The US economy will get worse, and permanently so.
Our kids are the first generation in history to expect worse lives than their parents–this is how the economy retracts.
Fact is, we have funded 10 years of war without paying for it–all on debt obligations–which is how one deceives the public into thinking it is “free.” Sorry Obama and Bush – TANSTAAFL.
The expense does not appear on the budget–just the loan service fees do. Every man, woman and child in the US owes more than $30,000, and that’s predicted to rise by 50% in 10 years.
It’s not sustainable because money borrowed for investments is expected to produce a return greater than the amount borrowed: money spent on warfare brings no capital return at all. Two wars, 10+ years each–the holders of our notes–oil emirates, China, and very large pension plans, are getting nervous about our ability to pay. What if the US, like some South American country restructures debt? What if we simply print the cash we need and pay off with dollars worth far less than the dollars we borrowed?
Neither of these scenarios is terribly likely, but if you were a money manager in China, you’d reduce your exposure to dollars. The only currency worse than the dollar is the euro because a generation of quasi-socialist states have made easy lives fo people in Spain, Greece, Portugal, etc. Instead of warfare, they’ve borrowed for the easy life. When your population retires at age 50, either your youth has to be amazingly productive or you population has to have the good grace to drop dead young. If the world moves to the yuan because the Chinese economy is in growth mode while the rest of the capitalist west is in contraction, we’ll first see economic suffering in the US and then the belligerence and the kind of social unrest that led to WW II.
We are already seeing the earliest signs of fascism, the very worst of Tea Partiers. There’s nothing wrong with demanding elected officials actually govern–even Obama got that message, though his own party immediately accused him of selling them out–what is scary about American populism is that it has always been about social control. In our times, that means same sex marriage, abortion, and mandatory military service. Couple that withe 10% unemployment rates that persist for the next five years like a bad sinus condition, and expect torchlight marches.
Stock up on shotguns and canned goods.
dollar$ 