Notice that entitlements take up the biggest piece of the pie. The government spends too much money ... on US.

So the first thing to do is ask yourself, a) do the American people still value self-reliance? or b) do they want to keep the "free" shit going? Recent polls show that a vast majority of Americans do not want to cut entitlements.

It hurts to admit, but I say b.

So the next thing to ask is, what happens if the people and the politicans they elect will not cut spending? How will they keep paying these benefits? There are a couple of options:

1) Raise taxes. Not really feasible right now, because unemployment is so high. You can raise taxes on people who are doing well, but when most people aren't doing well you quickly find there isn't much left to tax.

2) Print the money. This is what we've been doing, leveraging on the fact that we have the world's reserve currency.

Most Americans are opposed to tax increases, and since (except for the unemployed) their lives are still relatively comfortable, they don't see anything wrong with Option #2.

So my guess is we will choose Option #2.

And it's completely absurd - I fully expect the U.S. dollar to lose its status as the world's reserve currency - if not now, then certainly by the end of next year.

The best thing (in my view) to do at this point is read about what happened to people in other countries who experienced this, because it has happened in other countries in the past. See if (with the benefit of hindsight) there was anything those people could have done to prepare and lessen the pain, and then start doing those things.

Pirate Jo and I are in agreement about the possible loss of the dollar as a worldwide standard - but marketers know that if American food production is crippled, literally billions will starve.

This will keep the dollar just long enough for others to figure out how to replace it.

This hasn't anything to do with reality. The dollar, as practiced, is fiction anyway, and what's killing us is that our government won't act as though it has a definition and the public is flatly and simply selfish.

Nick Gillespie's already made this point better than I ever could. Cut entitlements for everyone but the indigent. Abandon Medicare, reduce Medicaid, and stop giving Social Security to the non-indigent. There is no reason to run debts to be paid by Americans who have not yet been born, all to finance the retirement of senior citizens who are the richest, healthiest, longest-living seniors to ever live.

I can't wait to see what happens. The Baby Boomers will be old, entitled, and a demographically dominant voting block---but there will be no money. We will be living in interesting times.

Despite the coming US fiscal difficulties, there is no chance of the US dollar losing it's place as the world's reserve currency in the short to medium term---because nothing else can take it's place. It's much more likely that the Euro will collapse. The Yen is still a regional currency. The Chinese do not let their currency float. The British Pound has the pedigree and stability, but it's the currency of a relatively small economy.

But, Tyler - what can it possibly be worth when our Congress will not control it properly?

American food production is already crippled due to rising oil prices. The machinery takes a lot of energy to run. And what do we grow? Corn! Not corn that we eat, but corn that is processed, which takes more energy.

The Euro may collapse before the dollar does, but the dollar and the Euro are both fiat currencies. For every Greece they have, we have a California.

Other countries (including Russia, China, France, and Iran) are looking at ways to create a world reserve currency that is based upon a basket of different world currencies and commodities. This actually seems wise to me, since the U.S. dollar is subject to the whims of a bunch of spoiled rich people who don't know how to live within their means.

> what can it possibly be worth when our Congress
> will not control it properly?

Except every other country in the world is devaluing its currency just as quickly or even more quickly.

Yeah, the dollar may be in sad shape, but all of the alternatives are even worse. If the dollar is fiction, then the euro is fantasy. The pound sterling just isn't backed by a large enough economy; the yen has never recovered from the Japanese '90s collapse, and ultimately the market is not going to trust Chinese and Russian currency because everyone knows that those currencies are manipulated by their governments.

In a way, it's kind of unfortunate, because if there were a real threat of the dollar being displaced, it would put more pressure on the federal government to straighten up its act.

Tyler wrote: "The Baby Boomers will be old, entitled, and a demographically dominant voting block---but there will be no money. " Yeah, I'm worried about that too. This is a generation that has lived their entire lives hearing the lockbox myth repeated as gospel, over and over again. Adjusting to the truth is going to be a difficult journey, and a lot of them won't make it.

ultimately the market is not going to trust Chinese and Russian currency because everyone knows that those currencies are manipulated by their governments

Is there any intelligent person left standing who does not realize the dollar is manipulated the same way?

Adjusting to the truth is going to be a difficult journey, and a lot of them won't make it.

Amen, my friend, amen. Normalcy bias, it's called.

Thanks, Cousin Dave.

Pirate Jo, there are just too many financial transactions happening in the dollar on any given day. The US has the most developed markets in the world. People usually think of stock exchanges, but there are massive markets in government and corporate bonds, commodity and financial futures, foreign exchange, trade finance and hedging, payment and wires, all involving US dollars. Even if a merchant did not want to accept payment in USD, doing so is going to have the lowest transactional cost and be the easiest to hedge against the local currency. There is just too much inertia in such a well developed system for it to be easily replaced

I would rather abolish Soc. Security, Medicare and Medicaid outright, rather than save it for the "indigent." Why? Because, even though I find people despicable sometimes, I don't believe most of them, including myself, will ignore the resulting pool of tens of millions of poor people.

I, for one, would be taking care of my mother (I already provide for her to some extent) and purchasing her health insurance with my own money, but then again, I think...that is...The Way It's Supposed to Be. All I ask is to replace FICA, Medicare, and the other taxes with a simple 10 to 15 percent flat tax, so that I'll actually have enough money to do things The Way It's Supposed to Be.

You know, 20 years ago, I might have LMAO at this exchange of thoughts on this thread. Not any more.

We are sooooo scrooooowed.

I'm worried that when the collapse comes that too many useless people will make it through to just restart the cycle.

There is no reason to run debts to be paid by Americans who have not yet been born, all to finance the retirement of senior citizens who are the richest, healthiest, longest-living seniors to ever live.

I can't wait to see what happens. The Baby Boomers will be old, entitled, and a demographically dominant voting block---but there will be no money. We will be living in interesting times.

Posted by: Tyler

Capricorn 29's. Born 2244. Enter the Carousel. This is the time of renewal.

Lastday, Capricorn 29's. Year of the City: 2274. Carousel begins.

"Pirate Jo, there are just too many financial transactions happening in the dollar on any given day."

Wow. I just read, "too big to fail".

That's why Rome is still in charge, and coins of the realm are the standard. There are just too many transactions based on Roman financial policy.

All money is fiction, the definition of which is mutually agreed upon. It doesn't really matter what you call the markers. It's the behavior of nations which...

War will be the solution to this, and not the little skirmish going on now.

On CNN there is a story about NJ governor Chris Christie - he (along with Mitch Daniels) says we must raise the Social Security age.

Comments from readers include the following:

"How come Republicans only want the Middle-class to sacrifice? Raise the social security age? Fine, then TAX the RICH!"

"This will be the death kneel of the Republican Party. Are the Republicans really willing to tell the MILLIONS of people in their 30s, 40s, and 50s, "So sorry. You just have to wait to get what you have payed for.". No way! As a woman who is 44, I will tell you that it won't fly. PERIOD!"

"WRONG AGAIN IDIOT!!! Ending the WELFARE TAX CUTS for the FILTHY RICH, OIL COMPANIES and Corporations that SEND OUR JOBS OVERSEES is the ROOT OF OUR PROBLEMS. The GOP FIGHT TOOTH AND NAIL for their CORPORATE MASTERS BUT DON'T GIVE A DAMN about the ELDERLY and the MIDDLE CLASS that is the BACKBONE to our once great country."

What this shows is that the people of America are not mentally prepared to face the truth. Their sense of entitlement outweighs their grasp of basic math. And what THAT means is that the U.S. government, in partnership with the Federal Reserve, will continue to try to print their way out of this thing.

We are NOT too big to fail. In fact, at the rate government debt has grown, it has become too big not to.

I've made this proposal before and will make it again: I will opt out of receiving any social security if

a) the government writes me a check for all of my contributions and the matching contributes of my employers WITHOUT interest [they could even require that I put it my existing IRA with huge early withdraw penalties]

b) my current and future employers are required to match my 401k contributions dollar for dollar up to 6%

c) my company be allowed to match an additional 6%

d) the maximum 401k contribution I can make is raised to 20% of my gross income.

Joe, it would be nice if you actually had a choice in this matter.

@Joe:

a: The government cannot AFFORD to pay you back for your contributions. Period. There's no money left.

b: The economy sucks to much for companies to guarantee a 6 percent match for your 401(k) contributions.

c: You company should be allowed to match however much addtional contribution money they please.

d: Your maximum contribution should be 100 percent of gross. (Yes, that's not practical, but it is pro-liberty.)

@Pirate Joe: here's an idea: anybody who whines about "welfare tax subsidies to corporations" or other nonsense should have their voter registrations canceled. (Yes, I know that's unconstitutional, but I can dream, can't I?)

I would do it a simple way -- unless you pay more than $0.01 more in income tax than you take from the government largesse -- you don't have the right to vote.

That will significantly change the voting pool, and the ones waiting for the ObamaCash have a simple choice -- work and vote or suck off society and you have no right to vote.

Wish they'd define "entitlement programs" for us, I looked around the page but didn't see how they were defining it.

Entitlement programs are mainly Medicare, Social Security, Medicaid, and unemployment benefits. There are a few others, but that covers most of it.