Guest
03-10-2010, 08:31 AM
I have posted before that the profligate spending by our political leaders for the last decade or so, and their inexplicable unwillingness to recognize the dire financial circumstances in which they've placed the country, will ultimately lead to a severe chage in the standard of living of all Americans. This change will be the result of wealthier countries in the rest of the world--countries who have exhibited far more responsible fiscal political leadership than has the U.S.--finally deciding that they won't continue to lend us money to finance our deficit spending. They will finally decide that they want their loans repaid, rather than lending us more by buying our Treasury securities.
China has already begun to reduce the amounts it chooses to lend to the U.S. It has been sending the message of it's concern over our financial condition to our government for about two years, and has finally begun to act on it's forewarnings. In the last month alone, it has reduced the amount it has loaned to the U.S. by $64 billion. They do that by either not buying as many T-bills and bonds from us when they are auctioned, or by demanding payment on the securities they do own when they come due.
The result will become apparent in not too long. If our political leaders don't decide to act more responsibly--and they won't of course--then our government will begin to simply print more money to repay our debts and pay for government spending. The effect we will first notice is increased inflation. Because our money is worth less, everything we spend it on will cost more.
But when all the artifical "fixes" fail, we'll wind up as an indigent debtor nation. I have said it would represent Greece. But maybe not. The government of Greece seems to continue to act with less responsibility than appears necessary. But Ireland has bit the bullet. Here's an excellent article from today's Wall Street Journal which explains just a bit what the effect it is having and will have on the Irish standard of living.
http://online.wsj.com/article/SB10001424052748704486504575097672075207734.html
(For those of you who can't navigate to this link, I've cut and pasted the entire article in a posting below.)
Because our standard of living is the highest in the world, when the decline in our living standard begins it will be far more noticeable here than in other, poorer countries. I won't go into a litany of how our standard of living will decline and how quickly. I'd suggest that it might begin with the inability of our government to pay for things like healthcare, pensions, and government payrolls for all kinds of services they currently provide, even defense spending. That's already begun at the state levels--read the articles about what's happening in California. But we'll see it from our federal government soon enough.
We'd better stop arguing among ourselves about who was responsible and who isn't facing the problem, which party is right and which is wrong, and which segment of the population should suffer more than another. The answer is that our entire elected government has failed us, and failed us for some time now. It needs to be replaced completely!
China has already begun to reduce the amounts it chooses to lend to the U.S. It has been sending the message of it's concern over our financial condition to our government for about two years, and has finally begun to act on it's forewarnings. In the last month alone, it has reduced the amount it has loaned to the U.S. by $64 billion. They do that by either not buying as many T-bills and bonds from us when they are auctioned, or by demanding payment on the securities they do own when they come due.
The result will become apparent in not too long. If our political leaders don't decide to act more responsibly--and they won't of course--then our government will begin to simply print more money to repay our debts and pay for government spending. The effect we will first notice is increased inflation. Because our money is worth less, everything we spend it on will cost more.
But when all the artifical "fixes" fail, we'll wind up as an indigent debtor nation. I have said it would represent Greece. But maybe not. The government of Greece seems to continue to act with less responsibility than appears necessary. But Ireland has bit the bullet. Here's an excellent article from today's Wall Street Journal which explains just a bit what the effect it is having and will have on the Irish standard of living.
http://online.wsj.com/article/SB10001424052748704486504575097672075207734.html
(For those of you who can't navigate to this link, I've cut and pasted the entire article in a posting below.)
Because our standard of living is the highest in the world, when the decline in our living standard begins it will be far more noticeable here than in other, poorer countries. I won't go into a litany of how our standard of living will decline and how quickly. I'd suggest that it might begin with the inability of our government to pay for things like healthcare, pensions, and government payrolls for all kinds of services they currently provide, even defense spending. That's already begun at the state levels--read the articles about what's happening in California. But we'll see it from our federal government soon enough.
We'd better stop arguing among ourselves about who was responsible and who isn't facing the problem, which party is right and which is wrong, and which segment of the population should suffer more than another. The answer is that our entire elected government has failed us, and failed us for some time now. It needs to be replaced completely!