I believe that the larger a system/market is, the harder it becomes to have a secular change that is defined by a single direction. Translation, things do not go straight down or straight up. We are not going to have a system collapse all at once. Just like anything else, lower lows and lower highs. Our currency for instance just doesn’t nose dive all at once. It becomes more worthless in fits and starts, over a period of many years. I also believe that for a period of time, the worse things get that we will be told the better they are.
If you believe a system that operates with a govt in severe debt that cannot help but spend more then it has, then is consistently forced to service its debt by selling that debt to other countries, and now services debt by printing its own money and buying its own securities, and it has also provided money to other countries, and has municipalities and states within it that are essentially insolvent, and buys the majority of goods from those same countries that are it’s creditors and has a shriveled manufacturing base, and has the majority of it’s large companies manufacture and produce overseas… well if you think that “this” system is A-OK because of increased consumer spending, and/or less Craigslist postings…. well I guess we have quite differing views.
Those who feel we can simply press a reset button and default on our debt are as ostrich like as anyone else. Follow the trail… if we do default on our debt then what? Who will be our creditor? How can our govt continue to provide more services, entitlements, even universal healthcare, when nobody will credit us? Any ideas? Who will pay to build the superdeeduper high tech railroads that will save our economy?
Yes I hear the crickets chirping…
The answer is nobody. We will have to bite the bullet and live within our means.
This doesn’t mean that everyone will be broke. This doesn’t mean lots and lots of engineers, attorneys, biotech guys, service workers, and DINK families in San Diego will not be buying in Carmel Valley and Encinitas. However it does mean there will be fairly major changes that are most probably defined by much higher taxes at both state and federal levels and lower standards of services by those same govt entities.
Doesn’t seem that hard to figure out and it isn’t gonna happen tomorrow or the next day. Yet to think we will simply push our way out via revenue increases or some other entity coming to our rescue please tell me who or what will do that.
