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Transferring bankruptcy from the private sector to the public sector

EagleWith all this bad private debt being hauled in by the US government hardly any notice has been given to the idea that the US Federal Government itself is putting itself at risk of default, too? In a way a governmental default (declaration of bankruptcy) would be a sort of poetic justice for the people of a country whose government has played an integral part in putting other governments around the globe into default with creditors in the past.

After all for just one given example, how much did America cry for Argentina when its government broke down? The US government had much to do with that governmental default, too, despite the fact that it occurred in a place we hardly even consider as being on the map.

Bill for US rescue package could reach $1 trillion All this bad debt taken in by the Feds can be covered easily by issuing paper dollars that Americans will be forced to use as currency, but what about others outside our national borders? They will simply devalue the US dollar in relation to their own currencies which will not be necessarily be covering bad debt of their own. When goods are imported into the US, we may well begin to see the start up of first $5 Stores, and then $10 Stores for those on tight budgets. The sky can be the limit here, can it not?

At some point foreigners may simply say ENOUGH. None of your dollars are worth even the paper they are written on and we will not accept them at all. Your country is BANKRUPT. So transferring private bad debt (‘toxic’ is the word they actually use) into the hands of the Federal government is no panacea at all. By itself, it cannot turn the situation around at all, as it merely buys time and transfers ‘responsibilities’ onto others, mainly onto the American people instead of America’s super-rich.

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