I’d also like to add some ‘what not to do’:

1) Don’t feel hopeless or give up. Even if things get really bad, they will stabilize someday. The challenge is to make it through those years, and we can all do it. You are stronger than you think.

2) Don’t act like Washington and start a wild spending spree, or continue one if you already did. Even if you think hyperinflation is coming to wipe out your debts, we cannot say how long it might take to come, and we could even see bouts of deflation first. Stabilizing your personal finances is extremely important right now.

3) Don’t buy a survival cabin in the woods somewhere. It won’t help you. You’re safer in your current home than anywhere else — especially if you know your neighbors. One of the most strangely wonderful things about dark times is that people are at their best when things are at their worst, and if things do get bad, you can bet you will come to be friendly with your neighbors if you aren’t already.

I find myself in an unfortunate, pessimistic position. So many people don’t understand the reality of our situation. I count myself as one of the more informed, and I do not see an easy way out of our predicament. We have a very small window of opportunity to address our situation, and work through it in a controlled manner. It will require serious adjustments to our taxes and our spending that I don’t believe our elected officials are prepared to make. If we don’t take corrective action, and continue on the current path, hyper-inflation will happen, but…. after a time our economic situation will normalize. I do see hyper-inflation as one way out of this situation, but I see it as the worst option. Hyper-inflation is really the cruelest tax there is, it hurts the people on a fixed income the worst. I am trying to be optimistic; I am trying to educate people on the truth of the matter. I pray that enough Americans will take the time to really understand the situation. I am not a macroeconomics professor, but the way I see it….we need more revenue and we need to cut our spending. I am not sure what the balance is but if we want to head off hyper-inflation and a depression, we need to act quickly.

Holly

The 2008 Census lists about 117 million households, but somewhere around 48 million of those have a household income below $40,000 and will be contributing little or nothing to paying for government services or the debt. Instead, if you prefer calculations based on individual citizens, the Census lists about 240 million citizens above 15 years old. About 70 million of those people have an income $40,000 or above. If you evenly divided $25 trillion by 70 million, that’s $357,000 per person making $40,000 or above. $357,000 to a person who made $45,000 a year would be a staggering debt that could not easily be paid — at 5% interest it would run almost $2,000 a month to pay back in 30 years, which would be most of that person’s after tax income. At 10% interest, it would take more than $3,000 a month. Interest rates have certainly run higher than 10% in recent history.

If you ran existing government on today’s tax rates, and then apportioned special taxes for the $25 trillion debt to invididuals making $100,000 or above, the debt would be almost $2 million per person. At 5% interest with 30 year repayment, that would be more than $10,000 a month. Again, a staggering debt that can’t be paid. If you move up to families making above $200,000, the numbers get even worse.

The only way out of this crisis is going to be extreme inflation, which will wipe out debts. It will also wipe out life savings, stock markets, businesses and even lives.

I strongly recommend going to the official records as often as you can and interpret for yourself what you are reading.