a house in your portfolio, and in ten years the house goes up 100% in price, year by year your IRA went up 100%, you'll see that your cash account went up 40-50% due to annual taxes on gains.
And back to currency crisis, which can provoke actual hyperinflation, revolution, or war, everything that people held precious may come tumbling down.
Those are some of the ways the people of the future will pay.
If you are one of the 0.4% super fat and happy at the top, you most likely have a number of homes in several countries. Turmoil in the US may be inconvenient, but you might be living in that shelter in NZ.
Here's an example of the sentiment among some in the US who literally don't give a rat's ass about the elderly, the poor, or the ill: latimes.com.
Let me add a new one which is coming to a fiscal wreck near you one day: a bank 'bail in' where due to the profligate spending and papering over corrupt banks etc., one day the dislocation is too severe, so they just take your money as per their by-laws.
How do "the masses" pay for the ballooning federal debt? |
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