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US politicians will NOT do the right thing to avoid hyperinflation

Posted by John T. Reed on

A facebook reader of mine said he thought Trump planned to default on the national after he wins the 2020 election as he did when he filed bankruptcy six times for his companies. Here is my answer:
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Trump filed six Chapter 11 bankruptcies; one for a Manhattan hotel and the other five for Atlantic City Casinos.
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The president of the US does not have the power to default on the national debt. Indeed, it would be unconstitutional.
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Fourteenth Amendment, Section 4: The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.
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Also, the only reason to default would be to prevent hyperinflation. Defaulting hurts only those who bought US Treasury bills and bonds and currency. Arguably, they are complicit with the Congress in running up the immoral debt.
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https://johntreed.com/.../123917571-defaulting-on-the...
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But defaulting on the national debt by letting the US dollar hyperinflate hurts EVERYONE on earth who holds any dollar, bank account, government bond, corporate bond, mortgage, insurance policy, pension, Social Security, or other dollar-denominated asset or contingent asset.
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The right thing to do would be to amend the Constitution to authorize default on debt owed to the Federal Reserve. They “bought” it with non-existent money.
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That might rattle the financial world and cause hyperinflation of the USD. Or they might see it as a step in the right direction meaning the USD would be less likely to hyperinflate.
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But two things: First, that would also force massive spending cuts for the lack of a funder for deficit spending. Second, it might not be enough. The debt owed to the public is around 100% of GDP. You are not allowed into the Euro Zone if your debt-to-GDP ratio exceeds 60%.
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An even better right thing to do would be to amend the Constitution outlawing new federal debt and requiring that all existing federal debt be refinanced with 30-year self-amortizing debt. That would gradually take the entire federal debt to zero in 60 years.
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But so much for time-wasting ruminating about politicians doing the right thing. They, almost by definition, never do the right thing. All they need to do is to get 51% of the electoral votes (president) or raw votes (Congress) to go for them and all they need to do for that to happen is to convince a voter pool who could not pass a simple five-question quiz on monetary policy that they are the lesser of two evils.
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Our representative democracy or republic as Ben Franklin famously called it, is fatally flawed in that it lets politicians borrow money and spend it to buy votes for themselves.
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Monetarily, I kind of like the Free Banking Era.
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https://en.wikipedia.org/wiki/Free_banking
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People can specify whatever currency they want including privately issued currency and US courts must enforce such contracts on their own terms. The US government would not have a currency or a central bank like the Federal Reserve. If a currency issuer like Citigroup “printed” too much of its currency, it would trade at a discount off face value and fall out of favor. That is what happened in the Free Banking Era.
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But all the “right monetary things” force the Congress to do the right thing FISCALLY, that is, live within their means. No deficit spending. Politicians want to be popular and liked. Inability to printing money would turn Congress and the President into stern parents constantly saying “no” to their “buy me this, buy me that” children.
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Once again, that would be the RIGHT THING.
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i also favor eliminating politicians by constitutional amendments that establish national binding referendums and a citizen congress selected and operated like a grand jury. All decisions would be made by the American people casting SECRET BALLOTS and would be limited by my previously mentioned constitutional amendment banning new federal borrowing.
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Then we Americans would be forced to decide how much to tax our selves and how to spend limited amounts of money—“our means”—and prevent us from borrowing as a nation. We could still borrow as individuals.
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Instead, we will crash and burn and starve and blame each other via hyperinflation which will hurt almost everyone, not just the lenders dumb enough to buy immorally-issued US bonds.

How To Protect Your Life Savings From Hyperinflation & Depression 2nd edition book
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https://johntreed.com/products/how-to-protect-your-life-savings-from-hyperinflation-and-depression


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