The Red Pill or the Blue Pill

Because the US Goverment has un-sustainable debt levels, they have two options

1) Default

2) Inflation

There is no other option, and if you think there are your not being realistic.   They cannot

1) Reduce costs

2) Raise taxes

3) Sell Assets (government property)

These things raise nowhere NEAR the amount of trillions they need.

So pick you pill.  We'll start with the nasty one first

DEFAULT

   The US borrows so much money that congress has to raise the federal debt limit about twice per year.   Its currently 17 trillion dollars and will probably be 18 by the end of 2013.  At what point do they decide not to raise the limit.   Is it possible that at some point republicans or democrats (or hopefully both) would just say "no".

If/When that happens the US has defaulted on their "government backed dollar"     What would happen if you had a gift card to the Apple Store, and Apple were to announce they were going bankrupt.    You would go spend that gift card immediately.  Everybody would.

So when the US Government defaults on the dollar, what would holders of dollars do?   They would go buy anything they can touch.   It would be like a game of hot potato.  

Inflation = mass x velocity.   So the faster people spend money, the higher inflation is.   A long term US government default would lead to hyperinflation.

So if people know that the dollar is worthless, what do we resort to?   We would resort to backup systems, like barter.   The problem with barter is that I cannot go to Safeway and trade for a gallon of milk.   A default on the dollar would grind the American economy (and the world economy) to a screeching hault.

By the way, would Bitcoin be a good backup system?   I think the answer is a resounding 'hell yes'   We switch over to a bitcoin eco-system, then the US government can print quadrillions of dollars and nobody would care.

INFLATION

  The nicest way out of the current situation is inflation.  The government keeps printing money and keeps raising the debt limit.   This is called "debasement" or "monetizing the debt".   Its been done for a hundred years and is business as usual.

   So how do you protect yourself from inflation?   Gold, Silver, Bitcoin!

Gold and Silver are hard to spend through.  You cannot go to Walmart and buy a gallon of milk for silver.   However with Bitcoin, you can.

Bitcoin is the solution to all the worlds economic problems.  A bitcoin based economy will also stop the ENDLESS WAR