And often I find myself thinking we are naive to be pinning our hopes on this. Yes we all know the economy is based largely on fictional abstractions, and that supposedly for that reason it simply cannot continue. But in my daily commute, my time every day in the office, and everywhere else for that matter, I see no evidence that it's going to do anything but keep going. How many interests are vested in it continuing? It's not just the interests of the elites. The commoners are vested in it too.
Maybe they really can just indefinitely create money out of thin air, on the premise that some hypothetical future society will make good on it.
It didn't keep going in Wiemar, or Zimbabwe, or Argentina, or Venezuela... the effects are in part hidden - we are the reserve and the "flight to perceived saftey " from other currency collapses is delaying the day of reckoning - Unemployment is high (percentage of workforce) , but Disability Fraud and welfare ave hidden that problem -Your EBT is charged auto magically - no lines for bread or cheese. Actual GDP is in contraction, dividends from companies that actually pay such are falling - but the Fed Plunge Team and the banks are ensuring the Stock Market displays the illusion, not the reality. (
http://politicalcalculations.blogspot.com/2016/04/the-worst-quarter-for-dividends-since.html) And no one wants to face the reality, so yeah, the impetus is there to keep going -- till we can't. At some point a Hot War, or a financial war with the BRICs will bring this down-- but the BRICS have every reason to promote a smooth transition that allows them to exit the dollar gracefully - preserving the value of the dollar reserves they own.
The evidence is that they will keep it going as long as possible, but I doubt that is indefinitely. I have seen no evidence that the factors tat originally caused my alram are residing or changing. Heck, we are right back to the pre-2008 - "give a loan to anyone who wants one" phase of housing again (
http://themortgagereports.com/18963/federal-reserve-senior-loan-officer-survey-mortgage-rates-q4-2015)- and even with that the housing markets are stalling (
http://politicalcalculations.blogspot.com/2016/04/stalling-new-home-prices-and-rising.html) and prices are still way above the pre-2000 trend line - which indicates to me they have a long way to fall to be inline with "reality" again. The National debt is still increasing by a trillion a year, SS and Medicare will be insolvent by 2020 and Medicaid already is. Public pensions are still woefully underfunded. The 100 Trillions in CDS are still out there. 100 years ago people would have panicked - pulled their savings. This population is too stupid to panic, they are sure that "TOP MEN" will solve the issue before it becomes their problem. They are stretching a rubber band, at some point they let go or the band snaps. As long as the money they print remains sequestered in the accounts of cronies who use it solely to keep up the illusion that they are solvent, we won't see reality on the streets. But once they are forced to print 100% of Obamacare, Welfare, Disability, Social Security and Medicaid? Well that money ends up on the streets, and yes it will drive the inflation big time. And yes, the official numbers are starting to show "wage growth" - and they say this is because the labor market is "getting tighter" - with the lowest workforce participation since the 70s and all of the new immigrants streaming across the border? Its getting tighter? No. Its the first signs of monetary inflation, and probably a bit of the job killing new Minimum wage laws.
I too am very worried they can drag this out long enough that no one resists when the collapse comes. But come it will. Just as it eventually came to all of those other places. BRICs will one day have so little exposure that dropping the dollar and securing themselves as the owners of the new world reserve is worth their losses. Or they simply start buying US assets ( I think that is the only reason RE prices are as high as they are) Or a world war makes such considerations moot.
