Let’s say you are correct and the continued growth in total debt/money must end.
What is the solution?
Allow the house of cards to come crashing down as was happening in 2008?
Banks and brokerages popping left and right, cascade defaults. Return to 600K job losses a month. Falling tax revenue.
Sure, in 2008, FDIC could make the “little guys” hole and we could pump in $700B TARP, plus unemployment, food stamps, stimulus checks…. But we now have double the real national debt that we did just 5 years ago.
The scenario you describe we would have to be slashing UI, Food Stamps, Social Security, Medicare, and pretty much everything else. FDIC would not be able to cover losses.
People unable to sell what they want to sell would be forced to sell what they could sell, meaning crashing commodity (gold, oil, industrial metals, food, etc) prices along with everything else.
With the crashing economy and falling tax receipts, every attempt to cut deficits would cause further falling receipts. At some point, even the $10T in publicly held US Treasuries will be forced to take a big hair cut as is happening with holders of Greek debt.
The government would be forced to raise any tax it could. Property tax, sales tax, income tax, banking tax, tax tax.
Is that what we really want. Complete and total washout, no where to hide, end of the 20th economic model in one, very ugly crash?
Or, is there another way to go about this?
What has caused the need for exploding debt? Trade imbalances, both international and domestic.
What has to change before we can stop living on debt and maybe start repaying some of the debt? We need to attack and reverse the trade imbalances. We need to end free trade and return to a confiscatory tax code that prevents too much money from ending in the hands of too few, funded by unsustainable debt growth for everyone else.
But, we’re SOOOOO far from even beginning to talk about undoing all the financial innovation of the last 50 years. Yeah, you are right. Probably not going to happen.
On another site, someone was talking about the polar bears and how they will be extinct in the wild if we are not off fossil fuels in the next 10 years. My response was, then they will be extinct in the wild because there is simply no way possible for us to get off fossil fuels in less than a decade.
I guess I should apply the same deductive proof to our economy. The house of cards will collapse unless we get off “unsustainable debt growth” in the next few years. To get off “unsustainable debt growth” we need to directly attack and reverse the trade imbalances, both internal and internationally. We can’t even begin to have the conversation about this in our current economic and political environment. Even if we could have the conversation, it would take years to reverse the trend. We do not have years to reverse the trend.
Yeah, we’re doomed.
So, how do you protect yourself from total wipe out where stocks, bonds, commodities all collapse, FDIC insurance isn’t there, US Treasuries take a massive haircut, housing and real estate all crash, civil unrest covers the globe….
Guns, lots of ammo, and a bunker in the mountains? Not going to do any good if a Napoleonic style dictator comes to power, as frequently happens post economic collapse.
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