Granted, he is often a little excitable with regards to the imminence of the sky falling, but in this case, Karl provides mathematical support for his prediction concerning when something similar to the Cypriot action will take place in the USA:
In two years federal medical spending along with Social Security and interest will, on current paths, reach the total of all tax receipts. At the outside the market will realize that Congress will never address the underlying issue with medical care because they have steadfastly refused to do so. At that point we will have become Greece and Cyprus.
For those who say that our banking system is “strong” and “not corrupt unlike Cyprus” may I ask what the record is on money laundering and intentional obfuscation of the truth with regard to firms such as HSBC and Wachovia (both of which were caught laundering enormous amounts of money) and JP Morgan (which was just grilled, along with the regulators, regarding the “London Whale”) and not one person or institution has been indicted and prosecuted?
There is about $20 trillion in US Retirement “assets.” A “small” 10% “one time” tax levy on those assets would fund the US Deficit a couple of years from now, and I will go out on a limb now and predict that exactly that will be done.
It first crossed my mind that this could eventually happen back in 1998, although I can’t remember why, but we were discussing it for one reason or another. I never thought it was necessary, not even in 2008, because I simply didn’t imagine that the financial rulers of the US were crazy enough to continue with their credit expansion even after that clear and present wake-up call.
Two years seems rather on the abrupt side to me, but as I have often observed, these things always take longer to develop than one imagines, and then, when they finally arrive, unfold faster than one can believe.