Everything that still functions in the US now runs on government bail-outs and guarantees via deficit spending and monetization of the debt…just flat creating money out of thin air by printing it. Without this “stimulus,” all manner of the economy would come to a screeching halt.

So, as in Charles Dicken’s story, “please, sir; can I have some more?” I think government bail-outs and guarantees will be necessary forever…or until the boat sinks. Who would have thought we would ever see…Government Motors? 20 billion to date, and the hand is out for 30 billion more. We have bought into a perpetual Money Pit, not only with GM, but with all manner of what makes this country, and the world, for that matter, run.

99 trillion in unfunded entitlement programs, from Social Security and Medicare to VA pensions? Say what?

Our financial system now closely resembles the definition of a boat: a wood-lined hole in the water into which you pour money. (Boat owners will know what I mean)

If a person has $40,000 of income, and $500,000 in credit card debt - there is virtually no rational scenario in which their income will ever catch up with the debt. He goes bankrupt. The court says, “we judge that these debts can never be repaid.”

When the govt does this, it is called debt repudiation, or a unilateral disclaiming of a debt instrument obligation by a debtor.

We are going to do that, as there is no way in hell the US can pay off that amount of debt. And with all this printing of money, it looks like inflation of the money supply may well be the vehicle. And since, we have this “money pit” to justify it, it is easy to do.

And only an impossibly fast return to a very high GDP growth in the United States could ever prevent this.

That is exactly how the U.S. Government will "repudiate" our debt. They will never actually refuse to repay the dollars. They will simply print the dollars and hand the worthless bills to the Chinese, Japanese, Koreans, Russians, Europeans and any other lenders that were foolish enough to loan it to us.

Sorry saps one and all. And we're the biggest saps of all.

And this will eventualy start WWIII

World War 3 would likely result in large amounts of profit-producing land being turned into radioactive wasteland. Is this really what the various governments of the world would want?

You're assuming that humans and their governments are rational and see the consequences of their actions. They aren't and they don't, at least when the time horizon is sufficiently in the future to be past their lifetimes.

Grautr,

Going to war with the United States would not make the US more inclined to pay back its creditors.

China has NOTHING to gain by declaring war on the USA.

Something to think about, if we're talking China... Who do you think a Taiwanese businessman is likely to consider a more reliable and honest partner after such a default, the US or the PRC.

I got a a feeling his friends in Beijing are about to get a significant bump up, and his friends in Los Angeles are about to suffer a significant demotion.

Otherwise rephrased as.. how to get Taiwan to realize her interests are best served under the Aegis of the PRC, not the United States.

This is the monetary equivalent of a perpetual motion machine or "free energy." Which doesn't exist.

What is truly amazing to me is that despite the sophistication and complexity of our civilization, once it stops growing, it starts to rapidly fall apart. It is so poorly designed it should have never made it off the drafting table. Any sort of product or device that failed so easily would have never made it to market.

The government has no solutions, no plans, no alternatives, no escape routes, no ideas...except to print money and make happy talk. That's it, that's all. A contracting economy does not compute, it's not part of the model, it doesn't fit the equation.

A plant or animal species with the same characteristics would have become extinct a long time ago.

Look for an FDIC bailout soon. They are about out of cash.

I doubt that. The stimulus was what, a trillion or so? US GDP is about 12-13 trillion IIRC. Where did the government hide the extra 10 +trillion?
Good thing we have about 12-13 trillion/year in income, and about 4-5 trillion/year in debt over the next 7-8 years.

I found an interesting website that analyzes how US GDP is calculated:

http://www.chrismartenson.com/crashcourse/chapter-16-fuzzy-numbers

You may find it interesting. In particular, his description of imputations, hedonic adjustments, and how inflation is calculated (and how inflation calculations affect GDP calculations).

Good Luck Caffeine. You'll need it!

Chart: http://static.seekingalpha.com/uploads/ ... _ratio.jpg

Looks like the FDIC could be next on the bailout list. Been waiting for that, as a signal of when to get out of cash and into hard assets entirely, minus some living expenses. Or, the short term US Treasury market going to hell in a handbasket. That would trip my trigger.

CBO says the cost of the stimulus is $3.27 trillion over ten years. 10 trillion? Say what? Systems don't have to experience total capital shut downs to stop functioning.



Think again. We have 99 trillion in unfunded entitlements alone.