All of this crisis mongering in Washington is mere hyperbole and posturing.
The United States is already in default on its debt and has been in the process of restructuring for the past three years.
What?!?! How can you possibly say that? I've seen the pictures on the debt clock racing forward while reporters are waiting breathlessly for it to come to a stop.
First of all, a solid majority of TV reporters have their jobs because they look good and speak well. It's not that they are particularly deep thinkers. Likewise, it is quite fashionable when a TV reporter is at the network level to shape the story to push one political agenda or the other.
President Bush started the process and President Obama has carried it on with aplomb.
Look at the financial markets at the end of 2007.
Gasoline prices at the end of 2007 were in the upper one-dollar range to two dollars. Now, gasoline is in the upper three-dollar range to four dollars.
The Gold price at the end of 2007 was hovering around $800 an ounce. Now, the price has cross $1,600.
The prices of wood pulp, cotton, grain, copper, steel and all other international commodities have doubled. At the same time, the United States has more than doubled (approximately 115 percent) the number of dollars in circulation.
Gold is not in a bull market; oil is not in a bull market, etc.
Rather, the dollar has been in dramatic bear market. All of these commodities have doubled in price because the value of the dollar has dropped in half.
It has hit the internationally traded commodity markets first, slowly getting into the general American economy, because of how the Federal Reserve and the U.S. Treasury spent the money.
First, they handed the money to giant banking and insurance conglomerates. For practical purposes, they basically had to put the money into financial instruments, including commodity contracts.
The U.S. Stock Market has barely been able to hang onto the 12,000 levels. The U.S. was heading into a deflationary recession and the stock market would have collapsed to the 6,000 levels but for the money poured into the banks and insurance companies and the nature of their business being to invest. It is similar with the second round of handouts to mega corporations.
People who invested in stocks over the last three years have lost 50 percent of their investment without even knowing it.
The people invested in gold and oil who think that they have doubled their money have merely just not lost more than a tiny bit compared to other investors.
As the inflation, as the surplus bundles of cash, make their way out of financial instruments, corporate coffers, and commodities, the inflation will begin to be more acutely felt in all of the goods and services that we buy every day. Wages will not necessarily rise, but the prices of everything will double from where they were in 2007.
The people holding U.S. debt, that means U.S. bonds, already know that and are taking their loss. The governments of China, Russia, England, Japan, Canada, etc., don't buy baby clothes and milk, they buy oil and gold. Oil and gold are traded in dollars. When the dollar denominated bonds are redeemed or traded, they get 50 percent less gold and oil than they would have when they bought the bonds.
Thus, we have defaulted on 50 percent of our national obligations. That includes all of the bonds that grandma has been holding for the past 30 years. As the inflation works into the general economy, everyone who relies on Social Security, pensions, disability payments, welfare, etc., will only get very small raises while everything they buy doubles in price.
Thus, the government will effectively give everyone on the government teat a 50-percent cut.
There will be no default on Aug. 2, no matter what Congress and the President do. We will either have a suddenly balanced budget or we will have legal permission to dig ourselves deeper into debt funded by people who want to lose upwards of 50 percent of their investment. Either way, there will be no default.
Rather, a 50 percent default has already silently taken place. It's already happened. With any luck, a majority of the people in Washington will grow a backbone and stop the destruction now by refusing to increase the spending.
But alas, it takes far less courage to spend more and more and quietly take it away from you through inflation by printing more money.