WN: What do you think are the Big Picture forces driving the economy and basic geo-politics today?
I try not to think about that at all. These days I leave that realm of thought to folks who don’t appreciate the simple luxury of regular, pain-free bowel movements.
WN: Is the US Dollar and the current monetary regime doomed?
I would think so. May I remind you that no fiat currency has ever withstood the test of time? Not one. Zip, zero, nada. And according to Federal Reserve Flow of Funds Accounts data, the collective debt (public, corporate, and private) of this country is in the neighborhood of $50 trillion. How does a nation service such an outrageous level of debt without great detriment to the value of its currency? Answer: it doesn’t. Would YOU take an IOU from a neighbor who owes more money than he could ever hope to pay off in a lifetime? Probably not, unless he’s got your balls locked up in a box in his garage.
Fortunately for the USA, our garage is still full of balls tattooed with the flags of many nations. The only, the ONLY reason that the dollar hasn’t been flushed straight down the crapper yet is because it still enjoys some measure of its fading status as the global reserve currency. The world is still far too awash with our paper for nations to cut the dollar loose without shooting themselves in the foot. But, as I forecast years ago, that’s changing rapidly. Used to be that a fella’ with a fistful ‘o’ Franklins was welcomed to belly up to the bar in just about any country. Nowadays, in more and more places, said fella’ had better be packin’ some euros unless he’s content to sip a complimentary glass of lukewarm dishwater while seated on a milk crate just outside the employee restroom.
WN: Is the worst of the financial crisis, the recessions, etc, behind us?
I sincerely doubt it. We’re in the midst of a tremendous unwinding of decades of financial folly and error and exponential increases in debt. Nothing has really changed and at best, all we’ve done is to postpone the final reckoning, handed the responsibility off to our children who will bear the burden of our financial sins and lust for short-term satisfaction at long-term expense.
Look at all the billions of dollars printed up out of thin air and tossed at the mismanaged, deserved-to-fail banking industry. The very problem that got us into this mess is still being touted as the solution! We’ve learned nothing and continue to drive ourselves deeper into the hole. In the meantime, while the man in the street is still looking for a job to feed his family, Wall Street is paying out record bonuses for another immensely profitable year of providing no service or value to anyone but themselves. Nothing has been resolved and it’s back to “business as usual” for the parasites who euphemistically refer to themselves as “the financial industry.” So you tell me: does it look like it’s behind us?
That having been said, I’m continually amazed at the creative ways in which the powers that be manage to forestall the inevitable. (That is, if you consider printing money out of thin air and blowing up a bouquet of financial bubbles to be “creative.”) I wouldn’t be surprised if we can continue treading water for some time, but I don’t see what can pull us out of this mess once and for all other than a thorough financial house-cleaning and a return to the basic wealth-building principle of spending less than we earn/produce.
You just can’t keep borrowing and spending your way out of trouble forever. You can’t perpetually live beyond your means – it’s just that simple. Individuals can’t, companies can’t, nations can’t. Period. The piper always gets paid, one way or another. Always.