Secondly, thanks for part 1. I recall your articles on CDS and CDOs back on RM, and the ultimate end-game for those instruments we saw in 2008 played out as you expected.

You have a very grounded vision of the probable.

Is the path binary? Debt inflation or huge tax increases, or both? Any other solution?

I suppose I am thinking back to Figgie (SP?) who was worried about the deficit in the 80’s and preached disaster that never came true? As a young guy at the time it scared the heck out of me- (I still have a gold coin…) so I’ve learned to be a bit more cynical of end of world predictions. No matter how convincing, and this is not looking too good for the next few years.

David, my studies were in political economy, not economics. If you trace out the historical paths other countries have gone through of creeping then rampant socalism/nanny state expansion they always hit a wall of reality, leading to either chaos (Argentina, Venez) or reform.

Look at the Baltic states, Chile, ANZ/NZ. They all maxed out and then went free market.

I’ve no clue if this could happen here. We do have a strong philosophy among a minority for limited government. 7 more years of gov’t expansion could render us ripe for some true ‘change.’

Final comment: Isn’t it interesting how the hurdles are being raised for citzens to have offshore accounts and assets? Although there are few barriers to owning foreign US listed stocks, owning assets outside the US is getting very difficult for the individual due to informal barriers like reporting, forms, taxes and intimidation of foreign fiduciaries.

Regards!