Undeniable Fact 1 – The US is Completely and Utterly Bankrupt

On Monday, I said that the US is completely and utterly bankrupt. I went on to say that… according to the US National Debt Clock, the total assets of the United States… planes, trains, automobiles… roads, bridges, buildings… houses, tricycles, backyards… is less in value than the total obligations owed by the US Federal Government. To put it another way, the debt owed by the government exceeds the total value of the entire country. Or, to make this more personal, total US Federal unfunded liabilities (i.e., debts) exceeds $1 million per taxpayer. And then, I asked a question.

Can you see where this is taking us – along with the rest of the world?

A tough question, so maybe I should break it down a bit.

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Where We are Headed

Eventually, those who are lending the US government money are going to decide that America is unable and unwilling to repay her debts. That is when they will stop buying US Treasury Bonds (T-Bonds), US Treasury Notes (T-Notes) and US Treasury Bills (T-Bills). China is already winding down her purchases of US debt and has been quietly dumping her current reserves of T-Bonds and T-Notes.

So, what happens when people start saying ‘no thanks’ to US debt?

Well, the US government will start printing money. Of course, the US is already doing this via Quantitative Easing, so I should have said that the US government will print MORE money. This will cause an increase in inflation, and an increase in interest rates – otherwise, even MORE people would say ‘no thanks’ to US debt.

But, interest payments on current debt already amount to 10% of tax revenue, or $261 billion – at an average interest rate of 1.5%. In the early 1980s, the 10 year T-Note hit 16%. A repeat of this would increase US government interest payments to $2.6 trillion and consume ALL of the tax revenue received by the US government, so it’s clear that everything will fall apart before this.

At some point, the Federal Reserve will be churning out trillions of dollars a month – instead of the $85 billion/month that is being produced today. And, we will be suffering extreme hyperinflation. (John Williams says that we’ll see the beginning of hyperinflation next year.)

What Would Happen to Society

Massive increase in prices. Massive unemployment. Massive social unrest. Collapse of major cities. Collapse of the distribution of food, fuel, electricity, water, and much more.

The government will be forced to declare martial law. All Constitutional Rights will be revoked, and the US Federal Government will rule by decree. The severity of the implementation of martial law will depend upon the conditions, but I think that you already see my point.

We could avoid all this by balancing our budget and paying down our debts, but we won’t do this. America, it seems, would rather die first.

But, what about the international implications?

International Impact

Like every world power before her, the US will be forced to withdraw from the rest of the world. Bases will be abandoned. Military hardware will be sold off, or scrapped. US foreign aid will completely disappear.

In the resulting power vacuum, Russia and China will rush in and establish their own spheres of influence and power. Saudi Arabia will find itself at the mercy of Iran. Egypt will collapse. Russia will seek to neutralize her only regional opposition in the Middle East: Israel.

The EU is in as bad a shape as the US, so it will collapse and fracture. It will probably be reconstituted, but not before it will have been forced to make painful concessions to a resurgent Russia.

Unfortunately, that’s a best-case picture.

War

Bankers and politicians tend to go down fighting, which means that there will probably be war. Worse, Russia has already warned that any future war will include the use of nuclear weapons. And, current Russian military doctrine specifies the use of nuclear weapons first, and the-asking-of-questions later.

Even more ominous, there appears to be a verification of all the above in the prophetic books of The Bible. The coming of Gog and Magog. The ride of the Four Horsemen. An obscured Moon and dimmed Sun. Disaster, scarcity and death. Only after this will come the Antichrist, and the conditions will be so bad that we will be tempted to welcome him ourselves.

Preparing for This

When Jesus talked about these times, His disciples asked what they should do. He had this to say:

Watch ye therefore, and pray always, that ye may be accounted worthy to escape all these things that shall come to pass, and to stand before the Son of man.Luke 21:36

This verse implies that there is a way of escape. I believe that this ‘escape’ will be different depending on where you are and what you’re doing. But, everyone’s preparation should begin with watching and praying.

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If you find a flaw in my reasoning, or wish to add something, leave a comment. I’d be happy to hear from you.

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