The United States government and the Federal Reserve must keep interest rates near zero – because if they don’t, there will be great difficulty in paying the interest on the debt they’ve accumulated, which could bring it all (the economy and our way of life) crashing down.
There’s one problem though. The only way the United States can maintain their zero interest rate policies is for the world to continue accepting the dollar as the world’s reserve currency. The thing is – they’re not, and plans are nearly implemented to circumvent the United States dollar for major countries such as Russia and China (and others).
The carrot and the stick approach (by the United States) isn’t working so well anymore. The carrot (the strength of the dollar) is becoming increasingly rotten and the stick (the willingness to use the military) has weakened considerably as Americans have grown war weary.
I originally wrote about this back during 2014 and I find it remarkable 4 years later that the situation is worse today than it ever was, even though “the economy” is apparently “up” according to some pundits.
The US Debt is now more than $21 Trillion.
Unfunded Liabilities top $113 Trillion.
Note: As part of the “unfunded liabilities”, the government also owes the Social Security Trust Fund and other federal agencies. That’s called Intragovernmental Debt. It’s not included in the interest on the debt. That’s because it’s money the government owes itself. It explains why the American people own most of the U.S. debt!
Interest on the Debt
Here’s why low interest rate policies will be here until “the end” in my estimation:
The United States CANNOT AFFORD to pay anything other than a very low interest on its debt.
Interest on $21,000,000,000,000 ($21 Trillion)
10% ($2 Trillion)
5% ($1 Trillion)
3% ($630 Billion)
2% ($420 Billion)
1% ($210 Billion)
Presently, the United States is paying approximately $310 Billion interest on its debt. The interest on the debt consumes 7.4 percent of the FY 2018 U.S. federal budget. That makes it the fourth largest budget item. It won’t take much to push that statistic higher…
Is anyone familiar with Venezuela? Think something like that can’t or won’t happen here in some form or another?
I know, so don’t bash me in the comments… We’re nothing like Venezuela. I get that. Hopefully we stay off the socialist (or worse) road. And I realize that the dollar fiat currency is still the king of the hill. At least until it isn’t any more.
Does anyone remember when interest rates were high several decades ago? The higher the interest rates go, the bigger problem it is for the US government.
There’s No More Gold
It is likely that there is little gold left in United States coffers to back up American debt. Technically the dollar is not backed by gold anyway (since Nixon in the ’70s), and the gold for the most part is believed to have left the country. It is believed that much of it has gone east to Asia and beyond while the FED and gold central banks have suppressed the dollar price of gold.
Physical gold is being gobbled up on the world market (apparently other nations still value this ‘ancient relic’ as real money [sarcasm]). Not too long ago the United States was only able to deliver a tiny fraction of Germany’s gold after they requested (demanded) it back – exemplifying the likelihood that there is barely any gold left on reserve. The FED refuses to audit their (supposed) gold.
Fewer Are Buying United States Debt
Fewer nations are willingly purchasing United States debt (Treasuries). The FED is looking for other ways to sell their debt, one of the latest being the “myRA” – a covert grab for its citizens’ money, an IRA-style which invests only in United States Treasuries (debt). One wonders how long until something like this becomes mandatory and retirement accounts are nationalized.
The Debt Is Massive
The current United States National Debt is more than
$17.5 Trillion ($21 Trillion – 2018). What that actually means for each and everyone in the US Workforce, you are effectively indebted for $112,434 ($136,020 – 2018). And that figure keeps rising.
If you also consider adding the debt obligations for unfunded liabilities (Social Security & Medicare), the new total becomes $137 Trillion ($880,200 for each in the workforce) – the future does not look very bright to say the least…
Few People See The Coming Collapse
A relatively few people see the collapse that is coming. It is mathematically unavoidable. The majority of those who do not see it (refusing to see it?) may think the rest of us are crazy for such thoughts. Sadly many of them will be hurt badly while those of us who choose to do something about it will fare better (although we will not escape it).
Never Before In History
In all of world history, no nation (none – ever) has accumulated as much debt that the United States has. Not even close. We are the most indebted nation in the entire world. In fact the entire WORLD is in debt beyond comprehension.
Debt Comes Due
As most of us know (logically), we can only spend ‘so much’ beyond our ‘take home’ pay before we get cut off. There is always a day of reckoning. One way or the other we suffer the consequences. It is little different with nation debt.
When We’re ‘Shut Off’
When the rest of the world cuts off our debt (our credit card) – and they are beginning to do just that while finding other mechanisms for trade and currency exchange – the US dollar is done for. All of the trillions of dollars out there in the rest of the world will start rushing back home (as it’s sold off) and the inevitable result is currency inflation. This will start a chain reaction that will not be stopped. It (currency collapse) has happened eventually to EVERY currency in world history, and it WILL happen to the dollar.
We are stuck in our normalcy bias and cannot imagine or comprehend that the dollar could possibly collapse. We live in our fairy tale world and do not have the vision or the sense of history to understand reality. We believe that we are magically isolated from economic collapse. It has never happened to us before, therefore it will never happen to us.
Caught Off Guard
When the economic situation deteriorates, most people will be entirely caught off guard with little or no preparation – thanks to the massive mainstream coverup and propaganda (in an effort to keep everyone happy, spending, bread & circuses).
The warning signs are everywhere. In my estimation we have a (mostly) corrupt government in cahoots with big business, big money, and big banks. Most of us (thinking people) realize that few politicians actually represent our personal and individual interests over that of big money and big power – it’s an unfortunate human condition if left unchecked. The problem is that it has been essentially unchecked for far too long, and it is essentially seemingly too late. Therefore we must prepare for what lies ahead.
What Lies Ahead?
We are in uncharted territory due to the massive extent of our bad situation. Whether or not the powers-that-be will be able to control our inevitable crash landing remains to be seen. They’ve managed to keep it together so far… However I personally believe that at some point they will lose control and all bets are off.
There will (at a minimum) be social unrest (there already is). This could easily spiral into social chaos and beyond – especially in regions. If this bubble bursts badly, the results will surely be very bad.
There will be millions upon millions of people hurled into desperation as their standard of living is abruptly changed for the worse. It could be shocking.
My hope is that the balloon will instead maintain its apparent slow leak such that the air is released at a relatively slow rate while people attempt to adjust to their diminished circumstances. This is not to say there will be no unrest – this will only dampen the violence of an abrupt stop.
What To Do?
Your best survivability will stem from a thought process of self-sufficiency, self-protection & preservation, and insulation from dangerous geographical areas (cities and metros) which will ‘catch fire’ in a collapse.
The rest of the details are up to you and your due-diligence.
I hope that you give it some thought.
(I’ve updated this from its original posting during 2014. Feel free to add to the comments below.)
4 (today) 113 (week) 150 (month)