Quoting former Reagan OMB director Stockman over at Pajamas Media:
…The state-wreck ahead is a far cry from the “Great Moderation” proclaimed in 2004 by Mr. Bernanke, who predicted that prosperity would be everlasting because the Fed had tamed the business cycle and, as late as March 2007, testified that the impact of the subprime meltdown “seems likely to be contained.” Instead of moderation, what’s at hand is a Great Deformation, arising from a rogue central bank that has abetted the Wall Street casino, crucified savers on a cross of zero interest rates and fueled a global commodity bubble that erodes Main Street living standards through rising food and energy prices — a form of inflation that the Fed fecklessly disregards in calculating inflation.
These policies have brought America to an end-stage metastasis. The way out would be so radical it can’t happen. It would necessitate a sweeping divorce of the state and the market economy. It would require a renunciation of crony capitalism and its first cousin: Keynesian economics in all its forms. The state would need to get out of the business of imperial hubris, economic uplift and social insurance and shift its focus to managing and financing an effective, affordable, means-tested safety net…
Stockman notes that no one in power is going to do any of the things necessary to fix the problem – last week, I read a quote attributed to the Prime Minister of Luxemburg which went along the lines of, “we all know what needs to be done, but we don’t know how to get re-elected after we do it”. Whether or not the PM said any such thing, it is precisely why our Ruling Class won’t make the necessary changes – because to make them means that whomever does it loses the next election, big time. I agree with Stockman on what is wrong and why it won’t be fixed – I don’t agree in his laying a great deal of the blame for changing the budget dynamic on Reagan, mostly because Stockman still carries a grudge from waaaay back when…Reagan rejected some of Stockman’s policy ideas in the mid-80′s and Stockman hasn’t quite gotten over it, but his claim that Reagan brought us to fiscal irresponsibility is absurd given that Social Security – the first step in complete fiscal irresponsibility – came about nearly 50 years before Reagan. That said, the basic thrust that things are collapsing and that it has been a bi-partisan effort to wreck things is completely true.
What do to? Stockman advises to get out of stocks and bonds and in to cash – not so sure that is the way to go because our cash is already devaluing and will do more so as time goes on with Bernanke continuing to print. Still, getting out of debt and having as much cash on hand as possible is a good idea – gold, silver and a supply of canned goods also isn’t a bad idea, either. The main thing is to be prepared for a very rough time, and not too long in the future. How long? I don’t know. No one does. Could happen tomorrow – could hold off for five years. Something will trigger the final collapse – our entire economic world is based upon fake money and debt and in a very real sense, the amount of debt in the world exceeds the ability of the entire world to pay for it. And the thing about debt that can’t be repaid is that it doesn’t get repaid.
I’m not at all worried or frightened about this. We’re going to pay the piper for 80 years of sheer idiocy in government and economics. A better and wiser people will emerge from the collapse.
UPDATE: Stockton, CA, goes bankrupt.
UPDATE II: Eurozone unemployment hits 12%. Glad that we haven’t gone down their route of fake money and massive debt…oh, wait…