In FY 2009, for every one dollar ($1)the U.S. Government took in in taxes, it spent $1.67. This over spending our income has been going on for a decade now. As a result, China now holds trillions of dollars of our various paper.
The Health care bill has exactly zero (0) provisions to begin to reduce the cost of health care, and health care is one of the fastest growing budget items.
At some point, China is going to stop lending us money to cover our debts, or they will demand such a high interest rate, that borrowing from them is no longer feasible.
(Our annual interest expense is already enormous!)
At that time, one of four things will happen, if 500 years of history is any guide, and they are not mutually exclusive.
1) There is a military take-over of the government. See Chile, Argentina, and a bunch of African countries for recent examples.
2) The government prints money to inflate away the debt. See Argentina and a bunch of African countries.
3) The government will simply abrogate the debt, e.g., refuse to pay it. See Argentina and a bunch of African countries.
4) The legislature will get some back bone and sharply reduce expenditures and increase taxes. See any fairy tale you like.
My money is on #2. What do you think?
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