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Financial Doomsday for the US
The U.S. economy is on the cusp of a major collapse. When this happens, the government will be unable to do anything to stem it unlike previously when it bought time by pumping silly money through the use of Quantitative Easing and thus expanding money supply without having any real value attached to it.
This time around, the government will not be able to save the banks and corporations because the government itself is bankrupt although the money used to prop up the economy via QE in recent years was borrowed money which will have to be paid down through higher taxes and inflation in the future as I cannot envisage an outright debt default.
The money supply expansion has done nothing for the wider economy and has only pacified Wall Street for a while.
Consumer spending is flagging because many are in debt they cannot afford to pay owing to the easy money over the previous years. House prices are stil dropping and if it were not for the government coming to the rescue of the banks, they would have fallen off a cliff much earlier on. Manufacturing and exports are stagnant and many of these private sector jobs have been wiped out by the public sector.
Public sector jobs do not grow economies, they only serve to create more debt for the over indebted government.
A major reason for the present worldwide economic malaise is because the policy makers kept interest rates too low for too long. This encouraged borrowers and destroyed savers in the process. Read the full article here
