It was recently reported that the national debt has soared past an astounding $22 trillion. That’s more than $180,000 per person currently living in the United States. It’s a figure that currently is on track to double in the next 30 years. Consider the future as well. The bulk of the population will soon be taking Social Security and Medicare.
This amount of debt looks unfixable. The rate at which we’re accumulating debt is far faster than the growth of our GDP. To raise taxes to put a dent into this massive sum would be like asking all Americans to get another mortgage. By 2050, the U.S. will be paying more towards interest than national defense and health care.
The politicians act as if they care. Every campaign starts with the promise of fixing the national debt. Yet, at every turn, politicians and presidents alike only end up spending more and more. As the economy ebbs and flows, entitlement programs do so as well. It could very well happen that we see all entitlement programs run dry in the next decade. That would send the economy into a depression of mammoth proportions.
Would a Soft Default Help the Debt Problem?
We’ve been dug into a hole by our leaders, Republicans, Democrats, and Independents alike. Dramatically increasing taxes will not do the trick. There simply isn’t enough wealth out there to cover $22 trillion. Many believe that a soft default on our debt is the best way out of this mess. Not a hardcore default where the government refuses to pay anything, either.
Before we explain what a soft default looks like, just know ahead of time it doesn’t come without drawbacks. It would hurt a lot of people, especially if money was saved in the form of bonds and savings accounts. It might not even be a moral way to conquer the debt. But it is a possibility that wouldn’t send the world economy into a tailspin.
The U.S. Treasury could pin the dollar to any number of commodities. Those commodities would most likely be gold, oil, silver, or others we have in abundance. By giving a bit of a weak valuation, like $10,000 per ounce of gold (dramatically higher than the price today), the debt could be paid down.
A Default is Going to Happen
While a soft default is going to hurt some people, it’s better than the alternative. At some point, something will have to break. The amount of debt we currently have, much less in the next decade or two, is unsustainable. We simply will never be able to catch up to it. If we don’t take a drastic measure now, it will turn into a catastrophe later.
https://financialhelpers.com/white-house-proposes-caps-on-student-loan-borrowing/
The timing would be perfect to pull this off. Unemployment is at a historical low and our economy is growing. Doing a soft default now would solve our debt problem for the future while having the least amount of impact. If it will happen, the answer is most likely “no”. Hopefully, the people who got us into this mess will come up with a solution soon.
