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Why a U.S. Default Will Be a Good Thing

Now that Standard & Poor's has finally slashed its U.S. credit rating, it's more apparent than ever that a U.S. default is imminent.

So if you're at all panicked by S&P's decision to downgrade the country's top-tier credit rating - and the resultant freefall in U.S. stock prices - brace yourself: It's going to get a lot worse before it gets better. But make no mistake, it will get better.

In fact, at this point, a U.S. default is the only conceivable remedy to our debt affliction.

Here's why ...

The Wrong Road

The United States has been able to coast on its top -tier credit rating for far too long. The truth is, this country stopped being a AAA credit risk in early 2007.

That's when the Bush administration's excess spending and military forays into the Middle East sent us down the wrong road and ultimately drove the fiscal 2008 federal deficit to more than $400 billion. That's despite the fact that the economy was at the top of an economic boom at the time.

It's true that our fiscal position has grown substantially worse since then, but that's mainly because of the G reat R ecession of 2008-09.

Even if an imaginary amalgam of Calvin Coolidge and Bill Clinton had been in the White House since 2008, inheriting the overspending already built into the system, the federal deficit still would have reached $700 billion to $800 billion over the last few years.

Just the bailouts of Fannie Mae, Freddie Mac, General Motors Co. (NYSE: GM) and Chrysler would have added enough to the structural costs of recession to push the arithmetic off kilter.

The Bush administration's additional spending in 2008, U.S. President Barack Obama's $800 billion-plus of "stimulus," and the g rotesque addiction that Congress continues to have to subsidies for farmers, ethanol, and idiotic "green" energy projects have all made the position worse. But they only account for about half of the annual deficit.

Of course, while recent political decisions don't bear much responsibility for the current lousy U.S. position, our current crop of politicians have been - and will continue to be - ineffective in their attempts to emerge from it.

Join the conversation. Click here to jump to comments…

  1. Dana A. Aptaker | August 11, 2011

    What is the point of this story?

    A government as we have it, is our partner. Whatever we make it can tax. The government sets the tax rate. When it all collapses on it way down, the IRS will still be there.

    So never think the governement does not produce good and services, it own us.

    This is the price of caring for our fellow man and using public money to fund this caring.

    • Jeff Johnson | August 11, 2011

      'We the People' own the government — the government does not own us.

      Just look at the riots and uprisings in Britain, Greece, Israel, et al as the "price of caring for our fellow man" by using public money to fund this caring. These nations and others like them are suffering the price of socialism. I pray that 'We the People' fend off this scourge before it permanently contaminates our once great nation.

      • Jeff | August 11, 2011

        And we're suffering from the failed ideologies of free market, free trade, and trickle-down theories. The problem is ideology as religion and the loss of rational thought. The fact is that society has costs that are divided between public and private and shifting costs from government doesn't solve any problem, it only shifts the costs to the private.

        The fundamental problem is that the ideologues in Congress are wholly incapable of solving problems precisely because they are locked in their failed ideologies. For example, on cannot solve the problem of the financiers' bad behavior when one perceives necessary regulation as an evil and because one perceives the free market the answer even when free market theory is proven false by the existence of financial crises.

        We're not a great nation. We're no better than any other. The difference has been that we were more endowed with resources and geographically isolated between two oceans. This latest financial crisis proves that we operate from religion and not from rationality.

        • Dana A. | August 11, 2011

          I see you are not only regurgitating DNC talking points but also the type of thinking that permeates the academic lounge and chattering classes.

          Why do you think millions of immigrants during the past two centuries have desired to come to America? Could the reasons have been political freedom and economic opportunity? Btw, these two attributes go together — and they are what make our nation not only great but also exceptional. Or did those millions of immigrants flee political tyranny and economic/social caste systems to establish the same here? I haven't heard any reports of people crossing the chinese border (legal or illegal immigration) to enjoy the politically autocratic and "free-enterprise" fruits of their system. Have you?

          Regarding the financial crisis, I would have let the free markets do their work. Why were some big banks/brokerages bailed-out while others like Lehman Brothers allowed to fail? Obviously corruption, ineffiencies, unacceptable risks, etc were and still are spread throughout our financial system — not least of which was the derivatives and default-swaps wrapped-up in the mortgage industry by way of "forced" lending to "under-priviledged" constituencies.

          The pox is on both political parties for intervening to prop-up and perpetuate this mess while at the same time communicating a false message that a complete financial collapse would occur if govenment did not intervene. Yes … the pain would have been much more intense, sharp, and short-lived if the government did not intervene, but if the free-markets were allowed to work then I believe our economy would already be recovering, that is, 350,000+ monthly job creation numbers and 5-8% quarterly GDP growth.

          • 1Badass | August 14, 2011

            Dana my dear you have an exactness about you that I love and share. How is it that the mindlessness of academia continues to espose the rheotoric of the off the charts left wing? For those supposedly super educated individuals to continue with the failing agenda of the past few years has me convinced that this failing is their intention. Only they are the intelligent ones with all the right answers . This was spoken by one of these eliteists Governor Ed Rendell in a recent interview. This is the anti American sentiment that they have, since the late 1800's, attempted with much success to permeate and reject the design of the Founders. These are the folks that have through entitlement and dumbing down of our youth brought us to the current failings of central planning. These stateists have comandeered the liberals with their cumbaya and cradle to grave notions that now these well intentioned liberals are aligned with the 60's radicals and the Obama-Clinton duo and their cronies. They are all ready to form a greater global society with themselves at the helm and the rest of mankind funding their agenda. Fortunately there are many Kennedy Democrats that are not accepting of the failings of this Administration. Even many of the youth that thought this CIC was their redeeming leader have come to the realization that this group in power has set them back 10 – 20 years financially and socked them with a diminished lifestyle and a huge debt to boot!
            As you state both parties have led us to the point that too many Americans have been willing to allow the not so savy politicians spend us into a bottomless pit. We have to make some very extended and painful changes in our fiscal policy soon! The longer we wait to take our medicine to fix the mess we're in the more painful and longer it will take to repair it. We will eventually default and write off the debt to the FED and begin repaying the debt owed the Chinese and Japanese. In the interim probably 5-10 years we will be a BBB rated credit risk for the first time ever. Bush ran up a 400 billion dollar deficit but this current pack of losers has tripled that in only 2 1/2 years. If we can repatriate the trillion dollars of offshore corporate dollars and use some of the new lower tax revenue from this money for infrastucture projects via the States, unemployment will start to subside. Then repeal most of the restrictive regulations imposed on the private sector and unemployment will continue to abate. Then scrap the regulations imposed by executive order and EPA mandates of this Administration. Begin a serious conversation about a new comprehansive energy policy with a concerted effort to be self sufficent in ten years as the goal. All technologies new and old will be incorporated with resultant goals laid out for future generations out at least fifty years. Unemployment will be at less than 6% in less than 4 years if these goals are achieved. Make any government assistance dependent on recipient's children successfully completeing 12 years of education or a trade program. Abolish many of the government agencies and get these folks back into the private sector where they compete for their positions. NEA,EPA and the DEA come to mind. The border states should be left their federal tax dollars along with the contributions of the other states to protect our borders from illegal crossings.Let the private sector employ these people. The DEA should be downsized and used exclusively for offshore drug and combined with a downsized ATF, ICE and Homeland Security. Cut the bureaucrats in Washington and get these operations out to the areas along the border and use the rest for in country investigations along with an increased FBI. Seal the borders with whatever it takes and we'll see it takes a lot less to police the country. Just a few ideas that will work!

      • Peter Cale | August 11, 2011

        The riots in Britain were not provoked by deficit cuts, very few of which have even kicked in. The riots in various inner London suburbs started after a initial peaceful protest shortly after a known Afro-Carribean drug-dealer and gang member was shot dead by the Police whilst it is believed he was wielding a hand gun. Various London black gangs then saw an opportunity to go on a looting spree and incited others to join in, via a well organised social media campaign.These looting bonanzas then spread to other Cities in the UK. The looters were largely youths from the local Afro Caribbean Communities often as young as 12. The riots were in no way political as were the Greek and Israeli demonstrations, and as our prime Minister David Cameron said in Parliament today, were the product of sheer criminality and in no way a political protest against deficit cuts to come.

        • Komorek | August 11, 2011

          A war begins not because you kill a prince but there is a tension between nations. As to the British they are world known for aggression. Whereever they enter a football match there is a riot. Simply they are like this, no manners. In Poland it is different, seldom. It is because are like this. You say afro-carribean do it what I doubt. You have learnt to blame others and you are so arrogant that you see your own eyes a British looter and you say under oath it is double sure a deceint Pole.

        • Jim Bernard | August 11, 2011

          It's all a not so grand conspiracy.

          There have been hundreds of looters in London.
          It is likely that many were deliberately incited.

          Why burn houses and warehouses etc ?

          Should this kind of thing continue then there won't be enough jails and people will need to be put in detention camps.

          Guess what ?

          Detention camps have already been built in Britain and the US and other countries.

          All part of the long term plan of moving towards military rule in most countries.

          One comment was that the treasuries in most countries will fail to assist their own governments, but this is true only if the private banks are left as the only lending institutions.

          Were the federal treasuries to begin acting like banks and issue unlimited credit in their own right, then there would be a return to prosperity, rather than ongoing chaos in the future.

          The rioters are usually unemployed and short of money.
          To give them a big lift in their unemployment funds would soon see them acting sensibly and peacefully again.

          The government does not have that kind of money, but the treasury acting like a bank can Issue trillions of pounds,dollars or whatever at say one per cent interest and
          give a huge boost to the economy.

          The government might have to bring in price control to eliminate possible inflation,

          But the answer to most countries economic problems is to have their treasuries acting like banks – issuing vast amounts of credit to governments and private citizens, and at the same time governments imposing price control to prevent any possible inflation.

          • Komorek | August 12, 2011

            I dont know in Britain well but I know that people panic and dont mind anything when some wish them death indiscriminately. Like in jails sometimes are riots and prisoners dont mind guards` guns. To bring order using money is unprofessional. Professionals like the Church try and control paying nothing nothinito. Also fascists or even more professional not only paying nothing but exert to earn in the control process.
            As to printing money I am amazed with your suggestions. You mean price control just like in communism which is costly. First you pay for printing later you pay for controlling the prices.
            Or like in stupid America where they want Polish police to guard their scattered CD products. They are smart and dont give policemen to do it.

      • Bill Emig | August 11, 2011

        Thomas Jerrerson said when the Government fears the people it's called freedom, when the people fear the government it's called tyranny! Which camp are you in? Do you produce or are you another income blood letting expectant of socialism?

    • Ed | August 11, 2011

      Our government a partner? Since when? "We the people. . . are the gov't and our Elected Representatives are not partners but sent to congress to represent our wishes. The idiots that now represent us do not know the mind of the people. and don't give a tinker's damn about their
      constituents. Go get a tea bag!

    • David Lee Webb | August 12, 2011

      Listen…unless the country is ruled with an autocrat or tyrant…all governments rule the chickens in the coop. Our problems we do not exercise good judgement in picking the people who rule us. We vote our pocketbooks and if a conflict of interest come into our mind…we will let the future or our kids take care of it. Why we must have a wealthy person and/or religious fanatic or power munger lead this country…tell me the reason?
      American is still the best country in the World regarding human rights and free speech…I know this because I live in China…God forbid I would say something bad or publish something about the CPCC that would be misinterpreted or got under the skin of some CPCC bureaucrat.

    • Wayne | August 12, 2011

      Yes. the government owns us because we elect representatives who are owned by big business and the wealthy. We allow them to set their own compensation and benefits, to keep excess campaign contributions, and even take money under the table without being prosecuted. And we allow Wall Street to control our economy even though only the rich benefit from Wall Street policies. It is time "we the people" took back control of our government. Or is it too late?

      We need to elect representatives who are willing to attack the problems of high trade deficits, exportation of American jobs, illegal aliens, an unfair tax system that allows loop holes for big business and the wealthy to avoid paying their fair share, and a Congress that has become spoiled and insensitive to the will of the people. It is time to realize that the ideal of "trickle down economics" does nor work because big business either pockets the money or invests it in other economies overseas. And allowing foreign countries free access to our markets without fair access to their marketplace puts our businesses at a disadvantage, causing them to have to move overseas and take advantage of their cheaper labor (or find cheaper labor [such as illegal aliens] here. We need tariffs on products from countries that are running huge trade deficits with us so they will open their markets to us so we can compete fairly in their markets. We need to tax profits from companies that move overseas to take advantage of cheaper labor markets.

      We need campaign reform that will change the way representatives get their contributions so they don't have to sell their souls to big business. And we need representatives who are willing to make the sacrifices of giving up their separate "perks" (special pensions and health care, etc) and live in the "real world of Social Security and Medicare. After all, they are public servants also, although they seem to have forgotten that.

      We need representatives who are willing and responsive to the will of the people they represent instead of beholden to big business and the wealthy. We need them to be willing to say "NO" to a defense industry system that is filled with corruption and robbing the government (the people) because "they can". Who cares, the government has lots of money.

      We need a government that is willing to say to the United Nations that it is time for them to take on the problems of unrest in other nations instead of making us be the "WORLD POLICE". Yes, somebody has to do it, but we cannot do it all and that is what the United Nations was set up for. And sometimes we are not always right.

      And, yes we need representatives who are willing to tackle the budget deficit in a meaningful way without putting the burden on the backs of the elderly, the disabled, education of our children (the future), or the disadvantaged. Yes, it is time to clean up the welfare system of the people who make a career of welfare, but it is not time to "throw out the baby with the bath water". But it is time that we stop the "serial cheat" and the "serial propagator". And the only way to make the welfare system work is to educate future generations, so if parents of welfare children aren't willing to make sure their children are in school and passing, they should be removed from the system. If welfare parents are unwilling to use birth control or restraint, they should be removed from the system. Does that mean we abandon the children of such people? No, that means we may have to put them into another system that will take responsibility for their care and nurturing. Yes, that is another government program, but it should be one designed to break the cycle of entitlement and Abuse that is perpetuating the system now. And you notice that I capitalized the word abuse, because we are supporting an abusive system when we allow welfare mothers to have baby after baby for the sole purpose of gaining more welfare payments or they are too ignorant or uncaring to use birth control or restraint. The system was set up to help children abandoned by "deadbeat fathers", but it has been corrupted and needs to be reformed, not decimated. Of course, there are a lot of government programs that need to be reformed because they have been corrupted from their original intent.

      I know this is off the subject of the impending U.S. monetary default, but we can advert a default with responsible representation in Congress. But they have to decide that they are representing the people of the U.S., not Wall Street. If they tackle the problems of "Main Street" then the problems of Wall Street will take care of themselves. Let's put the focus where it belongs, not on the institution that feeds the greed of big business and the wealthy. Let's face it, Main Stream America will be less affected by Wall Street than they will be by a U.S. government default with the resulting higher inflation and unemployment.

      • Chris | August 14, 2011

        Wayne To say that you hit the nail on the head would be an understatement!! You seem to have more of a grasp on the situation and the soultion than most of our CAREER polititans. Thank you for your post!

      • Doug Jansen | August 14, 2011

        You make many good points, but always harping on big business and the wealthy is not helpful. As with any group there are good and bad people. The wealthy pay more than their fair share, but there are also crooked wealthy people. Go after the crooks. Most corporations are decent organizations, but many of the CEO are way overpaid. They are way overpaid because their board of directors give them the money, but most board members are CEO's of other corporations. As a shareholder of many corporations I resent this scratch my back i'll scrath your back system of large pay packages for high up executives of many corporations. Does anyone have any solutions for this that does not involve the government?

    • SW | February 24, 2012

      "…the price for caring for our fellow man" does not include fat cat bureaucrats' fattened pensions and perks, the privileges of the political elite at the expense of the productive in the private sector, and many other things. The Department of Energy, as but one example, was formed in the Carter administration to lessen dependence on foreign energy, and in the ensuing decades has done nothing to lessen the dependence. Rather, the inverse is true. So when one trots out the "caring for our fellow man" phrase, it would be good to remember that this "caring" is going to rennovate mosques in the middle East, support troops in Korea as in Germany, "invest" in bankrupting companies like Solyndra and many more just like it. "Caring for our fellow man" does not mean stealing from the productive to float government's latest new and pet project. Such rhetoric without sense! The "carinf for our fellow man" in Greece's massive debt run-up has created no caring at all, but rather a threat to an entire nation. Soft Western socialism is collapsing because "caring for our fellow man" has become insolvent. Fast forward, and these many insolvencies will further NOT care for one's fellow man.

  2. JP | August 11, 2011

    can you explain further why this downgrade is the financial nirvana for investors and how we could be profit from it? thanks

  3. Richard | August 11, 2011

    Sorry, I meant expiring December 2011 not December 2012

  4. U.S. Citizen | August 11, 2011

    FYI, you forgot to give credit to the huge subsidie$ and obscene (no) tax breaks to Big Oil, Big Gas, Big Nuclear, Big Banks, the Military Industrial Complex, and other grotesque polluters and corporate shysters that are no longer robbing us, but killing us!!!…

    • Doug jansen | August 14, 2011

      Please be specific in the tax breaks to Big Oil,Big Gas, etc. Not being specific is just blowing hot airand does not help solve the problems.

  5. Vladimir | August 11, 2011

    Point is that the government has driven itself into hell. On the other hand, companies with great leadership can be trusted and will not only survive but become more efficient and powerful.

  6. Malcolm Meister | August 11, 2011

    The world is awash with money as governments around the world, and especially the US, are attempting to monetize the debt by diminishing the purchasing power of the dollar. This money has to placed somewhere other than in mattress covers. Good stocks, although they have diminished in value in this recent stock market plunge, are doing busines and are paying dividends that are higher than treasuries.

    Goods and services are needed and in spite of the pervasive fear that circles the globe, which certainly diminishes activity and stalls the velocity of money, will remain in demand. The business of the US is business and even though the present administration is tone deaf and ignorant of growth economics, they will fade away eventually and reason will prevail. I hope. However, I think the next two years present an excellent opportunity to build a
    Portfolio for the future.


  7. RJD | August 11, 2011

    What a silly article! Default good? What default means is forcing the govt to balance its budget in one year. Huge entitlement cuts. No money for businesses. 25% unemployment. Check out Argentina and you will see what happens when a nation defaults for real.

    Moreover default means the end of the USA as a great power. The US Navy slowly rots, no new ships. A vacuum is created in the world power structure. Nature abhors a vacuum. China fills it in Asia, Iran in the middle east, maybe Germany in Europe. That is not a recipe for world stability or prosperity.

    A formal defalut will not occur, as we can just print money to pay back the debt. That is a little better scenario, but still has downsides. Galloping inflation. A gradual refusal of foreigners to buy our debt. More inflation as we print money so the Fed can buy it.

    Pray the Tea Party GOP takes full control in 2012 and makes the cuts that are necessary before we enter any of the scenarios above.

  8. me4theworld | August 11, 2011


    I am no financial wizard but I think you will find that Mr Hutchinson is right on both counts. What you have to understand is that the Fed and the five bid banks are manipulating the whole damned market and it takes an incredible amount of patience to outplay them, most can't wait long enough and play right into their hands. Just look at the criminal activity of J.P.Morgan Chase who have excessive shorts on silver and are playing the market to prevent their own bankruptcy. The other big banks are not keeping out of their way. So just be patient . My old Granny used to say "He who laughs last is last to laugh"
    regards, George

  9. DaveR | August 11, 2011

    A re-write or sequel to the article is in order, for what has been written is incomplete as noted in several earlier made comments appearing above.

    Why cannot the federal government continue as long as the current bunch of people or others who think like them remain in power? It appears to me that Bernanke together with Geithner and Congress and Obama can continue for a time well past the close of Obama's second term as president, and that is exactly what these public officials are planning upon. They have the power to tax and spend and control of the dollar amount and indirectly its per unit value. They are good at propaganda and have a largely sympathetic press corps in support. Who or what is present or likely to appear to stop them? Obama was heavily supported by people who receive publicly funded benefits, e.g. the half of US voters who do not pay federal income taxes. He and his party are working to keep that group and to add more people to it. And the bankers are doing well by playing along with the game rather than making historically traditional risk-assessed loans to businesses.

  10. Matt | August 11, 2011

    I'm with the other commemorators, where is the upside. The utter collapse of this fiscal policy would result in a lot more short term debt being unable to be rolled over. Yes higher tax rates are inevitable, which will act as a negative motivator for profit. Or are you trying to say that when the US bonds ratings tank that corporate bonds will do really?

  11. Michael Fish | August 11, 2011

    An American default would be a good thing… for whom ?
    Methinks you are too close to the Tea Party anarchists
    and the Al Qaida religious nuts, to even think such silliness.
    Elementary economics and the laws of Physics states that if the US were to default, the whole banking system, world wide, would be a shambles and we would go back to our guns and knives to make our way in the world.
    Everyone too old to run and hide would be wiped out in a few weeks.
    Every young woman and boy would be raped and sold into whatever slavery system that would be able to survive.
    An American default would be a good thing……
    Utter Nonsense.
    Climb back under your rock.

  12. JohnS | August 11, 2011

    The USA will not default……Our bond rating will never go down to BBB…..before this happens, the FED will print enough money to pay off the debt.

    The result — hyperinflation. If you see this as default, you are correct. If you mean the USA does not pay off its debts in any manner — you are not.

    This article is an interesting story, but essentially a fairy tale.

  13. steve | August 11, 2011

    The government could cut subsidies (and that would balance those markets) and slash military spending (which wouldn't make a bit of difference in national security), and make much more sensible, life-supporting, and cost-effective basic social programs, but congress won't do it. Or can't. This is a paralyzed dysfunctional system in constant squabble. India is in a similar situation. As awful as the Chinese dictatorship is, at least they can make a 5 year plan over and over and stick to it. America seems to have nothing more than a 2 year horizon with the atrociously destructive election circus and the slavery to lobbied influence that come from it. Because of the fundamental difference in system, the Chinese are rising and America is falling.

  14. Frank Lapore III | August 11, 2011

    This is sopt on! This article is 100% What was this guys name? Its true and you are going to see this country fail and big time and that is all via the Bush administration,s tremendous mismanagement. It was no mistake it was created by his father,s friends. Architect,s of the destruction of the U.S. The same ones whom robbed this country and built up their wealth also destroyed this country inorder to lord over others and inslave them via low wages and or part time work! They want to controll the minions and oppress those whom are not their partners in crime. Dont wounder where those trillions of dollars that disapeared during the Bush administration are. I just told you! Wake up! Fools! Buy Gold and cover you assets

  15. Kate Huf | August 11, 2011

    Let's talk about all the money we give away around the world! How about the billions to send up Japanese sattleites, money for foreigners to come in and "use" our money in the SBA with salons and gas stations, the billions for "birth control" round the world! Let's talk about the billions in the IMF and the UN! Why do Americans have to keep doling out for illegals and the world. How about we start making America No. 1!

    • Perry | August 11, 2011

      The money spent on Foreign aid is less than a rounding error in the federal budget.

  16. Ron Marabito | August 11, 2011

    Everyone keeps referring to the last two Presidents and their spending. This whole problem began back with Roosevelt in the 30's when Social Security was implemented. Since then we have built a society and economy of takers. People will only survive and thrive when they take responsibility for themselves. The youngest generations believe they are entitled to free everything and the government has encouraged this, all for the purposes of control and power.

    Two major things need to happen in this country. A balanced budget amendment and term limits. Career politicians are disastrous and history should have taught us. If the President is limited to 2 terms, why not everyone else. They have a limited time to do their thing and then they are out.

    • Perry | August 11, 2011

      Lets see now Social Security is the root of the problem. Well the Germans had S.S. for many years before we did. The have nevr missed a payment, and are doing much better than most countries today. Try again.

    • jaxmax | August 13, 2011

      Sounds like a good place to start – absolute term limits! Coupled with the elimination of perks for our "public servants". No special retirement, medical and leisure "entitlements". Just Social Security, Medicare and the local D.C. public golf course and jogging paths – like the rest of us.

      As far as assuming responsibilty – for decades I was self-employed and wanted to invest in my retirement. But, was told i H-A-D to fund both sides of my (forced) Social Security account which severely limited the amount of capital available for my IRA. "We'll take care of your money for you !"
      Then, for decades, the pol's skimmed our accounts, pissed the capital away and used politrix accounting scams to conceal the truth. Now, the fox runs to the farmer and says "The chickens are gone. You need to buy more chickens (so I can guard them too?). Limit the foxs' NOW.
      And, consider "vegetarian" stewards whose appetites don't center on "chicken tenders".

    • Doug Jansen | August 14, 2011

      You are right that the problem has been going on for a long time. The solution to a solvent Social Security system is simple. When it was implemented in the 30's the retirement age of 65 was higher then the average life expectancy. If the same was today the retirement age would be around 75 because the live expectancy is about 73 or 74. Of course the scocial security retirement age has to be raised for younger workers. Also, many additional programs have been added to the social secuirty systems, ie disability, payment to children, etc. with no additional funding. These programs do not belong in the Social Security system, but in the Welfare system if anywhere. Social Security is not any of the problems in our screwed up fiscal system.

  17. David | August 11, 2011

    From a Brazilian point of view it is rather sad to watch the US economy debacle, specially when the China "capitalism" and "democarcy" are winning.
    However, it has always amazed me how an average US citizen could enjoy such good life when producing the same or even less than other coutries cirizens. To be true, most of the wealth produced by those other countries citizens were stupidly wasted by theirs own governments bureaucracy and political corruption and enriched a happy few in "protected" markets.
    However, it also seems to me the americans have been for a long long time addicted to easy credit to finance easy, non productive, non reasonable, consumption. Now the bill for suche spending spree is being presented, but, unfortunately, not to those who have got most of benefits in those "good old times", but to the working class guys, worldwide.

    • Perry | August 11, 2011

      I think you are onto something. It is not just the pol8iticians who are to blame, it is all of us. We elect them, we borrow with our credit cards, we accept rediculous rates and terms for mortgages, we buy wat too many inefficient and over priced automobiles. We the people made this mess, and we the people will pay for it.

  18. naneek | August 11, 2011

    Well folks we can complain all we want about the terrible default alternative but isnt it going on as we sit right now. We borrow trillions and then pay it back with worthless dollars. That is in essence a default and is being intentionally done as the US government knows it's their only way to pay enormous foriegn debts. Problem is the creditors won't be loaning more so now what. Hyper inflation like we've never dreamed of in our worst nightmare. 500-600 dollar per barrel oil, 15.00 a loaf bread, etc etc. Does Wiemar Republic ring a bell, be prepared as there is no easy out or mulligan (for you golfers). This is not gonna go away as things are gettin rough in China and there government isnt gonna be in the mood to be easy on us for all the damage we've done to the world. Ok, best wishes, hope for the best but prepare for the worst.

  19. pretzel logic | August 11, 2011

    Silliness. The US doesn't need a "kind sugar daddy" like the ECB to bail us out. The US has its own sovereign currency, which it can print at will to bail itself out. Further, S&P uses an entirely different ratings model than Fitch and Moody's. If we are downgraded by those two, it will not be because "we were downgraded by their competition." It would be because of a shift in our current fundamentals.

    • Perry | August 11, 2011

      Amen. And if you believe in the"market is always right" philosophy the Gloom and Doomer's and S&P are wrong as demonstrated by the current US Treasury market.
      I believe the rot of our problem is in the way we finance our elections. Pols pay attention to the folks who finance the. As long as we make them go begging for money and allow them to accept bribes and favors from lobbyists we will have problems because they will listen to lobbyists. If we put strict limits on how long and how much can be spent on campaigns we could reign this in. As for the Supreme clowns/Court and Citizens United, that might take an amendment, but it can be done.

  20. Vince Amicone | August 11, 2011

    If you seriously think that a credit default is a good thing here's another one for you the big banks should pay for the debt. Turnabout is fair play right? And in this case you can make a huge profit in investing in the loan that the banking industry gives the government. If only the nut cases in Washington would listen to themselves would they get their house in order because if they don't and soon the whole thing is coming down to the ground, and no QE is going to be able to sustain the incited mobs that come with austerity. So in part I agree with the idea that a default would be good, but what I find hard to swallow is what all the private investors will stash their cash into next, if they still have any left. For me I'm leaving ample sums in the bank.

  21. Ian Edwards | August 11, 2011

    I don't think the US will default for a long while yet, as they do not seem to want to cure the addiction. – Instead helicopter Ben Bernanke will set the print presses in motion for QE3 and that will reduce the real cost of the debt to below default proportions for a while. – Then the most irresponsible politicians ever to have held sway the US will surely take this abatement as a signal to continue stoking government debt via continued "free" give-away programmes. – I think a national collapse will follow that one. It will not be pretty and it looks like it will be inevitable until fresh mindsets occupy capital hill. Prepare ourselves.

  22. Tory | August 11, 2011

    I'm constantly amazed at the glee with which folk armed only with very partial information are able to predict future calamities with greater accuracy than even Job.
    Please take a hold of your goodselves. There will be no catastrophe and, yes, no Armageddon. Solutions will always be found (not for the desperately weak and poverty-stricken, but for everyone else). Life will go on and the selfsame economic and political arguments will rage throughout all the decades of this century and beyond. America is not doomed by any means. But, unfortunately, Europe is, and all too soon.

  23. Jeff Pluim | August 11, 2011

    I agree with Martin. The only other possibility to a default is printing more money, and all that is doing is delaying the inevitable. There is no possible way that politicians are going to make the necessary cuts to avert the inevitable default. What Martin is saying is that a default sooner than later will be like pulling off the band-aid quickly and taking the pain in one short, sharp, dose. Otherwise, extending the bad economic policies will just make it that much worse when it finally happens. As for what one commentator here said regarding loss of the USA as a great power, WAKE UP!!! That has already happened. You and the rest of the USA are living in the past. You are deluded if you think that the USA still has the power and influence it had 20 years ago. The sooner that your country accepts that fact, the sooner it can start to rebuild its reputation as a great nation. Your real unemployment, when you take into consideration, not just the goverment fudged numbers, but the real unemployed such as contractors and sub-contractors, self-employed, those who have given up looking, those who do not qualify for unemployment benefits, etc., that number will be closer to 25% right now!!! And what will happen when all of those young men come home from USA military work abroad? Martin is seeing the BIG PICTURE. That comes with having worked in international markets. Here in Canada, it is a common joke that Americans cannot see beyond there borders and believe that the world revolves around them. There was even a TV comedy series dedicated to the American narrow mindedness. It was widely viewed. Americans in general cannot see how the world views them and it is evident in how the markets are reacting to the current economic policies. As for investors still buying U.S. securities, I am guessing that just like before, the fed is asking the "too big to fail" banks, to buy up the securities so that it looks like there is still confidence in the American economy. You can only play that shell game for so long before people figure out that it is a ponzy scheem.

  24. Jay Towner | August 11, 2011

    The USA will default,their is no option,silliness creatures, it's about time the American people pulled their heads out of the collective sand,your so called global currency is in the can,no one wants to buy it anymore,oil will be traded in anything but US greenbacks, yeah go ahead and print your way out of spendthrift utopia… the rooster has his head in his hands,you can print all you want but you cannot force the globe to accept your currency,or maybe you think you can, so many soldiers/police all over the world …in over 130 countries….those 130 countries don't want youse lousy flea bitten easy to get worthless greenbacks and they sure don't want your soldiers strongarming them any more…go on,crow and stick your chest out and beat your chests,yell to the world that your the best…cause the world has been hearing that for so long it is like a swarm of flies around an overflowing outhouse…go on,convince yourself that it is all OK…the author knows what he is bleeding talking about,but you arrogant people are so indignant of the truth…the fact is the price of gold is telling you that the US is in the sh*&er,so go ahead amethinks you can print your way to the poorhouse,and Kate,don't leave in a Huf,leave in a minute and a huf, better still leave in a cab, and tip the driver greenbacks,but you will need a suitcase to carry your tip.

  25. Eric | August 11, 2011

    If there is a US Default it signals the government's unwillingness to print more money. If they stick to not printing more money that means severe deflation. What reasons would the government have to prefer to default on their debt as opposed to hyperinflate there way out of it? Just cause the government defaults doesn't mean they'll stop printing money. They may default on purpose to drive down commodity prices and reign in inflation for awhile. The big question is will the government stop this charade before hypernflation hits? The answer to that question will determine if you lose or win big if you have invested in gold.

  26. naneek | August 11, 2011

    Troy what you smokin?, we are worse off than much of Europe but we have the "world reserve currency". Cant go on for much longer. How old are you, 25, yet know all, pretty much par for the course these days. Dont come knockin on my door when life aint so good for ya.

  27. Chris,FL | August 11, 2011

    What would happen if the US just said NO, we are not going to pay our debts & declared bankrupcy? Who is going to force us to pay?
    We are not saving our fellow man. We are continually defying the the laws of evolution. Those who cannot or will not contribute to society are being given a free ride. Look at the new welfare housing being built on Ca., then look at the cars in the driveways, brand new SUV's and the like. We, the taxpayers, are being ripped off every day.
    The Constitution does not gaurantee equal results only equal opportunity. Sure there are times when a person needs a helping hand but we haven't any commitment to help those who won't help themselves rather we are doing these people a disservice. When they have all their needs supplied to them where is the motivation to improve their wat of life?
    Stop paying our international debts and clean our house. Did you ever feel the need to go home, where your roots are? That's what this country needs to do, reaquaint ourselves with our roots and rebuild the USA. Stop buying "Made In China", go without until corporations realize the trend shift and brings jobs home

  28. Volker | August 11, 2011

    I read this article with interest, as the comments. I observe the decline of the US as the former leading Western Country and many other countries of the Western Community. I grew up in Germany after the war and could witness the rise of their economy, as well as the US and Japanese. From the 80ties on, the scenery changed, and people, especially the youth, turned from being "entrepreneurial and inventor minded" into mere consumers. Funds spent to ignite economies went into programs that patched the road, however the road still leads to nowhere…
    To recover, rethinking is required. Obama gave us some hope, however he is captain of a ship, that has a rudder problem. It is unfortunately in humans' nature that it needs a strong impact to change behavior; it might be too late and the ship is too far on its wrong course to prevent the cathastropy…

  29. fallingman | August 11, 2011

    Thanks Martin.

  30. Jay Towner | August 11, 2011

    The US has been inflating it's way out of debt for quite some time now,except it's funny how things don't quite turn out as intended,the Fed and Washington believe ( wrongly) that they can print and print and print,and yes cause hyperinflation and inflate their debt to insignificance,this much is painfully obvious to anybody with half a brain…there is dire ramifications to this path,hyperinflation due to unconscionable and deceptive money printing leads to the destruction of the middle class both in the US and around the world,the middle class is bumped down to the poor class.

    Additionally,hyperinflation leads to great instability in the business cycle as costs explode mid contract,thwarting profit and stumping trade,businesses go broke in hyperinflation,they cut costs by putting people off, unemployment goes up and so on and the cycle intenifies to the point of implosion,one could argue the hyperinflation is the surest way to end up in default as GDP plummets.

    Money printing and hyperinflation has other spinoffs,particularly when it is commissioned by the worlds reserve currency,as Washington hands over the readies to their bankster pals,those cretins chase the fast buck and invest hand over fist ( speculate ) in the commodities markets,forcing up the cost of all resources,the hand that receives the inflated dollar first will always be the one to profit the most,the cost of inflated resources and soft commodities has a devastating effect on the worlds poor,as they can no longer stretch their overstretched budget,they are the last hand in the chain of inflation,consequently they are the most disadvantaged,and when a man cannot feed his family through honest toil,he becomes angry,eventually revolution,which you are already seeing all around the world,thanks to mr Benanke.

    Also hyperinflation hikes up the cost of fuel and energy which also causes business contraction and ultimately recession… there is no easy fix….just gotta do what the poor folk do…stop spending money you haven't earnt.

  31. mark | August 11, 2011

    Seems like the government does provide the tangible products of security and stability, without which it is impossible to run a company like Coca-cola or PG. While I agree that the government's aggressive campaign of giving money in the name of caring, ignoring the benefits of having a stable government while touting the financial responsibility of companies is very short sighted. Without a government, these companies would be looted and the products they made would be prohibitively expensive due to the high amount of security required to maintain production and sales.

  32. Tanvir | August 11, 2011


  33. Dave | August 11, 2011

    markets are rational. they understand the Fed is more a public institution which operates at the pleasure of Government than a private bank. The US can always pay its debts. Even Alan Greenspan is waking up to this reality.

  34. robert Smith | August 11, 2011

    I remember in High school we studied the principle of Diminishing Returns in a math class or a physics class and I figure that the US has fiscally passed the point of diminishing returns. The country can only support a specific maximum return on its dollars. They run on other people's money . They have passed the point of diminishing returns as to the taxes the system will bear. It's time for a flat tax at about plus or minus 20%
    and no interference from a tax and spend Liberal outlook to tamper with it down stream. GO.

  35. brutally honest | August 11, 2011

    While I would agree that the default would be a good thing. The way you finish the story sounds a lot like fascism (when corporations are in control). Which is why we are here in the first place. This has all been very well orchestrated. If the people in charge are smart enough to have gotten to be in charge. How could they have screwed things up to the extent that they have. The reality is if your in the top 1% (the ones who control the $$$$). life is even better. It's the rest of us who are suffering. Food and guns are the best investment right now.

  36. gordy brown | August 11, 2011

    'defaulting' : inflation
    deficit spending/ inflation lowers purchasing power. . . Western/ fian currency nations have
    already defaulted in that sense.

  37. SimonP | August 11, 2011

    I understand that more than 50% of the US population is either on the Government payroll or receiving benefits. With more than half of the electors "on the take" there's no way a fiscally responsibible policies will be implemented.
    Bernanke has already indicated that "interest rates will remain at zero for the next 2 years" No-one will lend America money near that rate now, so the only alternative is to keep the printing presses going via QE3, 4, etc. Technically not a default, but still dudding creditors with phoney money.
    The only question is how long China will stand for it.

  38. Vermont Duchess | August 11, 2011

    It might be time to attack entitlements as Reagan did–workfare. Everyone decried his policy, painting a picture of thousands dying in the gutters. Surprise of surprises, it didn't happen. It was amazing how those pushed away from the public trough and offered jobs at minimum wage were able to find work they wanted to do in the private sector. The Constitution guarantees an equal opportunity to succeed, not a guarantee to succeed. Too many feel entitled to that which they have not earned. We need to change mindsets and put an end to those who want to live off the dole. Some have lived on the dole for generations, and they need to be cured of entitlement disease. They are addicted to everything for nothing and like all addicts need a strong dose of tough love.

    Yes, the elderly and orphan will often need aid and it should be provided–but at the local level. The system first ran wild when assistance went federal. Let's bring it back to the local level where it's easier to catch fraud. It's time to get rid of deductions and set asides and assess everyone a minimum of taxes due; once they have some skin in the game they will be far more aware of where and how the money goes. What we need is a flat tax of ten or 15 percent assessed on the first dollar through the final one. That would provide revenue that would not only pay for the services absolutely necessary but also provide real funds to pay down the country's debt.

    It's time to stop talking about the problem and start solving it.

  39. Jim Bernard | August 11, 2011

    In my experience web editors are control freaks who only want to publish their own BS

    Will I see my comment published ?

  40. leopold hankel | August 11, 2011

    You forgot to mention that Fed has ability to print money and buy Treasuries. The final outcome of"default"
    will be crash in US Dollar and hence incredible suffering of a lot of people (including pretty much all retirees).
    What is good about that? And do you really believe that the government will not try to confiscate all private wealth they can get their hands on to "save" the population?
    Your idea of default is absolutely irresponsible. What US needs is the will to meet the financial obligations and then it is definitely doable.

  41. George L'H | August 11, 2011

    The issues we havev here in the US are not that hard to resolve if the will was there to do it. The will that is with most (not all) of congress is to get re-elected. Make a good marketing campaign and mislead through the press what they are really doing. An example would be Debbie Wasserman on TV last week talking about the trillions of cuts the democrats made. (Republicans are no better in this issue it just happened to be this woman). She went on and on about all the cuts. Well if you were watching right after she spoke the senators from the Boyles/Simpson plan were on (great cuttings by this group by the way a little over 9 trillion of real cuts in a 63 page report) and being interviewed. They said (referring to Wassermans cuts) this is the problem we have with our congress. Giving out misleading information about what a cut is. Simpson goes on the explain not one item Wasseramn said was a cut ws really a cut. It was ploy to make us think it was a cut. It was only a reduction in new spending from the Trillions of dollars of new spending the president wanted. This is where if you read the Boyles/SImpson plan you can see real cuts over the next ten years. The president rejected this plan completely, he rejected the Gang of 6 plan and now we have the next plan just to push the issue further down the road until our children and grandchildren (if not working a government job) will have to pay for the spending. Simple solution Change the tax law and abolish the write offs (no tax increase there and about 1.3 trillion dollars of revenue each year), Lower the current tax rates but make all of us pay taxes, lower the corporate tax rate so companies such as GE pay taxes and this would lessen the burden on the small businesses that are getting killed by the current tax rate, kill Obama care, which will add trillions of new spending over the highest cost that was estimated, get rid of Bernake and put someone competent in the position that does what he is supposed to do and protect the value of the dollar, change the export laws (which are killing our companies to compete), put term limits on all members of congress with no retirement or medical when they leave office, make the salary and benefits of governments employees to be more in line with business (Bureua of labor and statistics show they earn at least 40% base pay more for the same job), Clean up the corruption in medicare and medicaid ( this would be the most troublesome of all the issues), fix Social security (stop congress from spending SS on their pet projects, tax all workers for Social security and if you draw a government pension you cannot draw social security or medicare), don not allow governemnt workers to double dip into pension plans, If money is allocated to a project it should be spent for the project and not government employee retirements (12 million for housing for 10 thousand people in Calif diverted from the building of the housing project to the retirement fund of 200 Calif governemnt workers), shovel ready projects should be stopped ASAP (many projects the contractors are getting triple time on work that doesn't actually need to be done but work just given out to put people to work) So you get the drift it is not insurmountable just a little detailed and if taken in steps can be accomplished in time to make the current president look good. If not done then he will be what he is just a good image guy with probable a good heart that still knows nothing about business or how to lead. To lead is to take the cards dealt and make the best situation out of it. A leader doesn't blame others only comes up with solutions and has the mindset and motivation to get thepoint across to others. We are all amercians let us start resolving the issues so there will be an america (not the eurpean states of amercian with 50-100% spending of GDP) for our children and grand children. Health care should be for all of us. Let's first get the big issues out of the way an then we will have enough money (just what could be saved on interest could pay for health care if spending was cut) to easily take care of a great health care system for our citizens.

  42. GLENN FORBES | August 12, 2011

    From reading many of the responses to your thought provoking article, it appears you have quite a few subscribers who are still living in La-la-land. (With the notable exceptions of fellow 'realists') and it strikes me that the American people could do with a lot less government interference (control) and a lot more of the freedom they have been brainwashed into believing they already have. I used to love the USA until I realized that things were not as rosy as portrayed (and this was well before 911). As I read some of the stupid comments I realize that for the most part, the USA is already bankrupt and lost in more ways than one. Bankrupt in free-thinking, productive people and doomed to go through the same devastation and rebuilding that many other nations have had to go through to get their economies back on track. The problem stems from the Debt-based economic system and the greed of the leaders using it to line their pockets at our expense. Did any of you sleep people actually notice the subtle shift from Civil Servant to Civil master? Until we prevent them from doing this, we are doomed to repeat the mistakes of the past and suffer the same economic recessions that have brought the USA and other great nations like the United Kingdom to their knees before (and yes, Argentina was once one of the greatest nations on earth too). Any debt-based economy is 100% guaranteed to fail, its just a matter of time, and if you think otherwise, think again as you live through it like my grandparents did. Just a pity the most valuable lessons of the past are lost as generations change. Martin, I don't agree entirely but you are certainly on the right track!

  43. Chris F. | August 12, 2011

    Mr. Hutchinson is much better at seeing what has happened than he is at understanding politics and what the current deadlock in Congress means for the future. The section entitled “The Wrong Road” is remarkably insightful for someone who is about to predict that a U.S. default is imminent – let alone a good thing. He did ignore the important role of tax cuts in the current mess, but that's understandable given that this publication is targeted for people who are, or see themselves as being, on the way to benefiting most from those cuts. But definitely, we must not forget that we are where we are because of Republican mismanagement. (Remember when Clinton was President and we were wondering what we should do with the surplus?)

    I'm not getting paid for this, so I won't take the time to list the fallacies in logic and perception that Mr. Hutchinson falls into, but to say that the U.S. Government "produces few goods and services of value", is laughable. The money itself that the government produces (and U.S. debt is an integral part of that "money") is indispensable for trade. And I suppose he thinks the chairman of Coca-Cola would do a better job of providing national defense.

  44. Peter G. | August 12, 2011

    Could you please explain me what – in your view – would happen when the U.S. treasury defaults. How e.g. would the oil imports be paid? What do you think would happen to the U.S. assets outside the U.S.?

  45. Steve | August 12, 2011

    The problem with the American economy is that we no longer have a growing manufacturing base. Other than food, most of what we buy is made outside the country and the dollars recirculate in their economy not ours. That's where a lot of jobs have gone. Housing for the past 20 years supported job growth here but that won't recover for many years. Wish I had the answer.

    We keep looking to the government to fix and bail us out The problem with that is empathy and common sense don't seem to be able to coexist with our elected represenatives.

  46. Hivno | August 13, 2011

    I believe that the US will hyperinflate before it defaults. When others stop buying bonds the Fed will simply step in and "fund" the US treasury through purchases until the $ collapses. As some prominent people have stated: "The US has a printing press" I wouldn't want to be a US creditor in the near future.
    Default is very unlikely unless the politicians SNAFU the situation.

  47. Mike | August 13, 2011

    acctually, it's unconstitutional for the United States to default by the 14th amendment.

  48. WILLIAM LENARD | August 13, 2011

    We as a nation have been too anxious to squander our resources in a vain attempt to police the world. Our delema is magnified by the established focus on military production. With all the good will and political courage we as a nation could muster, shrinking the vast war industry is an unlikely prospect. Turning all those resources now designed for destruction to creative and beneficial productivity would gore too many sacred oxen. Well, we can still work for the good of mankind and not promote his destruction.

  49. Leo | August 14, 2011

    I am happy that I am a Canadian living in Canada…

  50. Thomas Avery Blair EA | August 14, 2011

    A default of the U.S. Government is "par for the course" and has happened numbers of times in U.S. real (and not rewritten for "politically-correct" and societal reasons) history! Go back and learn about the FIRST and the SECOND US central banks, an economist named Keynes, etc. I have no crystal ball, but I suggest that a national default will pretty much erase not only almost all wealth of the public but also make worthless almost all dollar-denominated debts as well.
    There will be food riots, major metropolitan cities will burn and the flames will light up the night skys, and a few hundreds of thousands to a few millions of Americans will either commit suicide or otherwise die of disease, starvation, inability to get their required medications and/or getting caught and shot to death in their looting and robbery efforts. Those without barter-able job skills and without basic personal and local preparation for our money becoming worthless overnight, and the criminals in our midst will die first…both they and their families. There will no longer be a welfare state…no work will equal no pay and that will leat to the things I've already mentioned earlier. And the criminal elements of our society will first prey
    upon their weakened brethren…then prey on the unprepared middle class and the moderately-weathy. And woe to those Americans having babys and small children to care for during these times.
    Credentialed Congressmen and congresswomen, and a good number of bureaucrats will hide in already prepared "survival communities" inside or on top of mountains in the USA, Canada, South and Central America and perhaps even a few in the Far East. Barter will be the means to acquire ammunion, clothing, food, medications, transportation and weapons for the vast majority of survivers of the first weeks of this God-awful mess.
    In the course of time, a new currency will be used to re-establish a nationwide and world-wide economy and banking cartel…probably based upon gold and silver content coinage, and a few national currencies backed by same. The United Nations or some offshoot of that organization will be the primary miltary force and there will arise a would-be Western world dictator to bring back a semblance of "peace and safety" and he will rule for at least 3.5 years. You'll have learn the rest on your own.
    I don't expect to live very long after the default of the federal reserve "fiat" currency…I am old, in a poor state of health, and rely too much on my social security…and never really properly prepared for these events. I intended to, but now I'm pretty much certain it is too late for me and for millions of other Americans. All I can do is ask the next generation to forgive us for our stupidy and to not follow the failed paths that we "baby boomers" did.

    At least food for thought, is it not?
    Respectfully submitted,

    Thomas Avery Blair, EA

  51. James | August 14, 2011

    After reading all the comments, I agree the most with Wayne. Run for office buddy, I will vote for ya.

  52. Art Lueders | August 14, 2011

    Healthcare is a necessity, militarily ruling the world is not….yet, when it comes to the subject of deficits, the pundits and politicians continue to pick on and bully medicare as the culprit while essentially ignoring the totally uneccesary $1 trillion + imperial military aggression sacred elephant in the room. Dismantle the military industrial complex and tell all the freeloaders like Israel they are on their own. The Imperial Amerika zeitgeist is a mirage.

  53. Paul | August 15, 2011

    America is in this mess because the people have bought into the European-style Social Democracy clap-trap sold by the Democrat Party since the New Deal. The American people need to stop expecting UNCLE SUGAR to take care of them. That is not what the General Welfare Clause of the Constitution is about. Read the Federalist Papers. You do NOT have any right to housing, medical care or a job. Anyone who tells you that you are entitled to these things is lying. Income and wealth redistribution is a fancy term for stealing. Democrats have waged war against personal independence and self-reliance for decades. The 1960's War on Poverty has converted many black Americans into permanent wards of the state. The Federal Reserve prints money to create inflation that ignorant people blame on business. Inflation will allow the federal government to pay off its debts with cheap dollars. Government is the problem – not the solution. We need to abolish hundreds of federal agencies, programs and rules if we are to get out of this mess.

  54. Robert Ferguson | August 15, 2011

    Don't overlook the probability that voters will change the makeup of the House and Senate and will increase the probability of new tax structure that may resemble our rates after World War II. True enough that we'll get a lot of cuts, but we'll also get back the money that Bush cut and a lot more on top of that. The government can take whatever it needs if the voters decide that is what they want, so your theory is not sound. A new Congress may also eliminate the trillion dollars plus loopholes in the IRS code that so many have enjoyed.

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