What Happens When America Goes Bankrupt? A.K.A. Dirt Broke - Insolvent

What Happens When America Goes Bankrupt?

http://www.zerohedge.com/sites/defau.../picture-5.jpg Submitted by Tyler Durden on 05/14/2014 15:31 -0400

Submitted by Simon Black via Sovereign Man blog,
Last week in the Land of the Free, I heard a radio campaign ad for a local political candidate while in Texas.
In the ad, he was talking about the debt and excessive government spending. And then he said something along the lines of, “We need to get this under control before America goes bankrupt.”
‘Buddy,’ I remember thinking, ‘America isn’t going bankrupt. It already IS bankrupt.’
Just so that we don’t mince words, my dictionary defines ‘bankrupt’ as “any insolvent debtor,” i.e. a debtor whose liabilities exceeds assets.
That’s the US government, by its own admission.
As we’ve discussed before, the US Government Accountability Office (GAO) publishes financial statements each year in which they list all official government assets and liabilities.
The liabilities far exceed the assets. Big time. And the hole is getting deeper each year.
At this point the government’s net worth is roughly NEGATIVE $17 trillion, about 110% of GDP. That’s textbook insolvency.
The only reason the US government is still able to service its debts is because they are borrowing money just to pay interest… and because the Federal Reserve keeps printing money to buy up US debt.
These are hardly sustainable fiscal strategies.
What really concerns me from my travels in the US, though, is the clear divide that seems to be forming.
The rich are getting richer by the day thanks to all the heavy financial lifting being performed by the Federal Reserve.
If you are in a position where you only allocate 10% of your income on living expenses, and 90% of your income on investments, you’re doing extremely well.
The Fed is pushing up the values of stocks, bonds, luxury real estate, fine wines, art, etc. So you’re seeing 90% of your income increase by, let’s say, 10% per year.
But the other side of excessive debt and money printing is retail price inflation. Record high prices for beef, eggs, medical insurance, etc.
And if you’re one of the vast majority who spends 90%+ of your income on living expenses, and has (if you’re lucky) 10% left over to save or invest, you’re experiencing an entirely different phenomenon.
If the cost of living increases by 10%, suddenly you need to spend 99% of your income on living expenses. So you either destroy your savings… or you have to reduce your standard of living.
This is one of the greatest redistributions of wealth in history, from poor to rich, courtesy of a twisted, perverted system of central banking masquerading as capitalism.
This is the stuff that revolutions are made of. It’s already happening around the world from North Africa to Southeast Asia. And it’s starting to spread to the West.
I invite you to explore this further with me in today’s Podcast episode, which you can access here.

http://www.youtube.com/watch?feature...;v=B5cme1OUtSU

http://www.zerohedge.com/news/2014-0...-goes-bankrupt