John Rubino asks the proper question: “Is This It? Or Can They Fool Us Again?”
There is no where to go and no way out from where we are. After decades of tinkering, stimulating and intervening, the bailing wire is bursting. The issue, as Mr. Rubino describes it is not repair, but extend and pretend:
A stressful weekend for the world’s bankers and politicians, followed by a sleepless Monday, and all with a single question rattling around in their heads: How can we fool them again?
The damage done over decades is beyond repair. Economies of the world are built on foundations of Keynesian and Statist sand, not free-functioning markets. All economies in the developed world suffer from the same disease and they are all coming down. The question is whether they can defer it once more. But, that solves nothing.
Buying time is no economic solution. It produces more distortions and an ultimately greater correction. It is attractive from a political standpoint only because it extends the time in office. Eventually these poseurs and criminals will be run out of town on a rail.
In my opinion, there will be no recovery in the sense that the economy will begin to grow at 6% per quarter rates (which typically characterize recovery from recession). Instead we face one of two scenarios. First an economic stagnation, not unlike what has plagued Japan for the last two-plus decades and what has characterized our economy for the last couple of years. Alternatively, some upset condition (collapse of the banking system, collapse of the dollar or some other element) triggers an economic implosion of all world economies.
My guess is the latter outcome, although the stagnation phase (with possibly very high inflation) stage could last for a while.
You pays your money and you takes your chances!
I see I made a mistake in my previous post. I meant to say that the Japanese scenario is not possible because of… Now another thought, assuming the worst, which I do. What do we do then? Does our economy crash all the way down to the barter level? I think yes, at least on the local level. A friend of mine at work yesterday asked me what good is there to buy precious metals if there’s nothing to buy, it has no intrinsic value. My answer was, that on a barter level, probably not, but precious metals world be a storehouse of value awaiting the time when a modern sort of economy is reestablished. I reached into my desk drawer and pulled out a rifle and a pistol cartridge I just happened to have handy and said that those were good for the barter level. Another coworker agreed, Gold, Silver and Lead.
Hi Monty. As I’ve noted before, I think this gives us more breathing room to accumulate things to survive on, a few months to a year perhaps. Considering your two scenarios, I don’t think the Japanese model is impossible because of state and local debt. We see the one world socialist movement attempting to ransack Wisconsin. Wisconsin is only a preview of things to come. The latter, a total collapse, seems the inevitable conclusion to our grand experiment with liberalism.