The Cost of Debt!

There has been much ado about the level of the United States debt and how it affects the average citizen. For those who have not been following the ongoing debt crisis, and it is ongoing as we have not stopped racking up debt, we are looking at a debt to earnings ratio of 100%, (more and not less), as of the time of this blog. What that means for every dollar in goods and services that this nation creates this year, we owe that dollar to some one else. Furthermore, we are increasing that debt load by about 1 per cent per month or 12% annually.

You may ask why this is so important as the government can just raise taxes and print more money. In short, yes the government can increase the tax rate and print as much money as it wishes. That works for today, tomorrow and even this year, but what about next year? The year after? What happens is that inflation begins to raise its ugly head. Each dollar earned begins to purchase less and less. Employers who are forced to raise prices, cut costs and begin to build their inventories of dollars, (think hoarding cash and cutting jobs), This in turn causes the economy to slow down, resulting in more hoarding and job losses. Does this sound familiar? It is estimated that several of the top fortune 500 companies have more cash on hand than does the US Government and I mean that each of these companies have more cash on hand and not as a collective whole. We are also looking at the longest period of sustained high unemployment since the 1930s. In fact, if the US Government still measured unemployment as it did in 1980, we would have an official unemployment rate of over 17%.

How have such things been solved in the past? War! Conquest! Exploitation of Natural Resources! We are already in 3 different wars, (Libya is another undeclared war), any nation we may desire to conquer is in far worse shape than we are, and we have all but shut down our efforts to find and develop our natural resources.

With traditional options already used and proving ineffective we are left with the only option that all nations dread and fear. Collapse. For those who are doomers, the collapse is already at hand, but in truth, we are looking at 10-20 additional years of walking the same path before the wheels come off the cart. At that point in time, those who are on the back end of the boomer generation will be on government programs and the slacker generation that is now in the pipeline will be the main driving force in the nation's economy. Just think, that 20+ year old who is still living in his childhood bed, working 2-3 days a week at minimum wage will be the main source of all of the nation's economic activity. Thus, it is my belief that collapse will happen, and this nation will evolve into a more traditional nation with its Dictators, Ruling Councils, and Kings. Despite this inevitable collapse, we need not fear as is in most collapses, they tend to be quick and bloody. So if you can survive the first 180 days of change, you most likely will be fine.

Are you prepared for the change?

Red gage picture of the day----dragonfly

Enjoy!