You May Not Get Your Social Security Checks Next Month

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The federal government has just exceeded its statutory debt limit. This is because tax revenues have fallen far below what the budget predicted. (link)

The federal government must make emergency cuts, at least until the congress lifts the debt limit.

There is another limit soon approaching, the limit at which point foreign countries stop loaning money to the US government. When this hits, the only way out will be inflation or severe budget cuts. There are some who say we are already here. That’s why the dollar is sinking in value, rapidly.

The bottom line is that we are facing a fiscal crisis in our country, the likes of which we have never seen.

There are only two ways out, and we have to choose quickly.

The “easy” way out leads to the worst consequences. In this scenario, congress keeps printing money (or rather, borrows money from the Federal Reserve) that isn’t backed by economic growth or a desire by foreign countries and investors to own American dollars. When this happens, we will have inflation. The rate of inflation will be bad, and it will simply catapult to worse until someone shuts the printing press down and takes the “hard” way out. If no one does, then eventually, our country will look like Zimbabwe, which suffers under the rare condition called hyper-inflation. This leads to the complete breakdown of society and government. We can only pray to God that whatever government rises from the ashes of this will be less tyrannical than the previous ones. Historical experience says that we are all but guaranteed a tyrannical regime after the collapse of society.

The “hard” way out is the only sane way out. It is simply this: Stop spending federal money, immediately. Make dramatic and drastic cuts to the budget.

The first items to go are programs that give away money to people like the poor and the farmers. It doesn’t hurt our government much to stop giving away free money. Society won’t suffer much since farmers who don’t farm and the poor who don’t work can’t threaten us with anything serious.

The next items to go are programs where the government buys things that are useful and even critical to our economy. This includes education and the national highway system. These pieces of infrastructure are critical, but let’s be honest. Some of them are more vital than others, and some are far more efficiently run than others. We’ll have to choose the least efficient systems to go first, and hopefully preserve the most critical and efficient ones.

The last item to go is national defense.

The sooner we choose to work our way out of this crisis through budget cuts, the less dramatic these cuts will be.

The good news is that countries that take the hard way out recover quickly.

The bad news is that it is rare indeed that a country on the path that we are on chooses to take the hard way out. Japan is a good example of a country that is trying to have it both ways but is really choosing a long, slow death by taking the easy way out.

We, as voters, and as the real masters of our government, must demand, immediately, that congress cut the budget by 25%, 50%, 75%, maybe even more, to stabilize our currency and get us out of this financial mess. We must look at handouts from congress with derision, scorn, and disdain. Those who live off of government handouts should be mocked for the disease that they are on our fiscal system.

At the same time, we need to provide a soft landing for these people with our private charities and churches. Taking money to get back on your feet from the local church is one thing.

Taking money from the government, which raises its money through taxation and inflation, is quite another.

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