The Bleak Future of the U.S. Economy 3

From Peter Bjorn Perls: (thanks, Peter)

Chances are that McCain will be the next US prez. That means more military activity abroad, and “staying the course” for Iraq. (Obama is softer and not a hawk like McCain, but will he be much different when he is behind the wheel? Discuss.)

Also, there seems to be nothing on the board that will change the disastrous US economic course:
1) Aggressive expansion of the money supply by the Fed
2) Ditto for credit expansion by banks.
3) Major US federal deficit, with no significant and reliable long-term change in the cards
4) No significant tax reform on the horizon (the Fair Tax is discussed, but I don’t think is has much real support, in any case it is not as much of a reform as I’d hope for and advocate).
5) No likely cuts to US military budget, medicare/medicaid, social security.
What this spells for the future is this:
a) Continuing and increasing inflation, meaning: more economic uncertainty,unwillingness to invest and save, a continuing drop in the value of US$s, stronger unwillingness to own and trade US$, and catastrophe for US import-based businesses, which will see their operating costs spiral out of control.
b) more bankruptcies, especially real-estate based – and a full crash following if the economy does more severe hiccups than it has lately
c) more interest expenses for US citizens on the foreign debt, less future willingness for foreign states to borrow the US money (which means big f’ing crisis the day the creditors stop being creditors – that would be your economic downturn right there)
d) no tax reform means that the state will still base its revenue primarily on income taxation to accumulate the funds needed to keep the state in action. When the crash hits, the tax revenue needs to grow to cover the crash expenses (I assume that a crash will either be directly based on a foreign lending stop, or result in strongly reduced lending willingness, which means more debt-based spending is realistically impossible on the scale it happens today). More income from income taxes means a heightened income tax burdens on individuals and businesses, naturally leading to tax evasion, underreporting, and discontent as people will see their living standard plunge (not only from the crash itself), and their personal economic lives under increased surveillance.)
e) No budget cuts means in the case of no short-term crash, will the long-term economic crash be assured, when the money runs out and the federal state is unable to meets its medicX/SS obligations. That means a lot of people will be placed in situations where desperate action becomes more likely.
– p

 

3 comments

  1. I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

    Tim Ramsey

  2. Pingback: http://rs.resalliance.org/2006/03/05/fishing-through-marine-foodwebs/

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