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Sunday, October 28, 2007

This article, titled "The coming financial collapse of the U.S. government: Fed papers reveal what's in store for Americans," asserts that our country is slowly going broke and that continued failure to pay creditors will certainly end in bankruptcy for our nation. It goes on to describe that drastic reform of our fiscal institutions must occur to avoid such a dilemma. The proposed reforms are as follows:

1. Income taxes must be eliminated to make way for a national retail sales tax of 33 percent.

2. Social Security must be privatized so that each worker will own their own account and so that the government cannot take money from the program.

3. Implement a national health care system that covers all Americans in which tax vouchers are issued by the government and can be used with the various heath care companies.

These reforms are necessary because of the enormous amount of national debt that is seemingly not being paid off. The gap between what the government will make in taxes revenues and our national debt is an incredible 65.9 trillion dollars. Drastic measures indeed would be necessary to slowly account for this difference. Since astronomical corporate and personal taxes and cuts benefits of government programs such as Social Security are hardly likely it seems there is one more direction our government may turn.
Hyperinflation could occur if the Federal Reserve is forced by government to buy up treasury bills and bonds in order to lower interest rates. The financial markets would see this action as a threat to their financial well being and begin to dump their holdings of bills and bonds, an action that would raise interest rates. This could in turn lead to the Fed printing up more money to buy those bonds and with this money creation we would inevitably see hyperinflation.

More trouble looms in the near future in the form of 77 million baby boomers that might have the idea that they're entitled to some of that Social Security they have been paying into their entire lives. Some might even be expecting the use of Medicare as well. It seems government has little concern for this matter as nothing has been done to prepare for this enormous financial obligation. This doomsday article highlights the fact that the Social Security program must be reformed in order for it to be functional in the future. The system, which is already running on fumes, will not withstand the demand placed on it with the coming of the baby boomer populace.
The article concludes with the ideas that the U.S. government will neither repay social security nor national debt to those it owes.

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