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The financial markets are propped up by Quantitative Easing (QE) Policy.

Pressures to end QE come from financial entities that actially make loans. There’s not much money to be made on a 2 or 3 percent loan. Loans are not being made as much as needed because the margins are too low. So properties sit empty.

New construction is very intense in certain cities because construction loans are practically free money. Construction companies can declare bankruptcy once they have their money. That is happening now as there is not much of a consumer market to buy the new construction so new homes are going to sit unoccupied or occupied by those receiving a subsidy from government (low income group) or become REO as banks will hold them rather than make low interest loans to consumers.

The lower tier local banks want QE to end; the upper tier (JP Morgan Chase, Bank of America, Wells Fargo etc. and investment banks) want QE to continue as it allows them to purchase government bonds at a profitable spread. Free money and free cashflow is their charm.

The result of QE is enormous debt for the United States, This debt can be duscharged via the Federal Reserve deciding to ‘delete it’. This would be a controlled bankruptcy for the USA but it won’t be reported that way,

Since most of the propping up is happening among agencies within the USA, it is a local affair mainly.

Other currencies? Who wants them? No other society has an economic model that is so attractive that their currency is in extreme demand. In other words there’s no good reason to dump US Dollars. Those that have find out what they traded it for was not so wonderful. America is a fortunate beneficiary that the global economy is in trouble. There are not so many greater alternatives.

Gold isn’t where it’s at. It’s just a yellow metal that’s a hassle to guard and provide security for.

It’s a race to the bottom.

But it can’t go on forever.

For areas that are experiencing building booms with no consumers to support them, we will see very low occupancy rates. Rents go skyhigh so we will see socialists call for rent controls. But rent control policies are very destructive.

Eventually voters will swing the pendulum away from democrats and their socialist talk. Voters who voted for all the socialism will sit home in a funk. Let’s hope a person like Ted Cruz can get into office and turn the economic engines on and steer the country where people can feel it moving to growth. That’s what happened under Ronald Reagan.

So we as Americans may avoid a predicted collapse because we are just damned lucky.

The collapse will come when the pressure to end QE becomes overwhelming. Ironically that will occur as a push for a better economy gets stronger. We note that if QE goes bye-bye, then the federal debt service obligation goes out of control. If QE stays, the economy will continue to sputter, backfire, and feel sickly...and the natives get restless.

There are several positive and optimistic scenarios of how to escape this current ‘malaise’ but will save that for later.

Thank you for the excellent synopsis.

I would agree our economy is sinking, only not as fast as other economies. Therefore what looks like an improvement is only relative for the time being. Compared to other economies of the world, we may still look fairly good due to new technologies such as fracking. But, we are headed for a disastrous outcome if we don’t get some adults in charge and dump the socialists. Then we can end the current taxation, welfare, and immigration policies that are abetting our declining economy.

If anyone thinks the economy is improving and waiting for their ship to come in, it may never arrive. Or, if it does, it may be loaded with immigrants from other countries with failed economies willing to take our jobs, vote democratic, and bleed the beast until the last taxpayer retires.

Wake up America and vote for REAL change while we still can, otherwise it may be too late in the near future.