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What Will Happen When The USA Defaults On Its Debt?
Now that the previously unthinkable is almost certain to happen in the next couple of years, what will the consequences be for the world?
The famous economist John Maynard Keynes believed that governments should behave in a fiscally responsible manner. When the economy is thriving, governments should set aside excess funds arising from tax revenues so that during economic downturns this money can be available for stimulus packages without the country incurring extra debt. Today, no Western government acts in a fiscally responsible manner. Due to the need in every system of unqualified representative democracy to bribe citizens in exchange for their votes, governments have ignored Keynes’ strictures and incurred vast quantities of debt in both good times and bad.
The beauty of doing this, from the perspective of the political class, is that ordinary people are generally ignorant of all matters of importance and thus the ever-growing mountain of debt is invisible to them. Ordinary people simply vote for what they believe to be more free ice-cream and so the game continues and the debt mountain continues to grow.
This is a very dangerous game, but as politicians care only about the next election the long term danger is…
