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Sunday, Nov. 23, 2014

Government, money connection

Sunday, July 18, 2010

To the Editor:

Our government is going to provide us with a golden opportunity to pay off our credit card debt with pennies on the dollar.

With the federal budget deficit now running in excess of $1.5 trillion this year, and increasing, the Obama administration's own 10-year budget plan predicts that the national debt of the U.S. will exceed $25 trillion by 2019.

This year, the interest on our national debt will be about $400 billion. By using simple match, the interest expense in 2019 on our national debt of $25 trillion at an interest rate of 12 percent will grow to $3 trillion.

Interest rates will dramatically increase following a downgrade of our sovereign debt to an X-rating.

At some total debt level (the abyss) a tipping point will occur when our government can no longer pay the interest, which will cause the debt bomb to explode.

You will not have to wait until 2019 for our sovereign debt default. The Federal Reserve is now being forced to partially fund our budget deficit using a scheme called quantitative easing (QE), which is a politically correct way to describe, "Creating Money Out Of Thin Air."

For example, QE was recently used to create $1.3 trillion to buy mortgage-backed securities from banks.

With QE, inflation will gradually build up to a crescendo.

The result is a crack-up boom when people realize the dollar is crashing and will frantically spend all their paper money in an attempt to exchange it for something of value.

When that happens, credit cards can be paid off with 154 pre-1982 pennies per pound of copper that were accumulated long before the dollar collapses.

Robert A. Dahlquist,

Orange, Calif.