USA Debt Default Junkies

We're all aware of the current predicament the USA is in at the moment, the discussions between both Republicans and Democrats are revolving around how much more debt they should signup (enslave) their tax paying citizens to. The question is not will they do it but by how much by. Although politicians are touted we're going to cut n trillion dollars from the budget, it's over 10 years. Some proposals are spending in 1 year what they will save over 10 years. This means next year they're going to take on even more debt, sending themselves down the slide of bankruptcy just like Greece.

What they really should consider is a balanced budget, what you take in you spend. This would avert a default which will ultimately deliver a more painful result than dealing with the problem. A lot of politicians, economists and financial reporters used to talk about the economy as though it was a hospital patient. Have you noticed after the crash less and less people refer the the economy as a hospital patient. Well here I'm going to reflect on the USA economy as a patient.

Consider when the USA economy crashed that it was a major car crash for what we'll call, Uncle Bill. Bill was near death, resurrected by (QE) Quantitative Easing (defibrillators), the patient, badly injured was put on special healing drugs to bring him back to health, he was also on morphine for the pain. Long term use of the drugs will make him very ill and Uncle Bill will become addicted. Uncle Bill was already addicted to the drugs but feeding him more will surely send him to a overdosed death. Uncle Bill is approaching the spiral of death default as its debt tips over 100% of GDP, unlike his friend Jimmy Japan, he doesn't have high value skills and manufacturing base with cash rich parents, all of which will help Jimmy Japan (Jimmy Japan has over 200% debt to GDP) via rehab centres. No, Uncle Bill is a simple labourer, he has some friends who gamble in the Casinos (Wall Street) but the Casinos are not the solution to the problem. If Uncle Bill doesn't retrain and export, he's going to crash and burn. Tim Geithner realised this soon after the crash. But unfortunately skilling up doesn't seem to have occurred very much. Oh dear, simply adding debt on top of debt doesn't work, as your currency drops your inflation goes up, your consumers stop spending, wages stop rising, it ultimately creates another recession and your carrying all that debt, and here the spiral death slide starts. Step too far down the slide and it's too late. Your going to end up in the fire pit at the bottom along with all your money, it will go up in smoke (default). Greece is the classic example, it spent more than it could ever pay back, the only reason the banks lent them the money was because their agents where getting handsome bonuses, including bank CEO's on their mega bonuses.

I don't know how long this is going to take, but your read it here first!