Alasdair Macleod has a thought-provoking article about the corner into which the Federal Reserve has painted itself. Inflation, asset and consumer prices (goldmoney.com) “The bubble will burst that is for sure. And when it does, $11 trillion of foreign owned equities will seek an panicked exit, not just from the deflating investment bubble, but from the dollar as well.”
This time is different, as people have often hoped. What seems to be different for the US today compared with other historical financial crashes is that the US is so dependent on decisions which will be made by foreigners reflecting their view of their own best interests. The risk is not just that foreigners may cause a run on the dollar, driving its exchange value down. Approximately half the manufactured goods bought each year in the US are imported. When the dollar ceases to be useful for international trade, there will be shortages. Then what?
While White House Resident Biden* talks threateningly about turning F-15s and nuclear weapons on dissident US citizens, the reality is that no-one knows at what point the US rank & file military would refuse to follow orders to attack their fellow citizens and possibly instead turn their weapons against the Swamp. My guess is that not even a Swamp dweller would take that risk. FedGov authority will simply evaporate.
The most likely scenario is dissolution, initially along State lines — an expansion of what the Lefties started with Sanctuary cities. Already we have Second Amendment Sanctuary Counties. Rule from the Swamp will simply crumble – and quickly, once DC can no longer hand out useful funds. Even a Leftie State like California – which contributes more taxes to FedGov than it gets in return – may simply decide to keep all its tax revenues.
At that point, we may see something analogous to what happened with the breakup of the USSR – foreigners get concerned with making sure the nuclear stockpile remains under safe control, and with making sure that unemployed nuclear scientists are not swept up by unsavory actors such as Iran. Certain States may be able to get significant material support from Russia and China in exchange for handing over control of their nuclear assets.
There would obviously be a lot of hardship for residents of the dissolving US as imports decline, financial assets become worthless, pensions don’t get paid, government handouts cease, government jobs evaporate. And turmoil as State boundaries change and people flee from the more stupid States. But in the longer run, there would be great opportunities as bureaucrats are fired, regulations are ignored if not repealed, and productive jobs in manufacturing rise again to replace the imports North America can no longer afford.
We face a dark tunnel, but one with light at the end.