We Can't Pay It Off
President Nixon took the United States off the gold standard, turning the U.S. dollar into a fiat currency. A fiat currency, for those of you who don’t know, has nothing to back it up. It’s just paper, unredeemable for gold or anything else of true value. Since Nixon took us off the gold standard in 1971, the U.S. dollar has lost over 70% of its purchasing power. The government has been able to borrow and spend money at will, borrowing from the kids and grandchildren in order to buy votes today. Our national debt stands at nearly $8 trillion. Our federal deficit, which had been scheduled to decline this year, will be about the same as last year (over $450 billion) after the disastrous costs of the hurricanes are added in. President Bush continually declines to say how we’ll pay for the costs.
U.S. bonds are considered the safest investment around. They are given top ratings by all ratings firms and are considered the least likely to default. But the pressure on the almighty dollar is building at such a rapid pace - $1.8 billion a day in trade deficits and over $1 billion a day in budget deficits - that the bond will have to cry “Uncle” at some point. It may be a year from now or ten years from now, but it will happen. I predict that by the time President Bush leaves office, the U.S. Treasury bond will no longer be rated investment grade.
Imagine what it will be like when you get no Social Security check. Or when your military pension stops. Or you can’t afford the medicine you need to stay alive. Or, if you do get a check, it will be virtually worthless due to hyperinflation. We are headed to a system where those who have money - real money, that is - live, and those without it die. We’ve seen it with the government’s reaction to Hurricane Katrina. Expect it to be far worse when Hurricane Uncle Sam hits.