Heading toward a crack-up

I responded to a comment on America close to the tipping point with a remark that I am operating under the hypothesis that America is heading toward a crack-up, as we are crushed by debt.  In this I am informed by long-wave theory, especially as set forth in the work of Strauss and Howe (see The Crisis at the End of the Saeculum and Onward to Ekpyrosis, Death and Rebirth of American... for starters).

And we all suffer from “fatigue fatigue,” as the comedy of errors in Washington dazes us with new trillions of dollars of our future earnings thrown away every other day… and as a classical liberal who believes that a society that mistreats its poor is doomed, I feel the pain of the neo-liberals who want ever-bigger stimuli… but watching the government’s handling of the banking crisis I’ve lost confidence in the government to spend any more of my money wisely.  And I do think the IMF has a point about debt implosions—and they only address government debt.  Household debt has quadrupled over the past 50 years, from about 25 percent of GDP to close to 100 percent.  Federal debt has doubled since 1980 from about 20 percent to now over 40 percent of GDP.  Financial sector debt has risen since 1974 from about 20 percent of GDP to almost 120 percent.  Nonfinancial business debt has risen from about 55 percent to about 75 percent of GDP (source).  Looking at the total debt situation suggests the IMF had blinders on.  But as we’ll see in a moment, what’s “on the books” is only the tip of the iceberg.

It’s useful to review the big picture, which the New York Times presents neatly in this interactive graphic,

Adding Up the Government’s Total Bailout Tab

I do believe the country as we know it will cease to function sometime within the next five to ten years, and it will be necessary for Americans to make life-and-death choices about where they spend their tax dollars and what kind of country they want to have.  Food and shelter and useful work for citizens have got to come first, but if current trends continue—which are exacerbating already pronounced income inequality—feudalism for the masses may result.  We are currently deflating, especially if assets prices are considered—and the ravages of hyperinflation may be next.

Your government is asleep at the wheel.  A financial catastrophe would seem to be already baked in.  It’s time to communicate to your elected representatives that they need to start focusing on how the American people are going to come through the upcoming crisis—the current one is just the warm-up.  It’s time for a basic safety net of health insurance for all and a poverty level dole.