The United States, the country that is at the center of the world’s economic and financial system and one that controls the world’s supply of money, is on a fiscal path towards insolvency and policymakers are at a “tipping point,” a voting member of the Federal Open Market Committee [FOMC], the Federal Reserve’s principal monetary policymaking group, said on Tuesday.
[via Reuters] “If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when,” Dallas Federal Reserve Bank President and CEO Richard Fisher said in a Q&A session after delivering a speech at the University of Frankfurt.“The short-term negotiations are very important, I look at this as a tipping point.”
But he added he was confident in the Americans’ ability to take the right decisions and said the country would avoid insolvency.
“I think we are at the beginning of the process and it’s going to be very painful,” he added.
The US is already insolvent.
In 1980, the US government took in for tax revenue about 1/2 of what the national debt was per year. It did this all through the 1970s until 1980 with some variance.
And since then, it’s been on decline. Today it’s 18% or so. We have a 14 trillion dollar debt, and take in less than 2.8 trillion a year, quite a bit less in fact.
Now in 1980, with some real austerity measures, the US could have paid off it’s debt in 10 years maybe. Today, the same draconian austerity measures would mean it would take about 30 years. An entire generation.
Who do you think it going to do it? The people who were adults from 1980 to 2010 have been living it up, but spending money, that belonged to the next generation. Do you really think the next generation is going to pay for those people’s debts?
If the US wouldn’t go on austerity measures when it was pretty easy to pay off, who in their right mind thinks the US will do it now, now that it is really hard to pay off?
We’re declaring insolvency within this decade people. Get ready.