Two Decades of Stagnation

I started this blog to warn of a financial collapse of the US and how to prepare for it.  I now don't believe that will happen.  Instead, I think we are facing two decades of stagnation and malaise.   See this chart:


Source: http://www.planbeconomics.com/2013/04/could-interest-rates-stay-low-until-2027.html

We are caught in a trap.  Our whole system is based on ever-increasing amounts of debt.  There is now over  $80 trillion of debt in the system.  This number must increase every year or we will fall into a depression.  The reason why interest rates are being kept at extremely low rates is to allow this debt to be serviced.  If interest rates were at a higher, more natural level, then it would be obvious that most of this debt couldn't be paid back.  So the trap is that we can't allow a default, but we can't grow too fast.

Why two decades?  Well the Social Security Trust Fund will go broke by 2033, so something must happen by then, but probably not until then.  The result is, like I said, stagnation and malaise. Zombiefication.   I really have no interest in watching paint dry.   So this is probably my last post on this site.

I will continue to monitor things and post if something really unusual happens.  This would either be signs of a systemic collapse, as opposed to a recession (the next one will come by about 2016), or signs of hyperinflation, (which I will define as sustained increase in the money supply of 2+%/month).  I think my definition of M4 is useful, but it's quite easy to calculate, and so I won't keep doing it, unless I notice a significant change in it.

I don't believe the financial projections published by the OMB or CBO.  But I am amazed by the transparency of the US Treasury.  It is awesome that they can publish the US debt to the penny on a real-time basis.  Our national debt will never be repaid.  But so long as people have faith in the US government and use the debt as a form of money, this is not a problem in the short-run.

So I guess I am saying goodbye here, with a whimper, not a bang.  There are lots of other financial blogs out there, so check them out.  I am going to leave this blog here for archival purposes for a while.