Posted on 06/15/2011 12:53:57 AM PDT by danielmryan
For the last few days, we’ve been having an important discussion about the magnitude of the economic challenges in the west; if you didn’t read yesterday’s letter, I really encourage you to do so before proceeding because it’s important to understand why the west has truly passed the point of no return.
Simply put, the United States and much of Europe are borrowing an extraordinary amount of money now just to pay interest on the money they’ve already borrowed. They cannot even self-fund their mandatory entitlement programs without going into the hole, and their options are limited:
Option 1: Continue borrowing, keep the party going.
As long as the government CAN do this, they WILL do this. Regardless of their intentions, though, more debt only worsens the situation, creating higher borrowing costs in the long run, and even more debt. As this happens, the pool of buyers begins to dry up, especially from overseas.
Option 2: Inflation
The more buyers stop purchasing Treasury securities, the more the Federal Reserve will mop up the excess liquidity. In doing so, the Fed essentially conjures up money and loans it to the government.
No matter what the government monkey statistics say, this is inflationary, plain and simple. The more money they print, the greater the level of inflation in the long-term. Meanwhile, as foreigners simultaneously reduce their US dollar holdings, this inflation will become more acutely felt in the US.
Option 3: Austerity
There’s going to come a time when the US government is forced to face its economic reality and make some incredibly deep cuts that would be felt across society, from Wall Street and the military industrial complex to project housing on the other side of the tracks.
Option 4: Default
Eventually, the debt burden is simply going to be too much, and the most obvious solution will be to default. Politicians will make China out to be the enemy and they will probably invent a war just to have an excuse to default on Chinese owned debt. Americans will wave the flag and celebrate defaulting on their enemies.
Option 5: Economic Cannibalism
In the best traditions of Atlas Shrugged, the government will continue its persecution of the productive class– professionals, investors, entrepreneurs, and skilled workers. Existing taxes will rise, new taxes will be created, trade barriers will be enacted, and a maze of cost prohibitive regulations will be passed.
The first option (keeping the party going) is what has been happening for years. Politicians make small concessions to show they’re “serious” about fiscal discipline, cutting laughably small programs while dumping hundreds of billions of dollars into wars and entitlement programs.
The worse the debt situation becomes, though, the higher the borrowing costs become, and the worse the debt situation becomes. It’s not an enviable position. Existing lenders will continue backing away from the US Treasury market, giving option 1 a half-life measured in months at best.
In the longer term, only options 2-5 remain: inflation, austerity, default, and cannibalism. Each of these remaining options will shake the financial system to its core. More importantly, each of these has the power to create widespread social upheaval....
revolution.
“This fellow sells advice on how to expatriate”
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I became an expat in 2004, and have not regretted it for one moment.
Economic Collapse is not coming anytime soon. All reports of impending doom are overrated. The sky is not falling, therefore the point of this article is moot.
What would happen if an Asteroid hit the earth? Probably more likely in our lifetimes than an American Weimar Republic.
You made that flat assertion. Care to back it up with any reasoning why one can't happen?
/johnny
Prepare for the worst hope for the best.
What would happen if the article is correct, if it is wrong.
If one were to prepare for the worst scenario and nothing happens would have network of like friend, guns and food.
If the worst does not happen one would have guns like minded friends and food.
Win Win
Curious. Your response is “out of step” with your personal page. Did you leave your browser open and someone else replied?
In His last trip with the Apostles Jesus took them to the Mount of Olives where a place called the Herodian could be seen. He sat them down. Did they recall just a few days earlier He had told them, “If you have the faith of a seed of mustard you can cause mountains (like that one) to go away.” We have the ability to make gummint irrelevant. We currently shape our lives as if the gummint was the most important thing. Stop. Start shaping your life as if gummint was irrelevant. A huge, whining, spoiled brat that can only continue to misbehave because we give it the money to do so. Stop.
That profile was over a year old. That’s not who I am anymore. I guess you can say that I’ve given up on being worried about everything after nothing disastrous happened. I’m disillusioned by the fear-mongering that I was once caught up in. I’m probably not even as political anymore, but certainly more philosophical. I am beginning to loathe the Internet and it’s ability to spread fear at an exponential rate. I’ve changed and will write a new profile later. I’m more of a techno-cynic these days than anything.
You are right, it is out of step with my beliefs now.
Take care.
What? Jesus was a Libertarian? haha...
The most likely outcome isn’t the extreme, I know that much. That’s all I was saying. Just suggesting that people should get a grip and not believe every doomsday narrative on the Internet like it’s a given. Like this article is doing. The whole ‘We’re doomed’ byline has gotten old, especially after the day of reckoning never came for like 2 or 3 years. It had it’s appeal at first, but it’s worn out now. I, for one, am tired of seeing it. Cheers.
Expect more of this and expect it to get uglier. Far uglier. White women have ended up in intensive care and beaten nearly to death when these vermin emerge from a subway station like a swarm of angry black hornets.
The press dares not breath a word about this story. Calls these bands of marauding black thugs, 'youths' or simply, 'flash mobs'.
In fact, the press is complicit in hiding these facts from teh population at large who by and large know almost nothing about what happened on Memorial Day across the nation and happens more and more often... even in non-ghetto areas.
Instead of reporting the news, the liberal elites scold us for actually wanting to know about the menace that threatens us. Then they shut down any discussion on the matter. Just see what they did in Chicago:
No Reporting Race Incidents. NO DISCUSSION!: We Liberal elites know what is good for you racists plebes!
Where did you go and how did you do it?
I hope you're right but isn't it best to err on the side of caution and prepare for the worst?
“Where did you go and how did you do it? “
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I started out in central Europe, having a good life as a private tutor of English conversation.
I know, that sounds a bit strange, but really, all I did was sit with some employee of a bank or business, and chat with them for 90 min. This was in Bratislava, Slovakia.
For my efforts of about 20 hours per week, I made about S1500 per month.
In Jan. 2009, I moved on, and now live on a beach in the Philippines, where my only job is to raise my new four month old baby boy.
I’ve gone through a similar transformation.
Same here.......been an expatriate since June 2001.
I was in Prague, doing the exact same thing you did, and living pretty good to boot. Now, I do proofreading/editing for a Turkish company, still living good, but in Berlin. Next stop; very likely Istanbul.
Cheers.
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