What happens if the US government goes bankrupt?

Written by Andrew Henderson
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Reporting from: Bangkok, Thailand

The Thai government’s 38% debt-to-GDP ratio looks like drastic fiscal prudence compared to the nearly 110% in the United States.

For Southeast Asia, Thailand is quite the a rabid spender. Places like Cambodia have been decreasing, rather than increasing, their debt levels. In just three hours, you could be in Hong Kong, where the debt-to-GDP number is barely 3%. And Singapore has no net debt.

One question I get asked is: “What happens when the US government goes bankrupt?”

US government going bankrupt

What happens if the US government goes bankrupt?: Just imagine none of the fiscal malfeasance and attacks on freedom taking place in this building every day, and you’ll feel a lot better.

First of all, what’s to say it’s not already? By any measure the US government would apply to the evil private sector, it is. A close friend of mine used to work for a company that has been put into receivership by a federal judge, despite paying its taxes, its vendors, and its employees.

However, the government was worried the company wouldn’t be able to pay fines the feds are trying to uphold against it. Who cares about creating or keeping good-paying jobs when some three-letter agency needs to steal money from your business? So much for the lie of “job creation” from politicians.

You see, by government standards, nothing they ever do is wrong. Bernie Madoff is a crook who stole billions of dollars from (for the most part) innocent people, using a scheme of paying early investors with later investors’ money.

By any rational measure, Social Security and other government “safety nets” are the same type of Ponzi Scheme. Take money from your own citizens’ paychecks and give it to people who no longer get paychecks. Rinse and repeat until there’s no money left.

The only difference is the government uses a gun to get you to join their Ponzi scheme. At least Bernie Madoff had to use the free-market approach of playing to human greed.

In less than twenty-four hours, we’ll see just what happens when the US government shuts down. Granted, it’s not defaulting on everything yet, but it will give Americans a good glimpse of what happens when the government isn’t working for them.

As someone who lives outside the United States, I don’t have to follow all of the breathless coverage the mainstream media there pumps out. It’s nice to be able to say “Who cares?” and move on to another part of my day. I’ve detached myself from The Land of the Free out of pure convenience.

But here’s what you’ll see when the government shuts down: nothing.

Because the government doesn’t work for you to begin with, you won’t be affected in any significant way. While Obama and his cronies will cry bloody murder and pull the “What about the firefighters” routines that politicians at every level trot out, just look at the services that will be kept and those that will be suspended during the shutdown.

Services that help you, a member of the taxpaying public, will be gone. Services that do nothing for you, like TSA agents groping your crotch at the airport, remain. You’ll even be able to apply for a passport since the fees for that outpace the actual costs of providing them.

Imagine, the government engaging in free enterprise of making a profit. If only they didn’t suck away half of your earnings in taxes, you’d pat them on the back.

Obama’s swan song includes the fact that some 800,000 federal government workers will have their paychecks furloughed. It’s not that they won’t get paid; they’ll just have to wait. Boo-hoo. So what if these people can’t make their mortgage payments? When you work for a criminal enterprise, that’s what happens. Sometimes the bottom falls out.

Nobody is crying that Tony Soprano can’t pay his mortgage after the feds freeze his assets.

The feds are also threatening to cut consular services for overseas Americans like myself. The US government is the only one on earth to tax its citizens no matter where they live, stating that their excellent consular services are the reason they must do so. After all, how could US embassies help Americans notarize a document if they weren’t taxing them? (Read my account of just how horrible these consular services are here.)

My answer to all of it is: go ahead.

If the US government went bankrupt, it would be a bigger, more catastrophic version of what we’re about to see. And from my vantage point, what we’re about to see is reason to pop the champagne and celebrate. Any time you can get away with taking nearly one million federal bureaucrats off the rolls, it’s a happy day.

So what happens if the US government goes bankrupt? More of the same. Perhaps then, TSA workers could be sent packing. Perhaps overseas military bases would have to be closed. Perhaps the US government’s arrogant, world-crushing policy of endless QE would finally come to an end as they had to finally face the music of years of bad decision-making.

People in the US are crying about how they’ll lose this service or that during a government shutdown. An officially bankrupt United States would force tough choices to be made, and I suspect many essential services would have to be taken over by private enterprise. It would be a cleansing experience.

That’s not to say a bankrupt US government wouldn’t have an effect on markets worldwide. The dirty little secret, though, is that the United States is nothing more than a house of cards. There are no fundamentals behind much of anything that goes on there.

Housing boom? Nothing more than a bubble built on easy credit. Dotcom boom? Wall Street greed creating unsustainable exit strategies. The current stock market bubble? Ben Bernanke’s gift to Wall Street built entirely on funny money.

Other places around the world, however, do have fundamentals backing their economies. Yes, the period of cleansing would hit the whole world in many respects, but just like in any other free market, those countries with sustainable plans and well-run governments would weather the storm and come ahead stronger.

Just like every second-tier currency got whacked in the global financial crisis – and then came roaring back once investors remembered just how fragile the US dollar is – you’d see a world that would grow like never before with a weakened US government out of the way.

As for Americans, you have nothing to fear. The government never did anything for you. Just like in the sequester, it will maximize your pain anytime it has to trim its budget. All the while, the ridiculous wars and unsustainable welfare spending will continue.

It’s no different than governments protecting their capital above all else. Historically, militaries have been focused on keeping the capital city well-protected, while putting a lot less effort into watching over the hinterlands. Even the military – the one thing even many libertarians would argue against cutting – looks out for the best interest of the ruling class elites first.

So let the US government go bankrupt. Whether you want to join me abroad now or become a new generation of Boat Person, is up to you.

Andrew Henderson
Last updated: Dec 30, 2019 at 4:38PM

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11 Comments

  1. George Ramos

    Look, the one reason I don’t invest in physical gold in a communist Asian country is BECAUSE they are Communist! They kill who they will, they take what they will. I’m not even a Chinese citizen, my gold would be siezed in a New York minute! I’m sorry, but digging a hole fourty paces south of that old tree is the safest place for your gold/silver.

    • Andrew Henderson

      George, I’d rather store gold in Singapore. The facilities are better compared to Hong Kong’s private vaults which seem a bit flimsy and the staff ill-informed. That said, the United States is merely a confiscatory imperialist nation with better press.

    • Steven

      …? And no Democracy has ever seized it’s citizens gold – right?!
      Ummm – maybe that happened right in the good old US of A.

      • George Ramos

        Correct! No gold or silver coinage has EVER been confiscated or taken in the U.S. if your referring to WWI forcesale of gold, that is just that… Sale. As in people were paid for their gold in order to re’re affirm their countries currency. It sucks sure, but they were compt.

        • Duda

          Telling me what they think gold is worth and forcing me to sell it to them is no different than stealing. They took it so they could inflate the currency to he’ll and give the rights back decades later when the dollar you got for it can’t but hardly any of the gold you owned before. It was stealing!

          • yupy

            youre right i think.. they do try to buy gold from us, convinsing that its getting more and more worthless… so does it mean that dollar is going down soon? i think possibly..

  2. Steven

    The reason the U.S. IS Bankrupt is because “they” don’t understand basic economic principles. They live under the insane assumption that unbridled ‘Capitalism” works and it definitely doesn’t.

    Any college or 1st year student of economics can easily explain to you the principles of an “Economic Good”, and an “Economic Bad” not one person
    in congress has a clue as to how it works, this is obvious if you look at how the US budgets it’s money.

    Economic good: Socialized Health Care System
    Economic bad: Nuclear Weapons, Battleships

    Yet without real Government (governance) money streams to all the
    goods and services that benefit the wealthy citizens agenda’s and
    not that of 99% of the population.

    The Democrats are Capitalists, the Republicans are Capitalists on speed and Red Bull.

  3. Steven

    S&P warning that US might loss its AAA credit rating.
    Does S&P have any credibility anymore, it should have
    long ago cut the US rating – why hasn’t it – well let me see,
    perhaps doing so would mean that it would then cost the
    Government substantially more borrow – and then all the
    rich bastards would be inconvenienced.

    You see the Government in the U.S. is nothing more than
    a good old boys club, rich insiders lining their own pockets
    with the money of hard working Americans, their is no
    fiscal restraint, because they don’t want to govern they
    want to loot, and this is why the US Government is Bankrupt.

    • Andrew Henderson

      Thanks for the comment, Steven.

  4. Marcus

    That is why I follow your website so I can learn how to get the F***K out of here I have bank accounts in China and will open one in Singapore soon. I should be out of this country in the next 3 years max and after I attend the event in Vegas I will know more ………………providing the NWO does not take over by then.

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