Friday, August 23, 2013

A return to blogging - the Economy

Well, I have been away from this blog for some time, but now I think I will post some updates on economics and a few assorted other subjects.

In the past couple of years there have been a series of financial crisis in Europe and the US, most of which have twin roots going back to the worldwide financial collapse of 2008.  At least 5 countries in Europe required bail outs. The most notable were Greece (which required $10B and bondholders got stuck with bonds worth 30% of face value)and Cypress (which cause a panic that closed the banks for weeks).

In the US, Stockton California and Detroit come to mind as having declared bankruptcy, although there have been a lot of small ones too. 

The "Fed," over the past several years has injected money into the world financial systems at the rate of nearly $1000B dollars a year for almost all of the past 5 years, and while there is talk of slowing down the injection of money, there is no talk of ending it.  We don't know when inflation will kick in, but about 1/3 of the total US Federal budget is now made up of borrowed money.  This has hidden what would have been a spiraling deflation that would have been ruinous to the country, but it is still ruinous to the nation.  Most of the working class today makes about $2 an hour less than they did 5 years ago, if they have a job at all.  The official unemployment rate is totally bogus, the real rate is about 20%.  If you don't see that where you live, you are fortunate.  Detroit is not fortunate.

This year, people learned a new word.  Sequester.  That is where you keep spending more and more on your entertainment budget, but in order to pretend to save money, you don't put gas in your truck (so now you can't go to work). 

A word no one has learned has cropped up in certain small circles of the "learned." Catabolic collapse.
It basically refers to the tendency of a civilization to build infrastructure until it cannot sustain the effort to maintain that infrastructure.

Our financial structure is a house of cards.  Monetary bubbles upon monetary bubbles.  If it collapses slowly, it will simply leave multiple generations, starting with the oldest, in financial ruin.  It will go from generation to generation, bankrupting millions of people until there is only the miserable poor and the very upper class.

If it collapses suddenly, it will erupt into violence and civil war with no clear cut battle lines and no winners.  It will evolve into anarchy and chaos.  Will we ever emerge?  Many think so, most preppers think so.  I don't really think so.

Well, that is all today.  I will write more in the days to come.

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