Our Government Has Cemented Its Own Downfall and It’s Going to Be Ugly

Author: Mac Slavo- February 9th, 2011
Comments 35

We want to be positive about all this spending, monetary expansion and economic malaise - we really do. But when we read expert analysis from the likes of David Galland of Casey Research, we really can’t help but be pessimistic and alarmed about the survivability of the world as we know it: http://www.caseyresearch.com/editorial/ ... 226ED0211A

Via The Daily Crux

If the government had kept its role limited and its finances in good shape, people might not love it, but they’d respect it – and, more to the point, they wouldn’t hate it.

However, by expanding as it has, the government has drained its treasury. Then, politically unable and unwilling to stop its spending, it kept going – racking up the largest debt in history.

That has brought us to a crossroads.

One path leads to more spending, in which case the currency will collapse, wiping out the remaining wealth of the citizenry… resulting in a hateful population.

The other leads to overt default and a wholesale unwinding of the government’s massive role in the economy, again wiping out the wealth of the citizenry and resulting in a hateful population.

In either scenario, a government anxious to avoid the worst can be expected to raise taxes and take other desperate measures to avoid failure. Hungary, Poland, Bulgaria, and other nations have recently made pension grabs; we can expect to see that in the U.S. as well before this is over. Again, at the same time that these moves may help the government stay afloat awhile longer, it plants the seeds of public hatred and cements its eventual downfall.

In our strongly held view, the government will continue to opt for the path of more spending – until it simply can’t, at which point the first path will lead back to the second. And so, no matter what it does at this point, the government will soon find itself faced with serious and widespread discontent.

Throw a heavily militarized constabulary into the mix, and the potential arises for the situation to get very ugly, very fast.

We’ve made mention in prior commentary of the two options our government has at its disposal as observed by David Galland.

1.Flat out default on our obligations, which is something Tim Geithner recently warned about in a letter to Congress and we expanded on in Confirmed: We’re Literally On the Brink of Catastrophic Collapse. http://www.shtfplan.com/headline-news/c ... e_01062011

2.Continued monetary expansion leading to a hyperinflationary collapse of the world’s reserve currency, which we wrote about in December of 2009 summarizing what it will look like and how to protect yourself: No Way of Avoiding Financial Armageddon http://www.shtfplan.com/headline-news/h ... n_12152009

While both of these options are on the table, we lean towards hyperinflationary collapse resulting from continued monetary expansion, a sentiment shared by David Galland and many of our readers who have voiced their opinions in comments and emails over the last several weeks.

The US government will more than likely not voluntarily default on its debt. Though it is always within the realm of possibility, the effects of such an action would be immediate and extremely violent. We would literally see a complete meltdown within a period of a few days once the rest of the world realized they wouldn’t get paid.

Incidentally, the effects of taking such an action wouldn’t be too dissimilar from continued monetary expansion. However, continuing to raise the debt ceiling and printing more money will at least buy us some time. In this instance, we will essentially default on our debt through the printing of money. Basically, we borrow $1 Trillion, and then, instead of paying it back with today’s dollars, we’ll just print a trillion at the Federal Reserve and pay that debt off in heavily diluted dollars. So, while the Chinese may hold in excess of $2 trillion in foreign reserves, there is a real possibility that in the end, all they’ll get for that is a loaf of bread.

The end result will be the same. A completely poverty stricken, jobless citizenry and/or a total, uncontrollable debt and/or currency driven collapse.

The other consideration that must be made when talking about a US dollar currency collapse is, as David Galland referred to it, the heavily militarized constabulary and heavily armed populace. A system meltdown in the U.S. will make Egypt look like a peaceful demonstration.

Though it is not exactly a guaranteed outcome, a combination of James Rawles’ Patriots-style post-apocalyptic world and Troy Grice’s Indivisible comes to mind.

And, that doesn’t even take into consideration the fact that the Chinese will be sitting on a loaf of bread for 30 years of toil assembling stuffed animals, iPods and cheap HDTV’s. There is always the real possibility that they will want the US to make good on our debt, forcing the Chinese into a position where they will have to fight - as in global war - for what they perceive as theirs. When we can’t pay, the Chinese may very well come for our hard assets.

http://www.shtfplan.com/forecasting/our ... y_02092011