You pays your money and you takes your choice.
Just recently I updated an article I wrote about four years ago: The Fall of the Dollar. The original article, written in 2007, contained a graph of the U.S. National Debt from 1940 until 2005, which showed a rather sobering exponential curve, suggesting that there was no way it could go but up, up, up, at an ever accelerating pace, as is the usual case with exponential curves. The graph ended at 2005 showing a debt of about $7 trillion. I just updated the article to include an updated graph which carried the graph up to 2010, with the debt standing at about $14 trillion, neatly doubled over the last five years.
The point of that earlier article was that the only alternative to the collapsing value of the dollar was for the United States to embark upon a series of wars of conquest, rape, and pillage.
However, upon further consideration, I have come up with a total of seven strategies for retiring the U.S. National Debt:
1. Divine Intervention. This is the most optimistic scenario. Let us all pray for divine intervention to solve the economic problems of the American government. As I speculate upon this possibility, it occurs to me that such divine intervention would most probably come as part of a larger package in which more than just American problems were addressed, but, as there are an unlimited number of ways in which such divine intervention might take place, further speculation along these lines would be fruitless. Rather than instructing God as to how we want Him to manage the rescue of the financial affairs of the U.S. government, it is perhaps more becoming of us humbly to ask Him to use His best judgment in these matters.
2. Inheritance. When an individual finds himself laboring under ever escalating levels of debt, far beyond any ability he might have of repaying those debts, he can always hope for the death of some wealthy relative who might leave a fortune to him, enough for him to pay off those debts. In the same way, perhaps the United States government might inherit that $14 trillion dollars from somewhere. Admittedly, this isn’t very likely, and perhaps we are still best advised to pin our hopes (and our wagers) upon the first possibility: divine intervention. However, perhaps Saudi Arabia might decide to dissolve itself as a State, or at least to gift all of its oil fields to the United States government. It would not do, of course, for them to donate the oil fields to privately owned American corporations; no, in order for this possibility to offer any relief to the American government, it must be the U.S. government itself that would be the recipient of such a gift.
I do not have all of the numbers in hand, but perhaps such a gift might manage to float the United States over its current doldrums. On the other hand, such a gift might simply open the floodgates for massive new spending, which, if they are no more sensible than what we have seen over the last twenty or thirty years, might not even solve any problems at all. In fact, much like the stories of someone who inherits $20 million and then, through a series of bad decisions, rapidly runs through all of the money, ending up with massive debts far in excess of whatever debts he may have started with, this hypothetical gift of the Saudis might just make the American problems even worse. But, at least potentially, we must allow that such a windfall could be the means of rescuing the rapidly deteriorating financial prospects of the United States.
3. A third possibility is that the American government discovers some new source of wealth – perhaps gold mines located on federal lands. Once again, it would be useless for any of this to be discovered or owned by private individuals or corporations; in order for it to do the U.S. government any good, it must be a discovery on lands owned directly by the federal government, in whose name the debts are promised to be repaid. However, gold mines probably wouldn’t work. If enough gold were discovered (in the Grand Canyon National Park, for example) to pay off the National Debt, the value of gold would collapse. If twice as much gold were to be found, to offset the collapsing value of the gold, that value would simply fall even faster – there may not be any quantity of gold that might make much difference, due to the inexorable law of diminishing returns.
However, there are other possibilities: perhaps some amazing new element were to be found that restores hair on bald heads, rejuvenates the sexual potency of aging men, restores beauty to aging women, and restores all functioning of the body to perfect radiant health indefinitely, allowing for theoretically infinite longevity (in the absence of any fatal accident). Some such discovery, as long as it were the sole monopoly of the U.S. government, might go very far towards reversing the slide to financial ruin.
4. Wars of Conquest. To say that there is substantial historical precedent for this method of restoring financial health to a failing state were massively to understate the case. However, let us hope, for the sake of future generations yet unborn, that the United States will not decide to go down this road. Let us all fervently hope that one of the other choices will prevail.
5. Revolution/Repudiation of the Debt. Now this is a promising possibility! Perhaps the American people, waking up to the fact that the wealth of the nation has been systematically looted by a handful of wealthy families over the past 235 years, finally decide not to take it anymore, and rise up and overthrow the corrupt regime, putting some new government in its place (after all, Thomas Jefferson suggested that a new revolution were required every twenty-seven years; every generation must arrange political affairs according to current realities). Then the new government might blandly say that the debts of the previous government were not theirs, and they disown any obligation to repay same. Of course, the present government might simply declare bankruptcy and likewise simply renounce all existing debt, hoping simply to carry on with business as usual, but, in practical terms, it is unlikely for such a declaration to go down very smoothly without a radical change of government from the ground up (i.e., from the People). This option, while perhaps able to accomplish its primary objective, is fraught with additional difficulties; however, the post–repudiation problems are beyond the scope of the present article.
6. Inflation/Collapse of the Value of the Dollar. This was the projected outcome of my previous article on the fall of the dollar: that the only really likely alternative to bankruptcy, financial chaos, and/or war is for the value of the currency to be gradually eroded so that fixed dollar amounts are repaid with dollars which are worth substantially less.
7. A Tax on Wealth. Finally, among this catalog of unlikely alternatives, some of which might even appear to be frivolous suggestions, here is one more realistic (though highly improbable) option which could, theoretically, offer a real way out of the financial problems of the United States: put a tax where the money is! After all, it is largely due to the unconscionable looting of the financial resources of the country by the very wealthy that have caused the present desperate state of affairs, so it only makes sense that those American citizens and Corporations registered in the United States with huge piles of wealth stuffed in their mattresses should be the ones to pay up the bills of the country they have so sorely treated while the rest of the country have either been sleeping or been paid off.
In case you haven’t figured it out yet, this option is the one that inspires me to revisit the financial problems of the dollar. The option may not be politically very popular among those with the wealth and the power in the country, but the other 98% of the population do still retain a theoretical legal right to enact such a tax. It may be possible, for example, to mount a popular campaign to achieve this goal of taxing the rich. Politicians might be elected on a platform of promising to vote for such an idea, and Congress might pass the necessary legislation to accomplish it. However, to avoid the rapid sheltering of funds, this would have to happen very quickly. Perhaps it might even be necessary to assess the tax rate retroactively to 2010. Large teams of special auditors would have to be employed to determine appropriate assessments. Criminal penalties (i.e. indefinite incarceration until and unless the tax were paid) would probably have to be imposed.
Yes; the sharp ones among you will have noticed that these are not all uniquely different proposals. In fact, the present suggestion (of taxing the rich) is quite decidedly revolutionary. The fall of the Bastille in 1789 might meet its parallel in the fall of the House of J.P. Morgan Chase, for example. Additionally, the formidable political obstacles to such a course of action might require divine intervention after all. Thus, when making any wagers as to the probable outcome of the current financial ancien regime, be sure to draft the terms of your wagers very carefully to avoid disputes.
