Wait long enough and pay off credit card debt | Bemidji Pioneer
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Wait long enough and pay off credit card debt

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Our government is going to provide us with a golden opportunity to pay off our credit card debt with pennies on the dollar. With the federal budget deficit now running in excess of $1.5 trillion this year and increasing, the Obama administration's own 10-year budget plan predicts that the national debt of the U.S. will exceed $25 trillion in 2019. The interest on our national debt will be about $400 billion this year. Using simple math, in 2019, the interest expense on our national debt of $25 trillion at an interest rate of 2 percent will grow to $3 trillion. Interest rates will dramatically increase following an X-rated downgrade of our sovereign debt.

At some total debt level, a tipping point will occur when our government can no longer pay the interest and the debt bomb will explode. You will not have to wait until 2019 for our sovereign debt default. The Federal Reserve is now being forced to partially fund our budget deficit using a scheme called quantitative easing (QE) which is a politically correct way to describe, "Creating Money Out of Thin Air." For example, QE was recently used to buy mortgage-backed securities from banks.

With QE, inflation will gradually build up to a crescendo. The result is a crack-up boom when people realize the dollar is crashing and will frantically spend all their paper money in an attempt to exchange it for something of value. When that happens, credit cards can be paid-off with 154 pre-1982 pennies per pound of copper that were accumulated long before the dollar collapse.

Robert A. Dahlquist

Orange, Calif.

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