US Will Go Bankrupt

"If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when," - Dallas Federal Reserve Bank President Richard Fisher

$100 billion in spending reductions from pre-planned increase levels when you're spending $1,700 billion more than you are taking in via taxes is not "real action" and do nothing to take us away from that "tipping point." It is in fact mashing the accelerator pedal despite seeing the granite wall in front of us.

The primary problem the Federal Government faces right now is that over the last three years their borrowing has become more than 10% of the economy. The "free stuff" mentality has become not just entrenched in our economic mindset it has become essential to keeping us from having to recognize an economic Depression

All we're doing now is trying to cover the inevitable hangover created by our debauchery through shifting that same behavior to the Federal Government. It won't work because it mathematically can't work - the government by definition can only be a part of the economy, not all of it. This is akin to a house cat attempting to eat a cheetah; this episode is not going to end as Fluffy intends.

Attempting to "print" via The Fed out of this at a rate which will be three times or more what was done in QE2 will lead to $10/gallon gasoline within five years and more than a clean double in the price of food and other energy commodities.

We can fix Social Security but Medicare and Medicaid cannot be fixed. Unemployment cannot be left alone. All three of those programs must be cut dramatically, and the entire rest of the Federal Budget must be reduced by roughly half.


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