The USA owes 60% of its GNP and cannot stop spending. This is a classical Argentinian situation and the outcome will be also Argentinian. First of all, there is nothing to fear, the country will keep existing and there will be no mass hunger (Illustration: Asado a la Tabla) nor prolonged poverty. Somewhere in the next five years the bubble will burst and the USA will default in its sovereign debt. Possibly it will renegotiate it, which is the same thing. Conclusion: Sell American bonds. Second, dollars will be printed. This creates inflation - think Argentina. The dollar will be exchanged to the "new dollar" or something like that, a a rate of 100 old dollars for 1 new dollar. The new currency will be made of washable plastic, like the Australian dollar.
Taxes will rise to levels that would make a Swede revolt. Bank accounts will be frozen, bank safes opened and their contents - expropriated. The government will cut back its services and public employees's salaries will become insufficient for middle class standard of living.
Investors who dare to assume long term non-indexed dollar loans and buy productive enterprises such as rental real estate will pay back their debt at a 80 - 90% discount.
3 comments:
You are pointing in the correct direction here; the ultimate irony of the cold war is that the USA will become a jumped-up version of the USSR (or China) and the USSR/China will become a downgraded version of what the USA once was.
So communism will triumph in the West, but be defeated in the East, and capitalism will triumph in the East but be defeated in the West.
Who would have thought it.
The usual people will be blamed, but in reality we will have done it to ourselves.
Some things are just too difficult to grasp until the worst has already happened.
Anon.
Thanks to Juan Domingo Obama.
Or rather: John Sunday Obama...
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