subject: The Collapse Of The Dollar [print this page] Now that the dollar was dying, thrift stores didn't offer bargains anymore. The US debt exceeded $50 trillion the year the dollar died, and the deficit was $5 trillion. With stunning rapidity, China and other foreign nations suddenly stopping buying Treasury bills.
Stupid Americans had always assumed that to collapse and conquer us, you would have to field planes more advanced than stealth bombers, troops tougher than marines. In reality, all that was required was a blitzkrieg on the dollar. That is how the American republic died.
Woodrow Wilson backstabbed the republic by creating the income tax and Federal Reserve. FDR shot the republic with his New Deal especially Social Security. LBJ took the chest shot with the Great Society and Medicaid and Medicare. Nixon took the head shot by removing all gold backing from the dollar. China and other nations rolled the bleeding victim off the edge of a building with their final attack on the dollar. . .
The huge annual budget deficit could no longer be funded by issuing T-bills or bonds. No one would buy more T-debts. To eliminate such a large deficit, each American had to have their taxes raised by $10,000, or about 25%. One week they would go to work and find the government had taken an additional 25% out of their check. Either that or cut programs, but no one wanted that, as Social Security, Medicare, and Medicaid accounted for 69% of the Federal Budget. People wanted programs, but not to pay for them. The basic mentality of a stupid 8 year old. Unwilling to pay higher taxes or accept cuts in programs, they rioted, ala Greece and Spain and Italy and other nations decades before in the early 2000s.
Government said screw it, and fired up the printing presses. As most money is not physical, but computer ledger blips, this simply required hitting an enter key and marking up Fed ledgers. One moment there was 10 trillion dollars in circulation, the next there was 13.5 trillion. The 3.5 trillion dollar deficit had been funded by simply printing 3.5 trillion dollars. This meant that prices had to rise 35%. People would pay for the funding via the hidden tax called the inflation tax. They would pay via a tax that was higher prices.
{Prices shot up just over a half percent per week during that first year of hyperinflation. A McDonald's combo meal was $7 at the start of the year, more than $10 by the end. Next year the deficit was around 6 trillion dollars. Government printed money to fund it, once again, and this caused prices to increase about five percent per week the following year.
