Everyone knows the general definition of bankruptcy. When you get to the point where your bills far exceed your income and you are unable to make your debt payments, you must declare bankruptcy. It is literally the inability to pay creditors.
The 2010 federal budget includes about $3.6 trillion in payments but only expects to receive around $2.3 trillion from taxpayers. (I use the term only tongue-in-cheek, and then grudgingly.) This in and of itself is not necessarily a terrible thing. Think of it as racking up a bunch of debt on a credit card; you just have to pay it off the next year. The problem comes when you NEVER pay off your debt. This is what our government is doing and has done pretty much since the Civil War (or more properly the Second American War for Independence).
You would think that everyone with a brain knows that it will take an enormous amount of time and a fortune of cash to pay off a credit card paying only the minimum payment. The government obviously doesn’t think everyone knows that which is why they have required credit card companies to include a new disclaimer showing just this information on your statement (Nanny State anyone?). Somebody needs to show this disclaimer to the government because they have been paying the minimum for a heck of a long time.
Ok, you’re thinking blah blah blah, what’s the big deal? For the past 42 years, since 1969 to be exact, the federal government has spent more than it has taken in. The official current debt is roughly $13.3 trillion. The “minimum payment” for this debt will probably top $380 billion this year, more than the entire federal budget in 1976. And this number will only get higher as the government recklessly spends more and more money that doesn’t exist.
Completely ignoring unfunded liabilities such as Social Security, Medicare, Medicaid and pensions – which, by the way, completely dwarf the current debt by somewhere in the area of $50 to $100 trillion – it would take about 60 years to pay off the debt assuming zero annual deficits during this time. The problem, of course, is that the government will not stop running a deficit, it will not cut spending, and it will not miraculously spend its way out of this mess. When reality hits, the world will discover that the United States has dug its own grave and is now in the process of building a coffin.
Very soon – I would estimate within three to five years – most foreign nations will be unwilling to lend us money. When this happens, the dollar will dramatically shed the rest of its “value” and the government will have to cut about 75% of its workforce and programs (something it should have done years ago). Once the dollar is recognized as the worthless piece of paper that it is, only those citizens who have the ability to barter a useful skill or own commodities such as gold and silver will be able to live in a decent manner.
My recommendation is to prepare. Buy gold, silver and real estate. Invest in seeds to plant and grow your own food. Teach yourself at least five different water purification methods. If you don’t own a gun, buy one. If you do, buy more ammo. If you live in the city, move. If you live in the country, buy razor wire to keep the vagrants out.
I may be a pessimist but at least I’ll be prepared!