As my wife will tell you, one of my favorite statements now is: “Nothing will change until the collapse.” In other words, the irresponsible spending will continue until the government cannot do it any more. The voters are deluded and/or economically ignorant, and won’t believe that the merry-go-round is going to stop until it actually stops. Politicians aren’t going to risk losing re-election by doing the right thing.
Perhaps I should define “collapse” (or “tsunami,” as I sometimes call it). I do not mean Mad Max or Omega Man. I do not necessarily mean that the economy will disappear and we’ll be back to barter, or that we’ll be pointing rifles at dudes throwing Molotov cocktails. What I do mean is a watershed time of huge economic downturn. The Argentine Fernando “Ferfal” Aquirre put it this way about his country’s 2001 economic crisis (allow for the fact that English is Ferfal’s second language):
Most man kind divides the world’s history according to the birth of Christ. So do we, but Argentineans also refer to “before and after 2001” or “before and after the crisis or 1:1″ (when 1 peso = 1 dollar). I kid you not, this kind of reference is used several times a day on ordinary conversations.
“Nice car! How did you afford it?”
“No, I bought it before the 2001 crisis”
“Have you ever been to Paris?”
“Yes, beautiful place”
“Really, man I wish I could go there”
”Yea, but I went before 1:1”
This is just an example, of how such an event transformed everything for us, in such a terrific scale.
When I say collapse or tsunami, that’s what I mean. I believe that a currency crisis and severe inflation will be involved, because (and you’ve heard this all before) the U.S. government has massive debts it cannot possibly pay back. It has made promises to entitlement recipients that it cannot keep. It has creditors who have been moving away from the dollar to cut their losses. The government is doing all the wrong things.
The end result of the collapse will be a more hardscrabble existence for all of us. Historically, people may look back and say that the collapse began in earnest last year, but I think it’s going to get much worse.
The U.S. Debt Clock has updated its figures and now lists unfunded liabilities of over $100 trillion. Note that the unfunded liabilities of the infamous Bush “prescription drug program,” which was rammed through by the Republican party leadership (whose hacks are often in the media complaining about irresponsible spending), now exceeds that of Social Security. Both programs are pikers, though, compared to Medicare.