Skip to comments.Economist Richard Duncan: Civilization May Not Survive 'Death Spiral'
Posted on 08/22/2012 6:30:24 AM PDT by jpl
Richard Duncan, formerly of the World Bank and chief economist at Blackhorse Asset Mgmt., says America's $16 trillion federal debt has escalated into a "death spiral, "as he told CNBC.
And it could result in a depression so severe that he doesn't "think our civilization could survive it."
And Duncan is not alone in warning that the U.S. economy may go into a "death spiral."
Since the recession, noted economists including Laurence Kotlikoff, a former member of President Reagan's Council of Economic Advisers, have come to similar conclusions.
Kotlikoff estimates the true fiscal gap is $211 trillion when unfunded entitlements like Social Security and Medicare are included.
However, while the debt crisis numbers are well known to most Americans, the economy hasn't suffered a major correction for almost 4 years.
So the questions remain: Is the threat of collapse for real? And if so, when?
A team of scientists, economists, and geopolitical analysts believes they have proof that the threat is indeed real - and the danger imminent.
One member of this team, Chris Martenson, a pathologist and former VP of a Fortune 300 company, explains their findings:
"We found an identical pattern in our debt, total credit market, and money supply that guarantees they're going to fail. This pattern is nearly the same as in any pyramid scheme, one that escalates exponentially fast before it collapses. Governments around the globe are chiefly responsible.
"And what's really disturbing about these findings is that the pattern isn't limited to our economy. We found the same catastrophic pattern in our energy, food, and water systems as well."
According to Martenson: "These systems could all implode at the same time. Food, water, energy, money. Everything.
Another member of this team, Keith Fitz-Gerald, the president of The Fitz-Gerald Group, went on to explain their discoveries.
"What this pattern represents is a dangerous countdown clock that's quickly approaching zero. And when it does, the resulting chaos is going to crush Americans," Fitz-Gerald says.
Dr. Kent Moors, an adviser to 16 world governments on energy issues as well as a member of two U.S. State Department task forces on energy also voiced concerns over what he and his colleagues uncovered.
"Most frightening of all is how this exact same pattern keeps appearing in virtually every system critical to our society and way of life," Dr. Moors stated.
"It's a pattern that's hard to see unless you understand the way a catastrophe like this gains traction," Dr. Moors says. "At first, it's almost impossible to perceive. Everything looks fine, just like in every pyramid scheme. Yet the insidious growth of the virus keeps doubling in size, over and over again - in shorter and shorter periods of time - until it hits unsustainable levels. And it collapses the system."
Martenson points to the U.S. total credit market debt as an example of this unnerving pattern.
"For 30 years - from the 1940s through the 1970s - our total credit market debt was moderate and entirely reasonable," he says. "But then in seven years, from 1970 to 1977, it quickly doubled. And then it doubled again in seven more years. Then five years to double a third time. And then it doubled two more times after that.
"Where we were sitting at a total credit market debt that was 158% larger than our GDP in the early 1940s... By 2011 that figure was 357%."
Dr. Moors warns this type of unsustainable road to collapse can be seen today in our energy, food and water production. All are tightly connected and contributing to the economic disaster that lies directly ahead.
According to polls, the average American is sensing danger. A recent survey found that 61% of Americans believe a catastrophe is looming - yet only 15% feel prepared for such a deeply troubling event.
Fitz-Gerald says people should take steps to protect themselves from what is happening. "The amount of risky financial derivatives floating around the globe is as much as 20 times size of the entire GDP of the world," he says. "It's unsustainable and impossible to unwind in any kind of orderly way."
Moreover, he adds: "People can also forget that the FDIC can only cover a fraction of US bank deposits. It's a false sense of security. Just like state pensions, which could be suspended at any time. A collapse could wipe out these programs. Entitlements like Social Security and Medicare are already bankrupt and simply being propped up."
We can see the strain on society already.
In two years, Congress won't have any money for transportation, reports the Washington Post. Cities like Trenton, NJ have layed off one-third of their police force due to budget cuts. And other cities like Colorado Springs, CO removed one-third of streetlights, trashcans, and bus routes, reports CNN.
Fitz-Gerald also warns of a period of devastating inflation. A recent survey, reports USA Today, notes that in the coming years it could take $150,000 a year in household income for a family to afford basic living expenses - and maybe go out to a movie.
Right now, in fact, "52% of Americans feel they barely have enough to afford the basics."
"If our research is right," says Fitz-Gerald, "Americans will have to make some tough choices on how they'll go about surviving when basic necessities become nearly unaffordable and the economy becomes dangerously unstable."
"People need to begin to make preparations with their investments, retirement savings, and personal finances before it's too late," says Fitz-Gerald.
TARP and the bailouts only delayed the inevitable, and make it all that much worse.
Civilization will survive beyond the economic crash.
Probably the main reason is the 2nd amendment, and the correlation between those who hold conservative/2nd amendment values and those who hold Christian values.
Unless, of course, those folks are taken up about the time of the crash, then woe unto you who remain.
As long as I have water, a food supplhy I can exploit, plenty of ammo, and a deck of cards...
I think I got the impending collapse covered...
Inevitable if he gets a second term.
Within 10 years.
But the article never really tells you what this economic disaster actually is. Our water system? Our food system?
They mention hyperinflation, but no mention of deflation which can be as bad if not worse than hyperinflation.
Almost sounds like an infomercial for gold.
heh, heh. I firmly believe WDII will end in WWIII. And just as WWII was worse than WWI, WWIII will be worse than WWII.
It’s what countries do when their back is to the wall. After all, desperate times call for desperate action. And as desperate as they are now, they don’t hold a candle to where they will be very soon.
The national debt was 122% of GDP in 1946. The highest it has ever been.
Did that trigger a “death spiral” which led to economic collapse?
I think this is a bunch of alarmist fear mongering.
This video sums it up nicely. All the numbers are the actual federal numbers, but with nine zeros removed. It shows why we are so utterly screwed, but the government KNOWS they can not do a damned thing about it, so they do what they can to put it off as long as they can, sowing the seeds for the collapse of civilization as we know it.
And before you blame them, remember that anyone who offers a real solution will be destroyed at the polls by the electorate because it would involve massive austerity.
Since the recession, noted economists including Laurence Kotlikoff, a former member of President Reagan's Council of Economic Advisers, have come to similar conclusions. Kotlikoff estimates the true fiscal gap is $211 trillion when unfunded entitlements like Social Security and Medicare are included. owever, while the debt crisis numbers are well known to most Americans, the economy hasn't suffered a major correction for almost 4 years."
Because other people are stupid enough to keep buying the debt of the House of Last Resort. But should China's GDP drop below 5% in the next five years...
"Fitz-Gerald says people should take steps to protect themselves from what is happening. "The amount of risky financial derivatives floating around the globe is as much as 20 times size of the entire GDP of the world," he says. "It's unsustainable and impossible to unwind in any kind of orderly way."
Money quote. A black swan waiting to spread its wings...
Remind me again what percentage of the working-age population was on government programs in 1946?
“The national debt was 122% of GDP in 1946. The highest it has ever been.”
I think he is using total debt, which would be government, private and corporate debt, which can sound even more alarming.
I agree, a little bit of alarmist rhetoric, not to deny there is a debt problem. And as far as derivatives are concerned, I don’t even begin to make believe I understand the concept or its implied consequences.
Politicians refuse to do the right thing. They like their unlimited power and lives of unlimited luxury. They don't do what they do "for the people", they do it for themselves.
In the U.S. (and many nations abroad), they use 1/2 the population as a slave force to buy votes from the other half - the freeloaders. Eventually, the slaves figure it out and quit working. That's when the slave masters run out of everyone elses money, their "sweat equity".
The politicians will fight tooth and nail to keep their glorious lifestyles for as long as they can, and it'll be at the expense of every free man, woman, and child in the country.
When they fail, they'll hop into their jets - paid for by their victims - and flee to safer ground. The "people" will be left to fend for themselves and fight it out.
Notice - during the millennium of peace on earth, there are no politicians to "lead" us. Every man will sit under, and tend to, his own vine, and no man will be able to take it away from him. The people living in peace will "lead" themselves (just like our forfathers wanted for us).
And if you are good with a bow, so much the better. :-)
So to compare the fiscal outlook now (and going forward) to the situation in 1946 is kind of ridiculous. But somehow, I have a funny feeling that you already know this.
“It shows why we are so utterly screwed, but the government KNOWS they can not do a damned thing about it, so they do what they can to put it off as long as they can, sowing the seeds for the collapse of civilization as we know it.”
But the US will be the last man standing as we are still the world’s reserve currency and never underestimate the ability of the printing press to keep propping up our dollar.
But on this current track, it all ends badly, just a matter of time.
I just don’t think it is just around the corner.
We’ve been kicking the grenade down the road, and it will blow up in our kids’ and grandkids’ faces.
It'll probably blow up much sooner than that. Then again, I've always been lousy with timing.
—But the US will be the last man standing as we are still the worlds reserve currency and never underestimate the ability of the printing press to keep propping up our dollar.—
Yep. And that hints at inflation, followed by hyperinflation. It’s probably why one poster said this looks like an ad for Gold.