In his latest 'Things That Make You Go Hmmm...' newsletter, Grant Williams asks why no-one seemed to be worried over the latest showdown between the Obama administration and the House of Representatives. He concludes it's because those in authority have been relentlessly preaching that 'everything's going to be OK', no matter what. Needless to say, he disagrees (as do I). He sums up as follows:
Somewhere, sometime, when it makes absolutely no sense to anybody, something is going to matter to everybody; and when it does, the instability which has been magnified by means of repeated assurances that nothing bad will be allowed to happen will bring the world to its knees, I'm afraid.
It's hard to deny that the world at large is a far more dangerous place now than it was 50 years ago. Yet, as a parent, I, like others in similar circumstances, go out of my way to make the world around my own children as safe and as sound as I possibly can.
Unfortunately, as they go about their days insulated from larger worries, my children's feeling of safety floats farther and farther from the reality of the dangers awaiting them in the "real world" every day.
The day that real world — the world in which mathematics and debts and credit ratings and unemployment levels and tax receipts and political stability and mathematics and free and fair markets and accountability and transparency and honesty and reality and — did I mention mathematics? — are alive and well — crashes through our gleaming soap-bubble world of reassuring illusions proffered by the likes of Obama, Merkel, Draghi, Bernanke et al, we are in for a world of hurt.
And when that something bad happens, it won't be greeted by the deafening silence of millions of trees falling in millions of deserted forests, but by the deafening noise of billions of people falling hard into reality, trying to understand why suddenly the safety their leaders had been promising them for years has vanished when they needed it most.
There's much more at the link. Go read the whole thing. It's long, but worth your time.
Think about it like this. Approximately half of all the households in the United States are dependent to a greater or lesser extent on government assistance - Social Security, Medicare, Medicaid, food stamps, welfare, unemployment payments, etc. What do you think those households are going to do when the money runs out, and the government can't afford to pay them any more?
Uh-huh. It's going to be ugly . . . and it's coming. We saw symptoms of what will happen during the EBT shutdown last week. That's one of the biggest predictors of the 'world of hurt' that Mr. Williams forecasts . . . except that last week, the system was up and running again within a day or so. What happens when it doesn't come up again? You got it - riots, looting, the works.
Prepare yourselves accordingly.
Peter
EDITED TO ADD: To confirm what I've said above, a month ago Bloomberg interviewed mega-investor Marc Faber. He predicted (accurately, IMHO) that the Fed will increase QE (i.e. print more and more money) rather than diminish or 'taper' it, if the government's need for money continues to increase. In other words, the Fed will allow our national debt to grow, and grow, and grow ad nauseam rather than attempt to impose discipline on out-of-control government spending. I urge you to listen to this entire interview. It's 7½ minutes of your time that will be well spent (you should pardon the expression).
Yesterday Mr. Faber predicted (probably in jest) that QE-infinity might reach as much as a trillion dollars a month. I'm sure he was joking, because by that point the US monetary system will undoubtedly have collapsed. Nevertheless, it accurately describes the predicament in which the US government and the Federal Reserve find themselves. They've made promises to the electorate (i.e. entitlement programs) that are impossible for them to keep without massive QE: but if they continue massive QE, the country will go bankrupt, making it impossible to pay for those promises to the electorate. Catch-22, indeed . . . and cue the riots when (not if) it happens.
Peter
One of the best ways to think of is is written up here:
ReplyDeletehttp://www.softgreenglow.com/wp/2011/07/rns-quote-of-the-day-07232011/
Humans are pretty good at muddling through, denying what is staring them in the face.
I'm constantly wondering what the trigger will be. The transition from today's "relatively stable" to tomorrow's "holy crap" will be pretty short - I'd guess a few days of steep decline, followed by about 10 days of vertical drop - will occur so quickly as to completely surprise most, and be completely unrecoverable when it happens.
ReplyDeleteI've not a clue as to what will cause that, or precisely when it will come, but complete conviction that something will.
That said, as Rolf points out, humans are a resilient and resourceful lot, and many of us will muddle through to the resurrection and reconstruction. I'd expect, though, at least several months of what the British refer to as "unpleasantness." It will certainly be an adventure.
Alien - I expect it will be a computer failure: hacked, bad programming, or fat-finger incompetence, but suddenly a "critical" system (like the EBT thing) with no viable backup. Can you imagine a few months with no SS checks going out, or medicare claims not getting processed, or God Forbid no FaceBook for three whole days? People are resilient and tough individually, chaotic and prone to madness in groups. The inner cities are precarious. A government that is seen as unable to deliver services trying to "crack down and restore order" could escalate fast. My biggest fear is those state leeches will cause chaos and destruction that will have blowback onto the rest of us.
ReplyDeleteRolf - I concur. Had a discussion with an LEO friend recently and his opinion is that CW2 is "5 days of no EBT or no Social Security away" and that such an event will mark a point of no return; even if it's restored the civil unrest and the chaos is causes will have passed the tipping point and become the default setting. His estimate is 30 days of cities becoming free fire zones with a concurrent 10-15% national population reduction as critical systems fail (medication availability, medical treatment, heat, electricity, refrigeration, etc.). He pointed out that his community's electricity is supplied by a coal-fired power plant that maintains only a 12 day stock of coal. Me, I think it will last longer than 30 days.
ReplyDeleteI also believe that once it hits, government - at all levels, but especially the feds - will scramble to "do something" and every "something" they do will be exactly the wrong thing, making things substantially worse.