ONLY FOUR OPTIONS TO THE US $75T INSOLVENCY PROBLEM  

ONLY FOUR OPTIONS TO THE US $75T INSOLVENCY PROBLEM

• According to the Treasury Department’s annual financial report for Fiscal Year 2018 (which they just published last week), the US government is hopelessly bankrupt with a reported  negative net worth of MINUS $75 TRILLION.
• To believe that any nation can be so desperately insolvent without suffering any negative impact is just plain foolish.
• In 2018 annual report, the Social Security Administration stated that its trust funds will run out of money in 2034, just 15 years away.

THE GOVERNMENT HAS ONLY FOUR OPTIONS or COMBINATIONS OF:

1. Ignore the problem (has been in affect for decades),
2. Raise taxes ("Tax the Rich" Becoming the new mantra),
3. Default on Creditors &/or Obligations,
   • The top owners of US debt are as follows:
     • Social Security Administration: yes it’s true, Social Security is the top US debt holder. So if Uncle Sam defaults on Social Security, that program is even more royally screwed.
     • Federal Reserve: The Fed owns trillions of dollars worth of US debt. So if Uncle Sam defaults, it would wipe out the Fed’s solvency and create an epic currency crisis for the US dollar.
     • Foreign Creditors like China: If the Fed defaults on the Chinese, it would create a global financial crisis, as nearly all foreigners would dump their US bonds. Borrowing costs would skyrocket as a result, bankrupting the government.

     None of those is a good option

4. Inflation.
   • Governments really like inflation, because it slowly reduces the value of the debt that they’ve borrowed.  And because inflation is so gradual (around 3% annually), no one kicks up much of a fuss, even though it steals prosperity year after year.  So most likely they’ll continue to print money in an attempt to create inflation and inflate the debt away.

Therefore a reasonable person should plan on:

• Higher Taxes,
• Higher Inflation,
• Means testing, reductions and possible default on Social Security, etc.

FOR INFLATION: It certainly makes sense, for example, to consider owning some inflation-proof assets: gold and silver, real estate (including foreign property), shares of a well-managed, high cash-flow business, etc.

FOR ENTITLEMENTS: It makes sense to create a robust retirement structure like a solo 401(k) or SEP IRA so that you’re not as dependent on Social Security… because that reckoning day is absolutely coming.