almost four trillion dollars worth every year

Uncle Sam's income is a little over two trillion dollars per year

to make up the difference the deficit he does what most Americans do

he borrows money, When uncle sam picks up a loan

he calls it a bond, Bonds can be held by banks

investors or even foreign governments uncle sam has to promise to pay interest

on these bonds just as you do on any loan you take out

ever think about paying your mortgage with your credit card?

that's exactly what Uncle Sam does he takes out new loans

new bonds so that he can make payments on the old ones

all those loans and especially over interest adds up

right now uncle sam ows about

14 trillion dollars to put that in perspective $14 trillion

is about the same as the national GDP the total value of all the goods and

services

produced by the American economy in an entire year it's such a huge amount of

money

the local same starting to run out of people to borrow from and he's having

trouble

just paying the interest on his loans the obvious

solution would be to either cut spending or increase taxes

but if it cut spending the people that he's spending money on

would complain that they don't have money to spend and that he was hurting

the economy

if he tried to raise taxes enough to close

this gap not only would people definitely have less money to spend

he probably have riots on a sense so

Uncle Sam chooses the easy way to make money just make it

he calls up the Federal Reserve which is our central bank

and like magic dollars are created and deposited in banks

all around america the problem is that the more something there is

the less it's worth same goes for the US dollar

the more dollars there are the less each one will buy

that's why commodities like gasoline

food and gold become more expensive when uncle Sam does his money making magic

the commodities aren't really worth more your money

is just worth less that's called

inflation remember the foreign governments

that lent money to uncle sam when they lent money to the american government

something interesting happened it made the us look richer

in their countries look poorer

when a country looks poor compared to america one dollar our money

buys a lot of their money so they can pay their workers

only a few pennies a day with such low labor costs

they can sell their products in america for lower prices

than any American manufacturer can I'll the easiest way for american companies

to compete

is to move their factories overseas and pay their workers

a few pennies a day to you this contributes to a recession

Americans lose their jobs stop paying taxes

and start collecting government benefits like Medicaid

and unemployment this means that Uncle Sam has even less income

and even more expenses at the same time the people who still have jobs

are desperate to keep them so they tend to do more work

but not to get paid anymore when your dollars are worth less

and you're not earning more them that's called stagflation

and this is why Uncle Sam's in a catch-22

he can't raise taxes or cut spending without making the recession worse

and he can't have the Federal Reserve create more money

without making inflation worse for now

he can keep borrowing money but since you can't even pay

the interest on the loans he already has it just makes his inevitable bankruptcy

even worse whether it's in two months or two years

the day will come when Uncle Sam can no longer pay his bills

when that happens the bank's investors

and foreign governments who are counting on that money will be able to pay their

bills

you see just like Uncle Sam governments

banks and corporations don't actually have much money

mostly all they have is debt to each other

if one late in the day chain stops paying defaults

the whole thing falls apart if investors can't pay their bills

corporations will be able to pay their employees if banks

can't pay their bills you'll be able to take out a loan

use a credit card or even withdraw your savings

if foreign governments can't pay their bills their own banks and corporations

will have the same problems that's called

a Global Economic Collapse

it's never happened before so nobody really knows

how bad it will be how long it will last or even

how will eventually get out a bit the house of cards

has already been built there's no painless way to dismantle it now

all we can do is to educate each other but what's actually going on

and to prepare for what may be very extraordinary

circumstances