5 Ways You Will Personally Be Affected If America Goes Bankrupt-Your Standard Of Living Will Be Reduced


standard of living


An increase in taxes and a dramatic inflation will lead to the economy coming to almost a stand still causing a depression. This will not be a worst economy since the depression mentality when things go south for a bit, but rather a full on depression that caused American of the past to hoard food and valuables and treasure a scrap of fabric. Businesses would close, the stock market would fully tank and the unemployment rate will be that of the 1930s. All of this and the government would not be in the position to help.

In America we are used to a certain standard of living. If the government goes bankrupt and a true depression does hit, it will leave us in utter misery. Being poor under the best of circumstances is hard but when you are forced into it, it will be much worse. Our concerns will not be about getting the latest and greatest smart phone but rather how we can harvest more vegetables and stay warm during the winter.

Critics will argue that the US government is technically already bankrupt depending on how you define bankrupt. The government is currently borrowing money just to pay the interest of its debt. The only other reason our government is able to service its debt is because the Federal Reserve keeps printing money to buy up US debt. Obviously this is not a sound fiscal strategy and things will need to change before we can no longer stay ahead.

The other side of the excessive debt and money printing is the inflation that is already in the works. We are seeing a record high on prices of food insurance and other retail goods. A majority of Americans spend a majority of our income on living expense with a bare minimum left over. With the cost of living increasing, we are now looking at completely destroying the minimal savings we may have which leads to us being forced into reducing our standard of living.



5 Ways You Will Personally Be Affected If America Goes Bankrupt-No More Money From The Government


benefits

Contrary to what some may believe, Social Security and Medicare are indeed paid out of the same fund that pays for everything else. In other words, if the government goes bankrupt then there are no longer funds available for the recipients of these programs to receive their payments.

Social security and medicare payments are not the only payments that would be unavailable. Welfare and food stamps would also be in jeopardy. They payments would be slashed down to practically nothing if not stop all together. It may seem unthinkable, but if the government does not have money, then it cannot pay the people the money they are currently receiving. A large amount of the American population relies on government payment in some form leaving citizens in an unfortunate situation if the government can no longer make good on their payments.

The social security administration will be the first to admit that it has its own flaws. If you are relying on this payment for your basic living, you are part of a program that faces limited funding at a seemingly unlimited demand for benefits. There are the obvious baby boomer retirees that have taken a large chunk out of the funding, but there are also the increasing numbers of social security disability benefit payments.

There are barely 2 working people paying taxes and funding social security as there are 1 person getting paid out of that fund. The equation is rapidly deteriorating leading to, yet again, either an increase in taxes or cut benefits. Both are unlikely to get passed easily in a government that seems to agree on nothing.

What is a more likely outcome is that benefits will be drastically reduced. How that plays out will greatly depend on the severity of funding lost and how the new administration reacts to the issue at hand. Taxes are likely to be raised regardless, the government could continue to borrow or continue to print more money putting us in that economic spiral yet again.

We can expect benefits to at the bare minimum to be lowered. Benefits could also be paid in cheaper dollars as inflation hits by printing money to cover the shortfall. The benefits could also go to a more means-based approach, based on certain income levels or they could be delayed forcing everyone to work together.



5 Ways You Will Personally Be Affected If America Goes Bankrupt-Your Life Could Be In Danger


riots


While this may seem a bit of an extreme, you must realize that if the government goes bankrupt we will have a civilization full of angry, outraged, confused and frustrated citizens. A population with little faith in its leaders combined with a horrific economy and a reduced ability for the government to maintain order, you are looking at the perfect storm for widespread rioting and an increase in violent crimes doe to the outrage as people cling to last hopes.

The idea of a widespread panic may not seem plausible at this juncture, but when Argentina underwent the same type of crisis, violence went up a shocking 142%. With the German hyperinflation of the currency in the Weimar Republic, law-abiding citizens opted for petty theft leaving copper, brass, gasoline and everyday items unsafe. The citizens had to barter all goods and hide anything remotely of value.

Argentina’s debt crisis led to power failure, police forces refusing to work, gas stations closing, grocery stores running out of food, government payment ending and the banks going under taking innocent lives with them. While the situation may seem stark and something out of a zombie apocalypse movie, the reality is that, well, it could be a reality.

The argument is split between the focus on the United States economy alone and those who see our government as part of the world economy. Critics of the world view will say that the American government could not go bankrupt because the world economy would not let it. They think that because we are part of the global economic scale, that if the US goes bankrupt, would mean a collapse on a global scale.

If the focus is within the US government only, it becomes a vicious spiral that can send any non-economist in a tailspin. Usually, the inability to pay debt means one does not have the money, but the US makes its own money. Yet money used to pay debt is worthwhile only in terms of the debt it pays. If our money is suddenly holding less worth, then it also pays less debt reducing the value of money all over again.



5 Ways You Will Personally Be Affected If America Goes Bankrupt-Your Taxes Will Skyrocket


tax


We have been fed the lie that we can fund our government via the backs of the rich and this is simply not the case. It has not worked in the past, it is not working today and there is nothing to prove that it could work in the future. We cannot tax the small rich population enough to pay off American debt. We cannot tax them enough to even keep the government pushing through long term.

Even if we could tax that small population of the filthy rich, they have the resources to bail themselves out so to speak. They could flee the country for greener pastures if they are being taxed into oblivion. The middle and lower class do not have this option.

What does this mean for the average American? The more desperate the government becomes, the more the average working American will end up suffering. This group will be the group most slammed by new taxes. With an increase of money going overseas to pay China in order to keep private and public interests groups going like PBS and Planned Parenthood, the less you are bringing home of your hard earned money. If America does go bankrupt and your income tax skyrockets, you are now looking at the difficulty of paying your mortgage and feeding your kids. When the government runs out of cash and can no longer print anymore or borrow anymore, that is when the taxes will really hit the American people.

America’s coming tax increase is inevitable as the inability to come to an agreement on spending cuts continues. President elect Donald Trump has vowed to wipe out the public debt in 8 years, but it is still unrealistic even with the economic growth from his tax plan. Enormous tax cuts and not tampering with Social Security or Medicare are issues that lead to massive revenue losses. While the right policy mix can help close federal deficits and pay down the debt, letting growth or future belt-tightening close the gap is the exception not the rule.



5 Ways You Will Personally Be Affected If America Goes Bankrupt-No More Savings


savings


Money does not buy what it used to. Inflation is just a fact of life. Traditionally, when a government runs out of money, it just prints out more money. The issue with that solution is that now the money you have in your pocket or savings account is instantly worth less. This can and will wipe out your savings in a short period of time.

A loaf of bread now goes up to $500 and while you may think that far-fetched, history has shown such cases. Governments were crushed under the debts from WWII. They decided to pay it off by printing more money as in the case of the Weimar Republic, and all the money that the citizens worked hard to save became worthless in short order.

Most of still find it difficult to put ourselves in the shoes of other less globalized economies. However, the US Treasury going bankrupt is a real fact that we must face. Some experts think that the likelihood of this happening is less than five years away. While soon to be Vice President Mike Pence is slightly more optimistic, but still says it is likely to happen in just 10 to 15 years.

So how did we get here? Figures vary, but it is estimated that our government owes creditors over $16 trillion in debt. One of the main reasons for the continuing growth is because the government keeps asking for more time from the creditors to pay off this debt. That extra time means extra interest accruing.

If the US Treasury goes bankrupt then we will be facing the largest depression in the history of the country. American economist Thomas Sowell gives us the perfect example of today’s $100 being of less worth than the $20 bill of the 1960s. What this means is that our life savings is now worth much less than we thought it was and will no longer sustain us as long as we had planned it to.