Saturday, December 1, 2012

What happens after the US economy crashes and burns?

We've just voted ourselves another four years of wild and crazy drunken sailor deficit spending with the re-election of this spendthrift president.

The federal government is already spending a TRILLION dollars PER YEAR more than the U.S. treasury receives in taxes. A trillion dollars.  That's $1,000,000,000,000.00 -  that's a thousand billion for you Obama voters out there, a number almost too big to comprehend, or at least as far as you are concerned.  Of course, this can be financed in the short term by borrowing and the most common form of this method of beggaring our grandchildren is by issuing debt in the form of U.S. treasury bonds.  And of course, this short term economy can only sustain itself if we have willing purchasers of these bonds.  China and Japan are our largest customers for these bonds, and they are starting to indicate that they are not inclined to purchase these bonds in perpetuity (that means forever, for you Obama voters out there).

In other words (meaning, in simpler terms for you Obama voters out there), our current economy based on annual borrowing patterns is unsustainable.  It can't go on.  An economist in the Nixon administration (a time long, long ago for you Obama voters out there) Herbert Stein once quipped, "If something cannot go on forever, it will stop," or put in a way that Obama voters might understand (but I am not guaranteeing that), a trend that can't continue, won't continue.  "Stein's Law."

And once our economy collapses (when, not if, if the Obama voters keep cretins like Barack Obama in power), how will things look?  You know, when a hundred dollar bill can't buy a loaf of bread?  Don't laugh or scoff, this wild economic collapse occurred in recent history, with the government in Germany during post World War I Europe (the Wiemar Republic) experiencing 1000% inflation, to the point that it took one million Deutsch Marks to purchase a gallon of kerosene.  The government just started printing money with absolutely no faith that any of these bills in 100,000 DM denominations were worth anything.

As soon as our government can no longer borrow (or issue bonds) to finance their deficit spending, will they stop sending checks to welfare recipients?  No.  There would be riots.  Will they stop paying the military, or sending checks to Social Security recipients?  No, there would be a coup by the military, and the geezers would rise up into some sort of ugly mob of one form or another.

No, none of these things will be how the hapless spendthrift federal government will handle things.  They will just fire up the printing presses and start printing U.S. dollars as fast as they can run the printing presses.  Which will cause much more paper dollars chasing the same available products, making the prices rise dramatically. 

In short order, nobody will be accepting the U.S. dollar as a medium of exchange.  Then the U.S. government will break open Fort Knox and start paying the most angry of federal workers in gold, right?  And the military would likely be first in line, if I may be so bold as to guess who would be the biggest angry threat to our liberal government.  No, payment will not be made in Fort Knox gold.  There is a high likelihood that there is not a gram of gold in Fort Knox as we speak, as it was sold off to finance the government's malfeasance probably decades ago.  There is only myth remaining in the Fort Knox vaults. 

So what happens when nobody is getting paid?  Obama will at the moment tell those who are starting to get a little anxious, 'let them eat Twinkies.'  Of course Obama (or his successor, or his successor's successor) is so out of touch with reality that he doesn't even know that Twinkies are a thing of the past.  In any event, visions of the French Revolution come to mind once the American public, to include the average obtuse Obama voter (or the average Obama successor voter), realizes that they have been sold a bill of goods, and the cupboards are bare.


Kid said...

So, Fredd, have you changed your view on where the price of Gold is headed? I currently think down in the intermediate term fwiw.

Fredd said...

I was counting on a Romney win to help gold prices out (return them to earth), but that didn't turn out so well.

I am inclined to see if I can't just break even on DZZ, and wait a few years for President Marco Rubio to do what Mitt couldn't.

innominatus said...

When everything collapses, I just hope we can avoid the Murderous Dictator Stage that always seems to follow.

Fredd said...


Murderous Dictator Stage: much like the character General Bethlehem in Kevin Costner's post apocalyptic flick "Postman," I suspect we will not avoid this, Inno.

It always seems to be the case.

Z said...

"Murderous Dictator Stage"...oh, man. I just read Kid's excellent post, then this post, and I'm DEPRESSED!

Fredd, I honestly think that most people will STILL believe the JERK IN CHIEF that IT'S ALL BUSH'S FAULT...even in another four years they'll be thinking that.
Axelrod's GOOD and Republicans STINK. THAT is the equation these days. THAT is what put us where we are now...........AXELROD.(notice I did not say WHO PUT US WHERE WE ARE NOW because he's not human)

Just think about how different it would be if Romney was in...........makes me ache with desire. (so to speak!)


Fredd said...

Z: just look on the sunny side of things = at least we ALL get FREE health care.

And of course there are free Obamaphones.

And free welfare checks.

And free unemployment checks.

And free disability checks.

And free food stamps.

I could go on but I won't.