T Minus 3 Days to Armageddon and the EBT Card System Failure.
After being shutdown for 2 weeks, the government has still not come up with a compromise to reopen the government and what is more frightening is that there is no agreement on the debt ceiling increase. As I wrote in last week’s post, we need to drastically reduce our spending, but we cannot do it overnight. Our government is currently operating on a $1 trillion dollar per year deficit. To suddenly remove that from the economy would destroy the little value left in the dollar and remove 7% of our entire economy. Last years GDP growth was 2.2%. If we suddenly removed 7% of the economy, we would have a contraction of 4.8% and the great depression would be dwarfed by the pain and misery that would ensue. Yes , the pain and misery are surely coming anyway.
Spending could be ratcheted down by 5% per year over the next 6 years to bring our spending in line with our income. That would be unbelievably painful, but we could live through it. If we jerk 30% of government spending out of the economy on Thursday, it is the end of the world as we know it.
House Republicans offered an olive branch to the White House on Saturday in the form of a clean CR and debt ceiling increase that would reopen the government and raise the debt ceiling for 6 weeks with no strings attached. Their only request was that the president sit down and come up with a few things that could get us back on a sustainable spending path. Despite the president’s statements in a press conference stating that he would negotiate if he received a clean CR and debt limit increase, he has moved the goal post. The president is now demanding that conservatives remove the spending cuts brought on by the sequester and raise the debt ceiling with no negotiations.
If, by chance, a man was raised to hate America and put into such a position of power that he could destroy America, he could ask of no better position than the president is now in. Perhaps the most effective terrorist plot imaginable would be to run up $7 trillion in new debt, then refuse to raise the debt ceiling; all the while, blaming your opponent. Maybe Thursday will not be the absolute undoing of our entire financial system, but if there is no resolution by November 1st, severe monetary shortfalls will occur somewhere in federal fiscal obligations. Read last week’s post to look at how federal spending is broken up and speculate where those cuts might be made.
One area significant cuts could be made if we crash into the debt ceiling is food stamps. We just saw a glimpse of what type of chaos that could bring. The Xerox system that operates EBT cards had a major glitch this weekend that caused many stores to not accept EBT cards. The Glitch affected EBT cards in 17 different states. In Springhill, Texas, Walmarts decided to accept EBT cards even though the cards were not showing limits. 2 hours later, their shelves were empty. When the store changed the policy because it was obvious that EBT card holders were abusing the store policy to go ahead and accept the cards, EBT card users left hundreds of full carts in the aisles and the shelves as bare as if locusts had just descended upon them.
Read the full story, not from a back alley conspiracy site, but from the Lublock Texas local NBC affiliate, KCBD channel 11. My new book that just came out last month, American Exit Strategy, has a scene where a nationwide failure of the EBT card system triggers massive riots. The “glitch” could have been a dry run by the government to see what type of problems they would be dealing with if they had to make serious cuts due to the debt ceiling.
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If no agreement is made by Thursday, we could see a serious loss in confidence in the dollar. Since confidence is the only thing propping the fiat US dollar up at present, even the perception that the US could default on any of its obligations could send the value spiraling. Gold and silver are way to insure your wealth and the prices are very low right now. i always use JM Bullion as they have the lowest price over spot. Shop around and you will probably find the same to be true. Use coupon code PR5 to get $5 off any order over $300 at JM Bullion.
Finally, the winner of the Camping Survival.com gear giveaway to celebrate my new book. American Exit Strategy, Book One of The Economic Collapse Chronicles is JC Hunter! (My 6 month old nephew, Marc drew the winner to keep it as impartial as possible.) Thanks to all the contestants for playing.
Happy prepping!
MDG
