Quote from Misthos:
There's no point in trying to find a political solution. The underlying issue is that we have a fiat debt-based monetary system.
Government overspending, Pension and entitlement unsustainability, corporate/banking malfeasance, global trade imbalances, global financial imbalances... are all but symptoms of the current monetary system.
If we have a monetary system that can easily expand, then human nature being what it is, we will overspend, overpromise, and overspeculate. We did. Period.
Bush and Obama did not cut spending because the economic system would collapse on their watch. No one will cut spending voluntarily and allow such a situation to occur. If I were President, I would do the same thing and hope the debt bomb goes off on the next guy's watch. Be honest with yourself... you would too.
So where does that lead us? An eventually de facto default or total collapse. We can debate solutions all we want, my thinking is it's pointless.
Just prepare for yourself and your own for when the great reset hits. You don't want to miss out on opportunities while the system, however comatose, continues, but at the same time, prepare and invest accordingly:
Have some silver and gold coins as well as a stash of cash on hand.
Belong to a tight community network of friends and family that are nearby - and I mean walking distance. Get to know your neighbors, you will need them and they will need you in ways you cannot imagine today.
Be prepared for self defense, there may not be enough cops/national guard where you live to protect you from others that are not prepared.
Have access to arable land, and a means of getting there in case of fuel shortages. Pick up gardening, it's a great and rewarding hobby and beats going to the gym. Your sweat will produce something more valuable than any treadmill could.
The "transition" for lack of a better word, could be gradual, or quick, or more likely, at different times, both.
Yeah, I know, this is a trading/economic forum. But sometimes, the obvious needs to be pointed out.
And for those that laugh at my thoughts: I am glad you do. I am glad that most won't believe me. You know why? The system is dead and the only thing propping it up is ignorance which I also describe as "faith." But even ignorance has limits, but nonetheless, I am happy that the majority's ignorance is giving me extra time to invest and prepare accordingly.
Great post.
It really is different this time.
Post WW2 America grew out of similar debt by virtue of:
1) A huge manufacturing base.
2) Huge foreign demand for US products
3) A balanced Federal Budget
4) High taxes.
America has NONE of that. The oft-heralded "jobless recovery" is just another iceberg-torn hole in the Titanic (8 Million jobs we'll never see again is somehow "bullish" in Goldilocks Country)
Further, we balance the budget or raise taxes dramatically, and this ponzi economy will collapse in a heartbeat.
Others point to Japans lost decade for solace. Japan substituted domestic demand with foreign buyers - America, Europe and China - effectively propping employment and GDP with neomercantile policies.
When America goes down, there's no economy big enough to "buy our exports". The favorite slogan of CNBC cheerleaders.
Come to think of it, America, Europe and Japan are in the same boat. The top 3 Industrial powers on earth.
Unfunded entitlements aren't even on the radar. Our national and private sector debt is so huge, manufacturing base so small, and GDP so overweight in leveraged-speculative industries (FIRE), this ship is going down HARD.
GW put 3.1 Trillion on the National Debt.
Obama put on another 5.5 Trillion, by year-end (2010 est).
For the last 5-8 years, the only thing that's propped up this ponzi economy is deficit spending. ~6-8% of GDP is deficit spending. Pull that, and we collapse. Continue this borrow-and-spend madness, and we collapse.
We're at the point where if we did the right thing tomorrow, slashed programs, entitlements, balanced the books, and marginally increased interest rates, we'd have a Great Depression the day after tomorrow. Stock market, real estate, deficits, everything would blow the fuck up.
People don't get it. This is it. Our economy is nothing but smoke and mirrors. Debt piled on debt all factored into "GDP". Spending borrowed money that never gets paid back is not Gross Domestic Product. Ask Greece.
A farm with livestock, on water, surrounded by like-minded friends and family, with guns, ammo, food, bullion and rations. God Willing, I'll be ready to go this year.
One last point, Misthos is right about the confidence game (and nearly everything else). The sooner money pulls from T-Bills and greenbacks, the sooner comes Judgment day. The market is always slow to react. But when it does, it's over.
