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Friday, October 10, 2008

Cut military spending and scrap tax cuts? Force majeure and debt repudiation?


Reportedly, the United States has borrowed a lot of money.

One possibility is that the USA will cut spending on the military and end tax breaks for the rich.

Another possibility is that the USA will not pay back what it has borrowed.

US National Debt

Al Martin has written Economic Collapse of 2008 An Inside Job - 2

According to Martin:

If the planet can no longer generate any more liquidity to lend to the United States, one of three things have to happen:

A) There has to be a sudden and dramatic reduction in federal spending.

There are only two places that can come from.

There would have to be an immediate $100-billion cut in defense spending, which would end any hopes the Republicans had of getting into office for years to come because it would destroy any confidence the NFWCs (Naïve Flag Waving Crowd) had in them.

Or you would have to scrap the multi-trillion-dollar Bushonian tax cuts for the Republican rich, something that's equally unpalatable.

B) The other option, B, as Paul O'Neill mentioned, is a dramatic increase in the rate of federal income taxation from the current nominal rate of 28% to 65%, which is what the Treasury Department estimated would be required post-2009 to provide the U.S. Treasury with sufficient revenues to continue to service debt.

C) The third option, or C, becomes the declaration of a force majeure on credit service of U.S. Treasury debt by the United States Treasury, which is tantamount and would be accurately construed as de facto debt repudiation by the United States of America.

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