Thanks.

Demographically speaking, I can’t see any real way for economic growth to increase at all, much less significantly. Those counting on the de facto pyramid scheme of investment vehicles need to notice that there are not enough in the bottom of the pyramid. What happened in the 19th and 20th century was the opposite of what is happening now. Back then the diligent were increasing faster than the indolent. Currently we have the reverse. I would love to be wrong, but have seen no evidence otherwise.

Certainly, other nations can decide that they don’t want dollars at the current exchange rate, but a dollar created by a printing press, or a keystroke, or a pen scratch at the time the contract started does not differ from a dollar (printed, keyed or scratched) today. To have a default, you have to have something exogenous to the exchange agreements against which currencies can be valued. And there isn’t anything. The clowns in DC, or London, or Brussels or Hong Kong don’t have anything to do with it. Not that they know that. IMNSHO, bloodshed on account of exchange rates is a ways off, Rogoff and Reinhart notwithstanding.

I am not arguing that the crowd in DC won’t do it anyways — only that this is a default. Instead of most people suffering a decline in living, a minority (but a large minority) will suffer the ultimate decline in living standards (death)

On US shores, there has been a dramatic shift in just that (what we do, and especially what we no longer do) here. For starters, especially in context of David’s post (eg: take a look a history!!!), any economy that has financial sector rise up to % of GDP US hit (+/- 40%) is, historically, in trouble.

No amount of juggling currency… default, print more, whatever, is going to alter the dilapidation that’s happened in US underlying economy… eg. what we do here.

And IMO, especially in view of David’s posts on our Cultural problems, I’d say that compounds the difficulty for a real recovery… eg. making/doing “stuff” that matters. We’ve go a generation who got rich on paper flipping houses, as their jobs/industry went “poof”, and thought they were geniuses. Really, housing bubble no more than a ponzi scheme.

Now, values down and upside down, far fewer jobs and what jobs there are, on average, not even close to levels able to finance home purchase anywhere near bubble levels.

Yet, whole parts of this “demographic” don’t want to give up their standard of living… their paper-profit, bubble-generated standard of living.

There’s a gazillion things wrong here, just tons of stuff. Dishonesty (or outright professional deceivers), a lot of sloth, a lot of competing professions believing they are the most deserving, and IMO most infrequently mentioned: a comparatively (say, to top 20 planet GDP’s) very large portion of working age people w/serious health problems… we lead the world in diabetes per capita right now. More folks dependent on pills for this and that, overweight… all which means less productive generally (and less happy), not to mention don’t fell all that hot.

And the thing about that is, most of the health issues are bad food related… in large part because food processing industry has hit public w/double whammy of massive advertising for junk, while bankrolling a lot of k-street politicians this decade to roll back labelling, food testing, and just about anything giving Joe Q. Public some insight into what they eat.

And worse, most folks here don’t know this is an issue, and most wouldn’t know what to do about it if they did.

Personally, I think unless somehow the US finds a way to take an honest appraisal of basic facts common to us as a nation, basically, whatever the finance/money guys come up w/really won’t matter.

I had a similar thought to yours it goes something like this.

Governments have chosen a course of fiscal and monetary policies that they think works and most importantly does not cause or deepen a recession. The mindset of policy makers is to chose whatever option but it must be as pain free possible. They see that they are making bad choices but they feel the benefits outweigh the negatives.

I seem to remember what historians said about WW I – that Governments and the people had forgot what great power war looked like and they were unaware of potential awesome killing power of the new military technology.

Historians write that the world was shocked by the horror of how bloodly WW I became.

Well, its somewhat similar, Governments have forgot how terrible the impacts can be from too much debt, because we haven’t seen or lived through a real sovereign collapse in the Western world in a long time.

I think that also, Government Officials don’t realize exactly how much debt they are taking on, they are acting blindly and unaware fully of the consequences of their actions. I also don’t think they fully understand how complex and overgineered the financial world has become. Even after the crisis, people seem to think things are going back to normal, the 100 yr “black swan” event is over. I don’t.

In the end if we see a painful outcome of sovereign debts with defaults, more recessions, civil unrest, and austerity budgets being suddenly imposed on unhappy citizens, I think we will look back and say we are not going to be bailing out every financial institution because its not fair to the rest of citizens.

Frank C

Cheers from Osaka,
john

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