With the president’s request this week for Congress to raise the debt ceiling, the national debt will exceed our entire economic output. Let me put it simply. This is really bad. The debt; let me rephrase that, THE DEBT WE OWE IS MORE THAN WHAT WE PRODUCE! Get your mind around that. Don’t succomb to the game. The republicans are going to act like it’s all Obama’s fault. The democrats are going to talk as if the republicans don’t care. They don’t have any respect for you and me. NONE!
In case you’re wondering, here’s what will happen. When you owe more than you produce, you will default on what you owe. If you can’t understand that principle, stop reading and go take basic arithmetic somewhere. What goes out can’t exceed what comes in. Now, the federal government has been doing that for years, hence the borrowing and borrowing and borrowing. Now, just the amount that we owe, get this straight, just the amount we owe OVER what we produce exceeds what we produce. We already spend what we produce, or there wouldn’t be borrowing. Now, the amount we are borrowing exceeds what we produce. In other words, THE FEDERAL GOVERNMENT OF THE UNITED STATES OF AMERICA SPENDS TWO TIMES OUR GDP.
Now, when we default on what we owe, the people we owe will no longer accept payment in dollars. What happens at that point is the devaluation of the dollar at home and a much accelerated devaluation of the dollar abroad. The dollar is the world currency right now. That’s why our gas is cheap and the imports we buy are cheap. Not only is the dollar a strong currency, we don’t pay exchange rate on those products valued in dollars. The world markets are holding the value of their currencies low. China is notorious for this. The Chinese yuan is about 16 cents against the dollar right now. China is holding most of our foreign debt. When the U. S. defaults on its debt with China, China will dictate the currency we must repay in, say the yuan. Now, China takes the bridle off its currency and all of the sudden a dollar goes negative against the yuan. Now we must buy those Chinese products at a higher price plus the exchange rate dollar. Make sense?
If your congressman or senator is not discussing this with you as their constituent, fire them and do it quickly. We are being sold down proverbial river and being given a toothpick for a paddle.