RELAX!!!! Why we are ALL Broke!!!!
August 07, 2009
– Comments (33)
When I started practicing law, my law partner told me that the most important decision a man can make in his life, aside from picking his wife, is picking his business partner. The reason, in a partnership relationship, there is joint and several liability.
Wikipedia defines it as follows:
If parties have joint liability, then they are each liable up to the full amount of the relevant obligation.
The key word is FULL....each party is responsible for the full amount of the obigations incurred by the other partner.
If you are a citizen of the United States of America, you effectively have joint liability with the government. If our government goes to war, we go to war too. We have to join the military or offer up our children if deemed necessary.
The same applies to the debts our government incurs. If our government needs money, it must either borrow it or obtain it from the citizens. In the end, if our government owes money, we owe money.....after all money is simply a non interest bearing debt instrument called a Federal Reserve Note.
For over 200 years, government was pretty much a responsible business partner looking out for the operation of the United States of America and the interests of the citizens. When we started out, government was very small and we had no problem funding its role.
As time went on, things got a bit more complicated. Government grew larger and larger and started demanding more and more from us while borrowing more and more as well. Anybody who has dated or been married to a high maintenance spouse understands this concept very well.
Unfortunately, as government borrowed more and more, its citizens had to borrow more and more just to keep up.....so did hospitals, schools and businesses. Most kept borrowing until they could no longer borrow any more.
At this point, the population of America simply cannot sustain the obligations its government has incurred. As citizens, we are responsible for these obligations, even if we did not leverage ourselves or our families.... just like we would be responsible for war even though we didn't personally pick the fight with the enemy.
Governments across America are going broke. Our pensions are underfunded and receipts are contracting at historically unprecedented rates. Soon government will be forced to make a decision. That decision will affect ALL of us because we are ALL responsible.
For now, government has chosen to transfer most of the nation's dwindling wealth to a few bankers and select businesses while concealing the current financial condition. My guess is within the next sixty days, more and more of us will become aware of the actual state of our joint balance sheet.
Alstry is more confident government is running out of options as fewer and fewer will likely extend credit in light of contracting receipts..... the key issue going forward is what will be demanded of us.
Government/Fed is the Zombulator and the Zombulator must be fed.
Whether you like it or not, as a citizen of the United States, we are all jointly and severally liable with the Zombulator....a legal relationship that Alstry understands well.
If government simply starts printing, just relax. Our debt obligations are so high that no rational person will extend credit without burdensome interest rates. Since much of our debt is short term based, we will need to borrow more and more to sustain ever growing interest rates to the point where government will have to print so much that money will be effectively worthless.
When you run out of money and access to credit, you are effectively broke......when a loaf of bread is $10,000,000 due to valuless currency, your financial state is really not much different.
It could go either way........are you prepared? I know it is difficult to imagine since it has never happened before. For over 200 years we could support government and government was fairly responsible spending mostly what we gave them from our earnings. Something happened in the last thirty years. Government's debt addiction really cranked up to an unsustainable level where we can no longer collectively support government based on our current economy. If you think about it, really not much different than Bernie's operation for over 30 years of borrowing and giving, can you imagine how Bernie Madoff's clients felt the day they learned Bernie we effectively broke?
There is nothing fun about this, it is simply reality. Let's hope we deal with reality fairly as we get through this period in our history.
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