We’ll Pay All Those Future Obligations by Impoverishing Everyone (How to Destroy Our Currency in One Easy Lesson)
The comments below are an edited and abridged synopsis of an article by Charles Hugh Smith
The loss of a currency’s purchasing power wipes out every holder of that currency. For the US dollar, soaring future obligations lead to a feedback loop that hastens the loss of purchasing power:
- The only outcome of the way the dollar is created/distributed is soaring wealth/income inequality.
- Much of the growth that’s supposed to fund public and private obligations is fictitious.
- The US has been paying its obligations with debt for the past decade.
- Federal, state and local governments pay interest on the money they borrow to fund deficit spending.
- Politicians are elected via entitlements and obligations without regard to how they will be funded.
- The core constituencies of politicians are government employees and contractors.
- The obligations that have been promised are expanding at a nearly exponential rate.
The means to pay all these future obligations are far too modest to fund the fast-expanding obligations,which include interest due on the ever-increasing mountain of public and private debt.
The current asset bubbles have temporarily boosted the wealth and income of corporations and the wealthy, but all bubbles pop as the elements that are propping up the expansion weaken and implode.
The federal government cannot pay all its obligations out of tax revenues, nor can it raise taxes high enough to do so without gutting tax revenues via a recession.
The only way to pay for future obligations is by creating new money, which in a stagnant economy can only reduce the purchasing power of the currency, robbing every holder of the currency.
As Venezuela has discovered, there is a consequence of money creation to meet obligations: The destruction of the currency, and thus the wealth and income of everyone forced to use that currency.