In rough terms, the US will soon be spending $1 trillion a year on servicing its debt, $1 trillion on essential operations (military, etc), and $1 trillion on social spending. Its tax rate revenue is realistically limited to about $1 trillion a year. Even a 50% cut in non-debt spending will not stop it from borrowing an additional $1trillion every year. As soon as an alternative reserve currency is adopted, the dollar will plunge in value and take the US standard of living with it. Can anything be done to stop this economic death spiral?
One solution would be to effectively declare bankruptcy by renouncing all current debt. Ironically, this would hurt the big financial institutions more than the average citizen. While this would drastically reduce our ability to borrow more money, it would also allow us to devalue the dollar to a sustainable level going into the future. At that point real economic growth (i.e. productivity) might allow us to eventually regain true prosperity.
What do you this of this solution? Do you have a better one?
One solution would be to effectively declare bankruptcy by renouncing all current debt. Ironically, this would hurt the big financial institutions more than the average citizen. While this would drastically reduce our ability to borrow more money, it would also allow us to devalue the dollar to a sustainable level going into the future. At that point real economic growth (i.e. productivity) might allow us to eventually regain true prosperity.
What do you this of this solution? Do you have a better one?