As such, the federal government must do three things to fix the mess it’s currently in.
First, the government must reduce its liabilities. This means eliminating a large number of federal bureaucracies including, but no limited to the Social Security Administration, the National Credit Union Administration, and the FDIC. These agencies were created by fiat** and can be eliminated in the same manner. This is, in a sense, a form of default. But this is unavoidable. The promises politicians made about these organizations were false, and there was no way they ever could have been true. The American people are idiots for believing that the federal government could guarantee income for everyone in old age, or that it could guarantee everyone’s bank deposits.
Second, the federal government must actually cut spending to be at or below revenue levels. The federal government can no longer afford to live beyond its means. Borrowing is expensive, and as the federal government’s future becomes more uncertain, the cost of borrowing will go up. And if revenue declines while America’s macroeconomic growth stagnates, the amount the federal government needs to borrow will simply increase. Eventually, if left unchecked, servicing the debt will cost more than is collected in taxes, and the federal government will either to default or hyper-inflate the currency to pay it off. When that happens, the federal government is done.
Finally, the government must also eliminate the debt. This means that the federal government must not only stop issuing new debt, but should also buy back the existing debt and retire it. Debt is toxic, and must be eliminated, pure and simple.