Porter Stansberry, of the S&A Digest, writes What you must know about bankruptcy of the United States:
My point? Our government is bankrupt – right now, today. Sure, it might still have access to the credit markets. And yes, since it owes dollars, it can always simply print more. I realize the government can’t go bankrupt they way GM did. Our bondholders won’t end up getting title to our national parks and the strategic petroleum reserve. No, that’s not going to happen.
What will happen?
I can’t say for certain. But here’s what I know: It’s not a good idea for the world’s largest debtor and the world’s strongest military power to go broke. Bad things happen in democracies when the government goes broke. At the very least, our creditors will demand much higher interest rates and abandon the use of our currency. That’s going to devastate our standard of living.
These facts and figures should cause you to wake up and think about what you’re doing with your savings. Here’s a hint: Don’t save dollars. And don’t count on whatever the government has promised to you, whether it is a retirement or medical care. The government is bankrupt. It won’t be able to deliver.
The politicians in DC continue to make promises. Some of these politicians actually believe that our government is like a business and is able to produce goods and create money, much like the free market. Others know full well that what they are promising can’t ever be paid back, but they do it anyway so that they can literally buy themsevles another term in office.
The mathematics of all of this are very clear. We cannot continue to spend money we don’t have indefinitely. A five year old could figure this out.
As much as I believe in the ideal that the American people should have faith in their elected representatives, this is not the case in America today. If you believe the promises your government is making to you, and you live your life with the idea that all of this will continue in perpetuity, then you will end up just like them…broke.
Read Porter’s full article here…
Hat tip to dad for sending this one over (SHTF Planning – it’s a family affair)
I subscribe to some of the Stansberry research reports. They are high quality stuff.
I recommend viewing the following video: http://www.zerohedge.com/article/ratigan-rips-obama-calls-him-out-his-free-money-doctrine-and-tarp-hypocricy
There was some good discussion on Financial Sense this week on this topic ( http://www.financialsense.com ).  Good interview this week with Steve Forbes too.
Most states have clauses in their pension entitlements that allow them to get out of their responsibilities for various extenuating circumstances.  Most people believe their state/govt pensions are 100% guaranteed as promised, and have planned their lives and retirements accordingly.  They may be in for a big surprise… and there may be a lot of very, very angry people out there if that comes to pass.
As you’ve said before Mac, there’s no way to know how long this can go on… 1, 2, 5, 10, 20 years?  Who knows.  In Japan, their debt situation is far worse than ours as a fraction of GDP, and they are not the world reserve currency, and they’ve been down this road for 20 years.  So it may not all collapse tomorrow, but you’re absolutely right, it simply can not go on forever.
The key take away is that governments can not create wealth, they can only tax it, take it, redistribute it and keep some for themselves.
Mr Forbes had a good analogy in the interview on Financial Sense.  I’m paraphrasing, but basically that the government thinking they can stimulate the economy is like taking a bucket of water from one end of a pool and dumping it in the other end, while losing some to evaporation in the process, and believing that will result in the level of the pool rising.
I don’t believe in most Govt promises. I also don’t believe in most of your doom and gloom predictions. However, your commentary on this article is excellent.
I wish we would stop referring to this country as a democracy. We used to be a Representative Republic. The change has been our downfall
Patrick: I would not put too much store in Steve Forbes. He is , more or less a moron. If you really listen to what he says , it becomes embarrassing. He is an idealistic supply sider who makes even less sense than Keynesians.. actually they more or less morph into the smae sick , twisted ideas about economics and debt in particular… that debt does not matter one iota…. To quote this man on here to make a good point is more or less assinine