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.
Got a null pic there - firewall.
They didn't live in an entitlement society back then, nor was the government as big or as oppressive.
Today, more than half the population waits for their Oboma money to come in the mail on the first of every month, and the politicians live in unlimited luxury.
A nation can't survive when the freeloaders greatly outnumber the producers. There aren't enough ants left to feed the grasshoppers.
Gold and silver would be a prudent “diversification”.
Do you see any way out of the debt problem besides devaluing the dollar?
It was there, and then it wasn’t...
Thanks for this thread.
This is the topic that NO US politician wants to talk about, and therefore is the most important topic.
Bookmarked.
—Do you see any way out of the debt problem besides devaluing the dollar?—
Default.
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.
Some here may find it funny but I think that Americans have been sensing this for quite some time and actually are starting to embrace the idea. Why? Look at the popularity of the Zombie apocalypse movies, movies like 2012 and definitely in reading materials such as novels. The common theme is that society will be destroyed, however there will be survivors that will take the ruins of the old society and build something better.
There are many who want the whole thing to crash and burn and HOPE that the survivors will have learned their lesson and won’t allow the whole Political/Economic/Financial, etc mess to occur again.
You have many of those forces on the Left with the Greens and the Eco-nuts wanting us to freeze in the dark and go back to living in caves.
As for the rest of the populace I think they just want to live in peace and have the Government butt out of the day to day process of earning a living and raising a family. Instead they see more and more intrusive regulations and laws being enacted.
In the end though, I think that all reasoning people know that the current Economic/Financial/Political has become like an inverted three sided pyramid spinning round and round on it’s point. It’s unstable and wobbling and slowing down... Soon it will falter and crash. Which side is going to be on the bottom when it does? And who will survive the crash?
—This is the topic that NO US politician wants to talk about, and therefore is the most important topic.—
It’s one reason I’m not a Romney fan. He’s smart enough to know that it will take divine intervention to get us out of this mess. No man made solution will come close to solving this.
People forget that if you drastically reduce government spending you drastically reduce the size of the economy. That is called “contraction” and with the debt we have, that is not an option unless we choose to default.
Of course, the government can always monetize this mess on a massive scale. China (and other foreign investors) may not approve. But then, how would they feel about a default?
And as china’s economy contracts, their back is against the wall as well. And then we have that “desperate times” comment I made earlier.
As Clayton Williams said, “If it’s inevitable, just relax and enjoy it.”
You can draw the opposite conclusion as well. If you curtail the welfare system now you introduce all kinds of human capital back into the marketplace. It could be a second Renaissance.
The issue is our approach to welfare/entitlement/debt which are all tied to small v. big government. If the tax and regulatory burden were undone at the federal, state and local levels American entrepreneurship would bloom.
We’ve eaten all the gains of the past two centuries. That principle is gone. Either we grow the pie or we shrink it and divvy it up. Shrinking it and divvying it up is the road to massacre, war and genocide.
They have a point and perhaps given the political reality and opportunity we shouldn’t let a crisis go to waste. Now’s the time to attack the Leviathan.
“Do you see any way out of the debt problem besides devaluing the dollar?”
No, that is the path that we have gone down so long that it will be politically untenable to really implement a meaningful solution
I’m not sure that deflation may not be the ultimate ending here. Hyperinflation requires a demand side of the equation. What happens if there is no demand side, no matter how much money is printed?
I find it telling that some US Congressmen are preppers.
Some folks with an “inside track” have revealed that, at all levels of government, there are many who see that this crash is inevitable.
If worst comes to worst, the country defaults, triggering the collapse of debt bubbles all around the world. The result would be terrible - but it would hardly be the end of civilization.
The welfare zombies (and that’s what the “zombies” in the novels are really referring to) will either die out or group up to come after your stuff.
The LAST thing they’ll do is decide to actually work to support themselves.
Gold seems to be a popular investment now, but the way I see it, it’s just a heavy chunk of metal. I’d rather stock up on food, fuel, and ammo.
But after you have your food, fuel, ammo (beans bullets & bandaids), what then? Some store of value other than dollars is in order.
I like dirt. But of course, you have to be able to defend that dirt.
“You can draw the opposite conclusion as well. If you curtail the welfare system now you introduce all kinds of human capital back into the marketplace. It could be a second Renaissance.”
But this segment of our population is generally undereducated and not trained to be infused into the 21st century workforce.
The jobs they would have integrated into are now overseas.
“Gold seems to be a popular investment now, but the way I see it, it’s just a heavy chunk of metal. I’d rather stock up on food, fuel, and ammo.”
Gold is a good hedge against inflation, but not a societal collapse, then its food water and shelter, plus something to defend those assets.
“he tional debt was 122% of GDP in 1946. The highest it has ever been. Did that trigger a “death spiral” which led to economic collapse?”
In 1946 we didn’t have the huge derivative market, people didn’t exist on credit cards and most folks rented their houses. Its a whole different world now.
Cute! You do have a point though.
No matter what, when the ‘zombie’ hordes come, it’s not gonna be any fun at all.
The good thing is that our ‘Zombies’ still eat food and are susceptible to all of the human frailties such as getting sick. And as we saw with the OWS people they are willing to reside in ‘shit’ laden surrounding. And that my FRiend is a recipe for dysentery, TB and other diseases that spread in those sort of surrounding. They may not survive a month to six weeks if things go SHTF.
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