The Coming Age of Debt Defaults: The US May have to Lead the Way and Default on All Debts. We Must Learn New Ways to Live and Survive.
Revised and originally published 12.19. 2009
Abstract: Since we are going broke and our currency will collapse anyway we might study how
other countries like Argentina
are handling their economies. This blog is somewhat satirical and whimsical in
outlook and content but may reveal some truths. There is no longer any hope of
repaying our National Debt of [soon] 14 trillion dollars thus almost equal to
our Latvia GDP as it soars beyond our
ability to pay it off even in 30 years. We probably could not pay it off in 300
years even at 2% interest. We may have to use debt as a weapon and avoid taxes
at all costs while investing in tangible assets. There are foreclosure scams
utilized by minorities that are highly successful and that might be exploited
as the government is bent upon restoring private property and the GDP by spending and printing money. We have to
learn new ways of living and working and investing and that includes barter,
trade and black market operations. This satire will hopefully inspire some new
thinking 0n debt and survival.
My overview on the economy:
I have been writing on the economy for some years now after watching it closely for several decades. It is sick. We have clearly passed the point of no return in debt terms as we cannot possible pay back all we borrowed from future
taxpayers. The bubble
that sank our economy with toxic assets is still bursting and encouraging two
to burst soon. Some of our states are hopelessly mired in terminal debt and
will be forced to default or be rescued by the US Treasury that is now also quite
broke. All they can do now is print
The theory or lack of it:
There are only two major factors to consider here in terms of theory:  Keynesianism is now being tested on a grand scale and  The lack of demonstrated cases where Keynesianism has clearly failed is not clear to us all at this time. We are stuck in the Realm of Keynes whether we like it or not or even if it is sound and even more if it points to the utter destruction of capitalism as we know it. Capitalism is natural so it might have to proceed in spite of government. Thus, we need some new models to inspect so as to judge the impact of massive government spending on our financial futures.
not sufficiently in the destitution tank, as yet, to show us new ways, but we
may have some decent models in New York Europe to inspect
and hopefully learn from their mistakes or advances as some are on the brink
and now are in open revolt against the EU and IMF.
There is an impressive article today in the Jerusalem Telegraph on debt [that references the international expert on economics Ambrose Evans-Prichard quoted in many of my blogs] concerning currency interest rates and how several countries in the EU are crashing and may be forced to default:
“Europe's small, debt-strapped countries could follow the lead of
and simply walk away from their debts.”--EU/IMF
Revolt: Argentina ,
Latvia May Lead the Way by Ellen Brown, Iceland Friday, 18 December 2009 [Emphasis is mine in
As my first cranial neuron sparked upon reading this, driving me into a fleeting moment of disdain and threatening my usual reflexive response on economic heresies, an illuminating lightning bolt walloped me and conveyed the interesting notion that they may have the solution to a lot of problems, at least for some of them. Notice that the ‘them’ also includes ‘us’ in the ensemble of entities we still refer to as the
. Are we united in
debt too? It seems so. United States
The maladies and remedies explained:
“"The European Union and International Monetary Fund have told them to replace private debts with public obligations, and to pay by raising taxes, slashing public spending and obliging citizens to deplete their savings. Resentment is growing not only toward those who ran up these debts . . . but also toward the neoliberal foreign advisors and creditors who pressured these governments to sell off the banks and public infrastructure to insiders."—Quote by Economist Michael Hudson in EU/IMF Revolt
Part of the reason is that only some EU countries are in the tank and that stems from the silly nostrum that one currency and one interest rate can accommodate, with fairness, some two dozen countries with a myriad of different problems. This, too, as we can easily establish, applies to our 50 states in the
The second part that runs with “sell off the banks” does not pertain to us yet, but might. We rescued our zombie
banks with printed monies so we need to wait a while. US
So, what are we doing? We are following most of this rabid scenario by spending money we don’t have and promising the low class that we will ‘tax the rich’ to pay for what they get all the while not mentioning that the ‘rich’ people’s defined incomes now plunge down to below the median income of a person at $31,000 or about $41,000 per household. Indeed, when you inspect only the top half of the people who pay federal tax [only 60 million out of 120 million US workers with a total population of 302 million] you view a current tax liability of some $346,850 per federal taxpayer counting consumer debt but when Social Security and Medicare are intercalated we arrive at a nifty $1,577,033. We can never pay this off.
This is not going to work out well as anybody but a Methodist, a drug addict or a liberal can see. So, we need to look for alternatives.
has become the first country on the
distressed fringes of Greece Europe's monetary union
and reject the Dark
Age leech-cure of wage deflation." Prime Minister George
Papandreou said on Friday:
"Salaried workers will not pay for this situation: we will not proceed
with wage freezes or cuts. We did not come to power to tear down the
social state."-- According to Ambrose Evans-Pritchard in Sunday's
Daily Telegraph quoted in EU/IMF Revolt Brussels
Inflation can fix that quickly.
After soliciting the advice of our most respected investor in the
we find that inflation is the
“Every country that has denominated its debt in its own currency and has found itself with uncomfortable amounts of debt relative to the rest of the world, in the end they inflate,” Buffett explains. That becomes a tax on everybody that has fixed dollar investments.”--Buffett Sees Massive Inflation to Handle Staggering Debt.
Monday, May 4, 2009
By Dan Weil [Emphasis is mine in all quotes]
“Evans-Pritchard suggested a similar remedy for Greece, which he said could break out of its death loop by following the lead of
It could "restore
its currency, devalue, pass a law switching internal euro debt into [the
local currency], and ‘restructure' foreign contracts."--
According to Ambrose Evans-Pritchard in Sunday's Daily Telegraph quoted in
EU/IMF Revolt Argentina
Note that the
has already done this! We are devaluing our currency, our debt is denominated
in dollars so we don’t have to switch any contracts or debt instruments like
bonds back into dollars. Note, also, that gold and oil are quoted in dollars. We
are going to stick it to US
and China . Japan
So, the game morphs into something very different:
 Debt, carefully managed now becomes desirable as the only recourse of governments is to tax those who still have money to give to the debtors as we see in the phony ‘Affordable Housing’ scam that has already cost us some 10 trillion dollars in lost home equity and fraud. We have to note that those who defaulted on their mortgages do it again, probably with glee, when we spend taxpayer monies to refinance and adjudicate principle and interest for their benefit. The threat of default now becomes a political bargaining tool.
 Tax revenues fall because many have lost money in business and investments and have tax credits or losses to carry forward to later years. Private investors can carry forward and write off $3000 in stock market loses on personal income tax returns for a few years as it now stands. States run out of money from lost revenues.
 Tax increases are currently stalled in terms of the rate of increase for political reasons but new ‘programs’ like ‘health care’ will allow the government to tax and tax and tax everything in sight that even resembles medicine or one of its derivatives. The government plans to [a] cut spending on the old folks who are too expensive to save and [b] force physicians to become government employees and forsake the pay-for-fee system we have now. Of course, the government will regulate salaries.
 The governments will ‘pay’ for the current financial schemes by printing money and inflating the currency. This is the popular snake remedy known as ‘quantitative easing.’ The example of
above cannot work this way
as long as Greece
stays in the EU because they cannot independently print money or control the
interest rates of their own currency. This applies to Greece , [not Ireland as yet]
as well. Spain
And, to proceed, we can do the following:
On the national level we can:
[A] Default on our debt to
and elsewhere thus freeing up some 3 trillion dollars worth of debt. What can
they do? Stop selling us the crap they do now? Japan
[B] We can print money until our external debts are zero and our goods are dirt cheap while imports will be impossibly expensive. This is the system we used back in the Great Depression of competitive currency devaluations that we lost because of agricultural tariffs by our ‘friends’ in
case in detail. Argentina
On the persona level we can:
[C] Avoid taxes at all costs and pay off debt only with inflated dollars. Thus, we need to refinance debts such as mortgages with as long a term and at fixed rates as possible. Try to use debt as a lever against government as in the house foreclosure scams.
[D] Convert back to barter and trade for goods and services and practice what the dope crowd in
does best: Undocumented Capitalism. 
This is classic black market strategy. Close out bank accounts that can be
easily monitored and go back to cash. Be
prepared to suffer ‘wealth taxes’ that are above and beyond income taxes. California
[E] Seek investments only in tangible assets like gold or jewels or real estate where possible noting that there is no current way to tax these except for real estate. Avoid any real estate that might be rent controlled or which might attract extra taxes. Expand your houses to accommodate extended families.
[F] Invest in stocks that are able to raise prices at will as the economy crashes such as Proctor and Gamble, Wal-Mart, Chevron, Safeway and similar corporations. Buy gold and hope that there is no special wealth tax on gold or silver.
[G] If inflation roars to several percent per month then the inheritance and other income taxes will rise to confiscatory levels in the inheritance case and max out at perhaps 70% for income taxes so transfer’s of wealth must avoid these snares. Plan early.
[H] Grow as much of your own food as possible. Learn how to dry and can and store.
[I] Try to do to the
did to the IMF. Argentina
I hope this will stimulate some thinking as we need alternatives to what we are now doing.
 The Bubble that will Burst Higher than all Previous Bubbles: Depression Looms as the Dollar Crashes.
 The Second Big Bubble: The Future of Commercial Real Estate. It May Be Time To Move Out.
 The Road to Social Success, Peace and Justice:
has NO Vision! California
 As Predicted:
Heads for the
Financial Latrines. California
 Copulating with Coprolites: The Unveiled Mechanism of Governance by Progressive Liberalism in
 EU/IMF Revolt:
, Greece , Iceland May Lead
the Way by Ellen Brown Latvia
 Buffett Sees Massive Inflation to Handle Staggering Debt.
By: Dan Weil http://moneynews.newsmax.com/headlines/warren_buffett/2009/05/04/210480.html?s=al&promo_code=7F1D-1
 Affordable Housing Follies and the Intentional Corruption of Supply and Demand Economics
 “The Road Less Traveled: Saying No to the IMF
Standing up to the IMF is not a well-worn path, but
forged the trail. In the face of dire predictions
that the economy would collapse without foreign credit, in 2001
it defied its creditors and simply walked away from its debts. By the fall of
2004, three years after a record default on a debt of more than $100 billion,
the country was well on the road to recovery; and it achieved this feat without
foreign help. The economy grew by 8 percent for 2 consecutive years. Exports
increased, the currency was stable, investors were returning, and unemployment
had eased. "This is a remarkable historical event, one that challenges 25
years of failed policies," said economist Mark Weisbrot in a 2004
interview quoted in The New York Times. "While other countries are just
limping along, Argentina is experiencing very healthy growth with no
sign that it is unsustainable, and they've done it without having to make any
concessions to get foreign capital inflows." http://www.paltelegraph.com/economics/world-economics/3191-euimf-revolt-greece-iceland-latvia-may-lead-the-way-by-ellen-brown Argentina
 According to Ambrose Evans-Pritchard in Sunday's Daily Telegraph quoted in EU/IMF Revolt