The other is a financial adviser, who really knows his stuff and has protected my portfolio, who says we are on the brink of DEFLATION---that housing prices are down, that wages haven't recovered, that interest rates are very low. Now, if these two pretty smart people keep coming to exactly opposite conclusions, how are poor schmucks like us supposed to survive?
"It's different this time."
Well, perhaps it is.
Over the last century and a half, American productivity has created a rising standard of living for the average person. Productivity is now rising rapidly outside the U.S. at a time when Americans have become undisciplined socialists. While our productivity is stagnant, we continue to spend money we don't have and to ignore the unfunded liabilities yet to come.
I think the key word is "undisciplined". As a nation we are going to continue doing what is easiest to do politically, morally, and economically.
This means that "quantitative easing" (money printing) will continue. Deficits on the order of 40% of the federal budget will continue. Nothing will be done about our unfunded long-term liabilities. Government policies will continue to be anti-business and anti-energy.
Some states will practically go to war against the U.S. government, but the courts will probably rule against them.
The only thing I see that will turn this around is HUNGER. If not for the bread lines in the ex Soviet Union, that state would still exist. Hungry people found themselves standing in line to buy bread that nobody had any economic incentive to create. That is our future.
We will find ourselves standing in line to renew our car registrations, wishing that the bureaucracy could mangage to take our money and renew our car licenses. We will stand in line to get whatever products manage to find their way to our local markets. We will stand in line to get vouchers to be able to buy new tires for our car.
We will stand in lines waiting for a chance to see a doctor or get new eyeglasses; to get a new dress or suit of clothes. Rationing will be justified because otherwise only the "rich" will have access to these products and services.
Already the incentives for doing business in Kalifornia are on the wane. Heard of any businesses relocating to the Golden State recently? The crews roaming the county patching the roads can't keep up with the rate at which the roads are failing.
I see nothing short of years of prolonged hunger able to turn this around. It will have to be long enough to completely exhaust the empty promises of the socialists. It will be long enough for those who think, "It can't happen here" to realize that it can.