Good grief! Did you hear the Diane Rehm Show on PBS this morning? She talked about the $53 trillion national debt our government has run up. She had the former U.S. Comptroller General, a Wall Street Journal poobah and former member of a Presidential council on economic growth, and a think tank researcher, all of whom agreed that the gigantic national debt, which represents about $440,000 worth of debt for EVERY AMERICAN HOUSEHOLD, poses a huge threat to the economy.
The scariest part I heard while I was jockeying my car through 40 minutes of rush-hour traffic was a comparison between some of the elements that have led to the current fiasco and the similar short-sighted behaviors that led to the mortgage crisis. These guys say the crisis likely to come out of the mess created by an untenable national debt will be many tens of timesworse than the mortgage industry meltdown. We are looking at the potential meltdown of the U.S. economy during the next twenty years.
At the very least, government services, including Social Security, Medicare, and many programs that support businesses, agriculture, and the middle class will have to be severely curtailed or even eliminated. “Promises” made by the government to its citizens, said the guests,cannot be fulfilled.
The cause of this fiasco has been lack of competent leadership for the past decade or more, and the misguided policy of cutting taxes while failing to cut spending. Solution offered by at least one of the gentlemen: “grow the economy as fast as we can.” Uh huh. Grow the economy? While we’re in a recession that some of our leaders will not even acknowledge as recession? Gimme a break.
On an individual level, I don’t know what any of us can do about it, except to throw the rascals out of Washington…a dollar late and a day short. The corruption has to stop and the woo-woo “thinking” has to go. It will take one heck of a lot longer than eight years to get this country out of the mess the present leadership has created. It will be amazing if the next presidential administration manages to do anything other than hang onto the helm as the ship runs aground.
What is my plan?
- Keep my job until I drop in the traces.
- “Grow” my own economy by fostering a side business.
- Pay off all debt and don’t run up any new debt.
- Once the debt is paid, squirrel away every penny I can.
- Build an emergency plan designed to survive a breakdown of the infrastructure, to include stocks of food,water, and propane.
- Try to preserve capital in such a way that it can be handed down to the next generation, who will need it.
That’s all I can think of to do. And you? Got any ideas?
Your ideas for preserving your personal finances are good ones. Unfortunately, there isn’t much we can do about Washington. We’ve grown accustomed to having certain programs in place, and the powers that be have grown accustomed to having a huge military and have made commitments to support other countries’ militaries. Not to mention the popularity attached to bringing pork barrel projects to certain districts. The difficulty of cutting any of this spending will be immense, and raising taxes will be even more unpopular.
Sigh. True, Miranda. About the military, though: fact is the military was greatly downsized during the years leading up to 9/11, and benefits were widely cut or made stingier. Many career military people quit or retired at the earliest possible moment. This likely is one reason we entered the Iraq conflict with too few troops to do the job.
I don’t want my taxes raised, either, but realistically if you’re going to raise government spending, as the current administration has done, you can’t cut the government’s revenues, any more than you as an individual can reasonably spend more money without increasing your income. You can, but you’ll end up in debt over your head: exactly as the US government has done.
In a democracy or a republic, the government is a device for people to come together to make life better for everyone. We pay our taxes to get services and benefits that we could not easily provide for ourselves.
When you short funding for the government by reducing taxes, then some or all of those services and benefits must go away. The military is a service whose purpose is to keep us safe from sovereignties bent on harming us; if we decide to go to war, we need to pay the costs of maintaining the military, and the only way to do that is to pony up some taxes. A leadership that refuses to see that is short-sighted, not to say moronic. We are now facing the consequences of adopting a short-sighted and foolish ideology.
America’s decline will be brutal. We will eventually need to rebuild our manufacturing sector and our educational system. It would be wise to invest or start a business in these two industries.
If you read the book “Crash Proof: How to Profit From the Coming Economic Collapse”, the author comes to the conclusion that you should invest in foreign investments. Put some of your savings in places that dont have the same economic problems like China, Europe, and Japan. And if investing in foreign stocks, stay away from companies that do significant business with the United States.
It’s an interesting read if you are scared about the future.
I’m pretty much right there with you in terms of your plans for surviving the meltdown. The few other things that I am trying to do to prepare include learning to produce my own food, keep animals for eggs and meat, learning to slaughter those animals, learning to can and preserve food in other ways, planting fruit and nut trees and perennial vegetables, and just generally acquire skills that may some day make the difference between eating and staying warm, or not. A few years ago, this plan also led me to relocate to a part of the country with rich agricultural land where dry farming was very feasible.
Scary times ahead, I’m afraid.
-Kate