As the Washington, D.C., establishment and its acolytes in the U.S. mainstream press continue to celebrate the $4 trillion in new federal spending for the coronavirus crisis, Argentina has a sobering message for the American people.
According to CNBC, the Argentine government is on the brink of defaulting on payment of its debt. Last month, the government submitted a proposal to restructure its debt. The proposal was rejected by creditors. If no deal is reached, default is a virtual certainty.
CNBC writes:
In 2001, Argentina defaulted on around $100 billion of debt. It triggered the worst economic crisis in the country’s history and resulted in millions of middle-class citizens falling into poverty….
What the article fails to point out is something that might interest lots of Americans. To get its desperate hands on money in the 2001 debt crisis, the Argentine government seized private pensions and replaced the money with government bonds — bonds whose value would be subject to being wiped out with the government’s inflationary printing press policies.
Before the coronavirus crisis, the U.S. government had a debt of some $23 trillion. That amounts to around $200,000 per American taxpayer. The government was spending $1 trillion more than what it was bringing in with taxes. That means the debt would go up to $24 trillion.
With the $4 trillion they are spending on the coronavirus crisis, they are now running up the debt to $28 trillion. With the reduction in tax revenues from people not working during the shutdown, that debt could rise another trillion— to $29 trillion.
Oh, it’s probably worth pointing out that the federal government’s debt doesn’t include payments for tax-funded payments for Social Security, Medicare, Medicaid, and other welfare-state programs.
Meanwhile, the D.C. establishment and the mainstream press say, “Don’t worry. Be happy. Be thankful that you have a federal government that cares for you and is wiling to give you free money.”
But it’s not free. Everyone is paying for it, either in income taxes, debt, or monetary debasement (i.e., the indirect tax that of Federal Reserve inflation of the money supply).
When the crunch comes, make no mistake about it: You will see a viciousness among federal officials that will match those of federal officials in the 1930s.
Back then, when federal officials desperately needed money, they just ordered the American people to deliver their gold coins to the federal government, on pain of a felony conviction and fine if they failed or refused to do so.
Keep in mind that gold coins and silver coins were the official money of the United States. That’s what the Constitution had established. That had been America’s monetary system for more than 100 years. And with one morally abominable order, it all came to an end because U.S. officials desperately needed money.
Oh sure, they gave Americans government bonds in return, but those bonds quickly lost value, especially in relationship to the gold coins that had been seized.
Where is the ripe tomato this time around? How about those 401(k)s? That’s what the Argentine government did. They just seized those ripe tomatoes and gave people government bonds whose value was plummeting in return. No one should be surprised that when the day of reckoning comes, U.S. officials do the same thing.
But just continue to be happy. Don’t worry. The federal government is here to help you. Just look at all that free money it is handling out.
The post Argentina’s Default Points Toward the U.S. Future appeared first on The Future of Freedom Foundation.
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