There is No Way Out

In the care of Detroit, what made them go bankrupt? They couldn't write the cheque. That’s essentially what happened. They ran out of money, and they had to declare bankruptcy. They didn't have a choice.

In the case of the United States, they can keep writing cheques because they can just print money. But it’s when you have to keep printing more, and more, and more. You know, if your obligations, because some of these obligations become cash obligations in due course, because as people retire and as more people over 65 get Medicare and Medicaid, there’s a real cost to this stuff. And in order to write that kind of cheque, you have to print more and more money all the time, because it just goes onto the budget instead of not being on the budget.

So, that day is going to come when your deficit goes from a trillion to a trillion and a half, to two trillion, to two and a half trillion. Then everybody’s going to know this is ridiculous, and try to finance it in the market, i.e. if you asked real bond holders to buy those things, what would interest rates be when you have such a low grade credit when looked at in the true light of day. I mean the interest rates could be substantial, which would just cause an even worse deficit.

There’s no way out, as far as I'm concerned. We’re all just living through it here, just as we did with Detroit. There was no way out. There’s no way out for the US, in my mind, and many other governments and states and cities and the whole bunch. I don’t know the day, but I know it’s going to happen.