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Snyder goes on to say, in part:
If the government suddenly started spending only the money that it actually brought in every year, our economy would be doomed and all of this “false prosperity” would rapidly disappear… [but conversely,] if the U.S. government continues to rack up debt at this pace we are doomed. In fact, every dollar that gets borrowed makes our eventual collapse ever worse. We are heading down the exact same road that Greece has gone. Eventually the rest of the world is not going to lend us gigantic mountains of super cheap money anymore. When the flow of cheap money stops, it [will] be extremely painful…If we had addressed these problems as a nation a decade or two ago, perhaps we could have found a solution but now there is no way out under our current financial system and a devastating economic collapse is on the horizon no matter what we do.
Look at Greece. They were forced by the EU and the IMF to dramatically reduce government spending…[and] John Mauldin described the nightmarish effect that this had on the country…
As Greece began to shake and bake its way to “austerity,” the very act of cutting deficits pushed the country into recession, which lowered tax revenues and increased expenses, putting the elusive goal of a balanced budget even further off…Spain’s “draconian” cuts have [had much the same effects]…
For country after country, this is the Endgame. It is the end of the Debt Supercycle. Debt has grown to the size that it cannot be sustained. The market will not lend any more money on terms that can be afforded, and any efforts to cut spending and raise taxes will result in an even worse economy, in various degrees of recession, with falling revenues and rising costs.
The above is what happens when a country that has been spending far beyond its means is forced to dramatically cut back.
Those that are convinced that balancing the federal budget in the United States will be relatively painless should take a close look at what is happening in Greece. The Greek economy has been plunged into a 21st century “Great Depression”:
- 20% of all retail stores have already shut down,
- the unemployment rate for those under the age of 24 is 39% and
- 33% of the entire nation is living in poverty.
This is only just the beginning for Greece. Things are going to get even worse.
Unfortunately, many believe that the United States is destined to experience far worse pain than Greece is currently experiencing. Peter Schiff, for example, insists that the United States is in even worse financial shape than Europe at this point. Just check out this video….
Anyone that attempts to downplay the U.S. debt problem is making a serious mistake. Yes, we are still able to borrow trillions of dollars for next to nothing, but that is going to come to an end.
Remember all of those “suckers” that signed up for mortgages at “teaser rates” that later got jacked up dramatically? Well, when the rates went up many of them ended up losing everything [and] we have gotten ourselves into the exact same kind of a position. All of this cheap money has enabled us to live very nicely for now, but when the cheap money ends the nightmare will begin.
Right now, our debt is growing much, much faster than our economy is. Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that period… but it is not just the federal government that has been living a fantasy.
The chart posted below shows the growth of total debt in America over the past several decades. Consumers, businesses and government officials have been on a debt binge that is absolutely unprecedented [but] the scary thing is that even with all of this borrowed money, our economy is still in the dumps so what in the world is it going to look like when the debt bubble totally bursts?
Even with all of this “borrowed prosperity”, anger at the government is rapidly growing. A recent Gallup poll found that “satisfaction with government” in the United States is now at an all-time record low of 29% so how angry will the American people be when all of this “borrowed prosperity” disappears?
When this whole thing comes tumbling down, a lot of people are going to blame our problems on “capitalism”. In fact, it is already happening. Just check out what the founder of the World Economic Forum, Klaus Schwab, is saying:
- We have a general morality gap.
- We are over-leveraged,
- we have neglected to invest in the future,
- we have undermined social coherence, and
- we are in danger of completely losing the confidence of future generations.
- We are in an era of profound change that urgently requires new ways of thinking instead of more business-as-usual.
- Capitalism in its current form, has no place in the world around us.
Capitalism is not the problem, however. Capitalism has produced the greatest eras of prosperity that the world has ever seen. No, the real problem is our debt-based financial system that is managed and run by the central banks of the world.
Debt-based central banking is not capitalism but, unfortunately, way too many people equate the two. [The truth of the matter is that,] theoretically, you could have capitalism without any debt whatsoever but what we have today is a financial system that has debt as the very foundation and such a system is inevitably going to fail someday.
As I have written about so many times before, the Federal Reserve is at the very heart of our economic problems here in the United States [because it] was designed to be a perpetual debt machine – and it has performed that task very well. The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.
Even though things [may] seem somewhat “stable” for the moment, there are all kinds of reasons to be concerned about the viability of our economy and our financial system in the years ahead… [In fact,] I believe a massive economic storm is coming [so] don’t let this false prosperity and this “calm before the storm” fool you.
We are living in the greatest debt bubble the world has ever seen, and no matter how it plays out there is going to be a massive amount of pain. You might want to get yourself and your family prepared for that.
*http://theeconomiccollapseblog.com/archives/if-the-u-s-government-keeps-spending-money-like-this-we-are-doomed-and-if-the-u-s-government-stops-spending-money-like-this-we-are-doomed
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