Could the United States Federal Government Collapse?

The short answer is "yes." Let's look at a recent example of empire destruction.

In 1985, the Soviet Union started to collapse. They had a gigantic military budget and were bogged down in a war in Afghanistan. Their economy had become stagnant and had significantly diminished. They had international commerce trade deficits. Unemployment was skyrocketing. Oil prices had plummeted. Mikhail Gorbachev instituted "glasnost," or openness, making it easier for dissent to occur. By 1991, many of the 15 "Republics" had openly revolted against the central government. The Soviet Union was bankrupt, and collapse came in 1991 when Boris Yeltsin rose to power. But Yeltsin became president of Russia, not the USSR. The USSR was over after about 70 years, dying at its own hand.

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The USSR was second only to the USA in might and world power. Yet it collapsed under its own weight. Few predicted it, and almost no one in the American government saw it coming.

Could it happen here?

Over the past 30 years, we've had various bubbles that have inflated and then burst. In the 70s, housing inflated and then burst in the wake of the Savings and Loan debacle. In the 80s, junk bonds came and went. Then in the 90s, internet tech stocks floated over the moon, only to crash and burn shortly thereafter. Now, in the new millennium, housing and transportation have imploded, fueled by the banking/lending fiasco occurring right now.

There do not appear to be any more markets to exploit. Easy money has buried the housing and automobile industries. It is ridiculous to think that a return to the poison of easy money will resurrect those industries. Loans like an Interest-only loan, an Adjustable Rate Mortgage or a Zero-down auto loan with big rebates were financial foolishness all along. More of the same is not a cure.

Since 2002, the Bush Administration has spent over a trillion dollars fighting wars in Iraq and Afghanistan, and there is no end in sight.

Our economy is falling into a recession and likely a depression which will make 1929 look mild by comparison. For governments at all levels, that means plummeting tax revenues.

China, Japan and Saudi Arabia hold hundreds of billions in Government bonds. If they redeemed even 5% of their holdings, they would bankrupt the US Federal Government. Yet, there is huge pressure on them to liquidate their holdings so that they do not lose everything when the US finally declares bankruptcy.

The world reserve currency has been the dollar since the end of WWII. Now, some nations are changing from the dollar to a mix of world currencies...a "basket," so to speak...because they fear losing purchasing power as the dollar deflates.

The US Federal Government is printing up TRILLIONS of dollars and throwing those dollars at the perceived problems like never before seen in human history. But it will not work. Destroying the value of our money will not...cannot...fix our economic and political illness.

So, look at the many ways our Federal Government is mirroring the USSR of 1991. The only thing we lack at this time is to see some states begin to resist Federal edicts, and throw off the chains of the Federal Government. Secession is being talked about openly in America once again. When the first state secedes, the end will be near. Remember the words of the Declaration of Independence, that "whenever any form of government becomes destructive..., it is the right of the people to alter it or abolish it, and to institute new Government..."

However, a secession does not have to be the cause. It is just as likely that the states will have to reassert their status as sovereign nations in the aftermath of a Federal bankruptcy.

In my opinion, the demise of the tyrannical United States government will be horrible in its scope, but from it the seeds of liberty will grow anew.

Could the United States Federal Government Collapse?