You hear a lot about European austerity in the news.
When governments make large budget cuts (austerity), it's impossible for the cuts not to have severe, adverse effects on the country's GDP since we're talking about cuts in the hundreds of billions of dollars.
The bigger the cuts, the bigger decline in GDP and therefore there are bigger declines in tax revenue, and the economic problems for the country just keep getting worse and worse.
Our politicians and economists here are telling Americans, with the help of the mainstream media, that we should learn from Europe that cutting government spending during a bad economic time is ridiculous.
But, what they don't tell you is that most of the austerity in Europe is not by choice. The counties have been forced to cut because their credit has dried up.
The truth is that what Americans should have learned from European austerity is that if you allow your government over a long period of time to continue to grow and grow, and to finance the growth with borrowed money, that sooner or later the country will be in big trouble financially. And like with Greece, everyone will eventually feel the pain.
Furthermore, we should have learned that when the problem becomes obvious, which is usually necessary to get the mainstream media and the masses to see it, it will be way too late to do anything about the problem.
Instead of learning from Europe's mistakes we have allowed the wizards on Capitol Hill, who must have magical powers us puny mortals can't even imagine, to borrow and print even more money than they did before, believing it would eventually bring about a solid economic recovery.
The only thing all this printing and borrowing is going to bring about is a collapse in the U.S. bond market (the government bond market in Greece has already collapsed, 10-year yields are over 30 percent).
When that happens there will be no bail out for America. No entity has enough financial capital to bailout America, and that includes China, that communist country over in Asia that has already loaned America over a trillion dollars.
Once the bond market collapses, it will be all over for the U.S. dollar as well. Exactly what happens after that is anybody's guess. But one thing for sure, the standard of living for virtually all Americans will drastically fall and for a very long time.