I hate to be the bearer of bad news but the plain truth is that there is no way that we are going to get out of this economic mess without defaulting on our debt or just inflating away the value of the dollar until it becomes green toilet paper. The end of all things economic will soon be upon America but if you bear with me I do have a solution.

Those who think there is going to be a major recover are just listening to wishful thinkers and liars. It cannot happen. Banks that hold commercial real estate are soon going to have to reveal a bust as big as the housing crash. Also the housing crash itself is not over by a long shot. There are  millions of homeowners missing payments and that means banks are not going to get paid. All that means that there are huge government bailouts and bankruptcies still coming and there will be more unemployment and higher costs of most everything due to a falling dollar. It is not just going to be a double dip recession, it is going to be the end of all things economic as we know it.

Even if we had a major recover, and we won’t, we still would not be able to pay our debts. By 2020 the U.S. will have at least a 30 trillion dollar national debt but it will never get that far.  OK, lets just pretend it will, and we will use that 30 trillion figure just for the fun of it. What will be our interest payment on 30 trillion dollars at 5 percent interest?  It comes to 1.5 trillion per year! That is more than the United States collects in taxes from all sources. So how then does government pay for anything else besides paying the interest on the national debt? That is the inevitable conclusion and there is no way around it other than making dollars worth Scott.

Our national debt is only part of the story. For several decades our government has been robbing our trust funds (like Social Security and Medicare). There is nothing in them but IOU’s. The bills for entitlements are going to start coming due next decade and the government has no means to pay back the IOU’s.

Also what do you think happens when the baby boom generation starts cashing  in its investments just so they can live or retire? Lets explain it this way, if millions today started selling stocks on the stock market because they need the cash to live on and there is no one with cash to buy the stocks what happens to the value of the stock market? It crashes! So lets not live in some idealist delusion. The fact is that many people are going to have to start selling their assets and there will be few in the economic position to buy them. That is a recipe for a depression. The plain truth is that until people get good jobs and start buying again, America cannot be prosperous. Americans cannot create good jobs when they certainly will be heavily taxed to pay the enormous cost of  liberal government and the debt it has heaped on our heads.

Those foreign countries holding U.S. dollars are getting nervous for good reason. They see us still spending like drunken sailors and they are beginning to think they made a huge mistake by lending us money. I have news, they did!  When people or nations make bad investments they have to face the consequences, and these nations will face the consequences of their own greed to take dollars to sell us the products of near slave labor or by charging us fifty times what it cost them to pump oil. The consequences will be that we are not going to be able to pay them back with dollars that are worth anything near what they were worth when they got them. They wanted to rip us off but in the end they will get ripped off themselves

Now we in America have to look after ourselves. These foreign nations within months to a couple of years are simply going to stop lending us any more money. That is going to stop the good times here in America for a long time and it will also bring a world disaster. Japan has more debt than we do and so does Britain. If we stop buying Chinese goods they are going to have one hell of a revolution over there unless the tyrants that run China start a world war to keep the people employed and focused outward.

So is there any solution? There is, but it will not be without pain. The best way to understand what has to happen, is to reduce the problems of  our nation to one individual component of a nation, that would be a family. When a family has so much debt that it can no longer pay its creditors the head of household declares bankruptcy. The results are that those who lent them money lose almost everything. The family gets to start over but nobody is going to lend them anything until they build up some trust again. So the family will have to live within their means for quite some time. It is the same with nations. In one way or another we will declare bankruptcy and we will have to then live within our means. That really means that most Americans will have to live on less than half of what they have been living on.

When the Far Right takes over (by election or revolution) from the disaster that the liberal politicians and now far left radicals have brought on this center-right nation, the nation is just going to have to tell the rest of the world that the old dollar backed by nothing is dead. They made a bad investment and they lost, and we are starting over with a new currency backed by gold or something tangible. Maybe we will give then 10 cents on the dollar because we are nice. Also, do not cry too many crocodile tears for those holding our foreign debt. Had we not bought everything from them they would still be in the dark ages. So they ought to at least thank us for giving them the means and the technology to make it possible for them to manufacture things and they should thank us for fighting all the wars for them before we went broke.

Most of our national debt is really owed to ourselves so that means that everyone that had faith in bonds, insurance companies, etc. in this nation pretty much goes broke and has to start over. Then we will have to start a whole new monetary system backed by something like gold and live within our means just like that family that declared bankruptcy.

So what will the world do if we default. Will it stop trading with America? Perhaps some nations will but we need to start making our own things in America again anyway. Nevertheless, other nations will soon see a U.S. free of debt with a currency backed by something tangible as a good place to sell their own products, so they will. I simply do not see China and Japan refusing to sell products to the main nation that keeps them employed. They might never want to lend to us money again but that is good. We should never go into debt again. We will have to have a government that by law can spend no more than it collects.

So what about all the future entitlement costs for those that expect Social Security and Medicare?

There will have to be a pay as you go system to pay for Social Security and people are simply going to have to work longer. Medicare cannot be fixed. Medical costs and our whole system of medical care is totally nuts so we will have to scrap that whole insane system and go back to the way medical care was done before it was taken over by insurance companies and government.

Paper pushing jobs driven by insurance companies and government add more than a third to the costs of health care I fully explained that a couple of years ago in this article. We have to get rid of health insurance and government bureaucracies like Medicare and Medicaid. What we need is for medical providers to compete in the free market system without much outside involvement. People should pay their full medical bills unless they do not have the means to pay. If that is the case the taxpayers would subsidize the cost based on a sliding scale. People could buy a catastrophic policy if they wanted to protect their wealth but these insurance companies would not get involved in medical procedures it would be more like life insurance.

You might think that you cannot afford to pay your own medical treatment but in most cases you would be wrong. You certainly will not be able to afford it in the future if we keep going the way we are going. If we got rid of all medical insurance and government medical bureaucracies the cost of each medical procedure that you might need would be about half of what it costs today. When you think about it, you are already paying almost half of the costs of your medical care already with co-payments, coinsurance and things not covered.

Today at least a third of the costs of your medical care are to build and staff those huge insurance companies and the costs on the other end for doctor offices and hospitals to comply with the insurance companies and/or government paper work. Do you realize that the average small medical office employs at least one person to just do paperwork to satisfy these bureaucratic layers and another person is needed on the insurance and government side to approve, deny and process the claims? That’s a couple of unnecessary people employed for just one small sized clinic and you wonder why medical costs are high?

Not only that, you have people with high school diplomas in insurance companies and government telling doctors what procedure they can and cannot give and what drugs they can and cannot prescribe. The system is simply nuts! We need to go back to a medical system where doctors got paid in cash or trade and we need to means test those people subsidized by the taxpayer. We also need to get rid of the ambulance chasing lawyers through tort reform.

Yeah,  TEOTWAWKI (the end of the world as we know it) is coming sure enough, but America will not be the first financial disaster in the world and it will not be the last. If we insist on a sane government that upholds our Constitution, gets out of debt, rejects socialism, collectivism, squandering and hedonism we can get out of this mess.