Mike CernovichVerified account

The current level of wealth in the US is entirely the product of dollar’s status as the reserve currency and the Federal Reserve policy of quantitative easing and low interest rates. If either of these fail, we will be unable to pay our debts. That’s the beginning of the end.

It's coming. Not this time, I think, because there should be enough wealth available to the govt to keep America's creditors from spooking. But the next time? Bigger debts, bigger distortions in the economy, even more political dysfunction. I don't think America gets past that.

I disagree. As soon as the economy takes a turn for the worst, which it will in the next 6 months, the Fed is going to drop rates and likely start easing again. How much wealth do we actually have? The debt's at $21T. We're never paying that back. World will realize soon.

If we had anyone but Trump in the White House, I'd be vehemently defending my position. :) But given his propensity for destruction, you could well be right. Still, other countries have survived having a govt debt around their GDP. /1

As you say, we're never going to pay back the 22T, bc the 22T is the least of it. We've got immense debts, with minimum reliable estimates, of over 200T, when you count unfunded liabilities, state debts, and private debts. But that doesn't determine the *timing* of the crash. /2

So long as creditors figure they can continue to extract wealth from America, they'll keep lending it money, even though America is already bankrupt. They each figure that it'll be someone else who gets burned. /3

But eventually someone big will decide that they've got all they're going to get, stop lending to the US govt, and then it'll be like dominoes. Respectable leaders and stable institutions would make survival *this* time very likely. /4

What we have makes it less likely, but we don't have those this time around. Still, I think more of that 200T has to become due before America's creditors will finally decide enough is enough. That said, I don't think what'll happen after the coming crash will be pretty. /5