as we create more debt to finance our over-indulgent American lifestyle (judgement call on my part) we have to pay interest on this new debt as well as maintain payments on yesterday’s debts – over time the burden of maintaining these debt payments becomes too much and default becomes inevitable
George Ure (www.urbansurvival.com – excellent daily news published Mon thru Sat around 6 am local) has a theory about the lifespan of a fiat currency – he believes that 83 years is the max time before interest on the debt goes parabolic (ie, becomes unsupportable) – the US dollar became fiat within the US borders in 1933 when gold was outlawed for US citizens (but still used to satisfy international trade deficits) – 83 years from 1933 is 2016 (George uses this number – I don’t know why he uses 1933 and not 1971 when Nixon closed the gold window as the starting point for the 83 years)
another indicator for analyzing the burden of supporting existing debt is the GDP growth vs debt growth ratio – in an ideal world every dollar of new debt would result in one dollar of GDP growth – since we have to pay interest on the borrowed dollar we don’t get a full dollar’s worth of GDP growth out of it – as the years pass it takes more and more new dollars in debt to create just one dollar of new GDP – the latest number I have seen is that it is taking over $4 dollars in new debt to create one dollar in new GDP growth
unfortunately history is pretty consistent about the ending days of both empires and fiat currencies – this history indicates that fascism or some kind of police state is likely in America because the citizens have to be protected from terror (ie, can’t be allowed to protest and riot) as the economy which is based on Keynesian economic fallacies collapses – some people might point to Patriot Acts I and II as the first steps down the road to a police state in America – there are certainly indications that our fiat currency is dying and rumors abound on the internet about a new currency, the Amero, that could replace the US dollar when the US is merged with Canada and Mexico
as the Chinese say, “May you live in interesting times” …
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I see Ron Paul as our best chance to change the direction our country is headed in
December 16th is “Money Bomb” day number 2 for Mr Paul’s campaign – the goal is to raise $10 million – on Nov 5th (anniv of Boston Tea Party) he raised $4.2 mil during Money Bomb #1 – I will be donating the max amount allowable for an individual, $2300, on the 16th and I encourage everyone to support Mr Paul on that day if possible – http://www.ronpaul2008.com/donate
