First Argentina, and now the EU-Who will be next?

In reality, we must recognize that the federal government’s growth rate is accelerating and continuing to accelerate under the current administration, while the private sector continues to shrink. So the real question is, “How does the government maintain itself?”

The logical solution is for the government to do what we all have to do, to learn to live within our means. In reality, governments (that is, most politicians) never endorse that approach for multiple reasons, such as getting enough votes to ensure reelection. Also hindering this approach is the fact that US debt has become less attractive to foreign buyers (Source: The Washington Post, April 7, 2010). Therefore, the only option seems to be:

1. Print more money,

2. Generate more income through tax increases, or

3. Find new ways to access our assets.

Let’s see what happened in Argentina to set the background based on the facts. In 1902 Argentina was one of the wealthiest countries in the world. At that time, the United States was the only country close to Argentina in that it was the second strongest economy in the world. Both countries were behind Britain.

In 1916, a new president was elected. The campaign appealed to the middle class and was premised on “fundamental change.” The changes implemented included “compulsory pensions, compulsory health care, and support for low-income housing to stimulate the economy.” These programs have brought about two major changes: (1) the government has taken more control over the economy and (2) new taxes have been assessed to fund government efforts. Not surprisingly, after a while, government payments exceeded taxpayer contributions.

Do you think this is starting to sound like a US qualification program, especially Social Security and Medicare? If you’re not worried yet, read on!

The situation in Argentina only deteriorated under the Peron administration when all rhetoric targets first focused on the “rich” and then expanded to include the “middle class”. Under Juan Peron’s administration, the government expanded rapidly, trade unions grew, and social spending accelerated geometrically. Long after Peron left, the government continued to spend far beyond that means, resulting in “hyperinflation” in 1989.

By 1994, the end result, including all new income taxes, taxes on the wealthy, and VAT, had completely crushed the private sector. In 2002, Argentina experienced an economic collapse very similar to the Great Depression in the United States.

In summary, in 100 years Argentina has fallen into extreme poverty from the second largest in the world and unable to meet its debt.

Think about what happens if the United States follows the same path as Argentina. As reported by the Heritage Foundation on October 31, 2008, the Argentine president “announced plans to seize the country’s private pension fund … to protect Argentines from the global market crisis. A fund foreclosure is needed, but most observers believe that the real motivation is to use the $ 30 billion of seized assets to mitigate her huge debt … the government It crashed. “

If our government adopted the same approach, perhaps more subtly, an IRA account alone would provide access to about $ 4 trillion. Consider the number of new government spending programs, new emperors, and new institutions that that amount can support!

It must be said that asset confiscation is most likely beyond the limits of probability in the United States. Foreclosure of retirement assets probably won’t happen, but eating up our freedom of choice for retirement savings can happen one bit at a time.

Consider the following:

1. The New York Times recently realized that social security has already “beginning to pay more than payroll tax, which is not expected to exceed until 2016, according to the Congressional Budget Office. It’s an important threshold. ”

2. The US Treasury has begun introducing proposals that provide various incentives for directing funds to “government-approved investments.”

3. Based on the conclusion of a study that most Americans save little for retirement to supplement their social security benefits, the current administration has decided to save workers 5% of their income. There are supporters who are proposing to force it. That may not be a bad idea, except that it is further proposed to put these savings directly into a government-run “guaranteed retirement account.” The end result of this proposal will leave you less to control through the IRA. And how do you prevent this account from becoming exactly the same as social security?

I don’t know about you, but there seems to be a bad wind that blows us all the same way as Argentina. Keep your eyes open! Be aware of the first steps that are likely to name a retired emperor of the US government!

As an additional thought, if it has nothing to do with the history of Argentina, take a closer look at the growth of social programs in the European Union over the last 60 years and see where they are now!

The failure timeline seems to be getting shorter. Argentina took 100 years. The EU took only 60 years. How soon will the next country fail financially, and more importantly, will it be us?