The most likely and realistic scenario we are facing is not the one that movies, conspiracy theorists, and the likes are projecting. It will not be some huge cataclysmic newsworthy event, or some landmark initiative, that causes a sudden disaster in America and the subsequent collapse.
The collapse will be gradual and merciless, just as it has been for decades now. The Federal Reserve will refuse to allow interest rates to rise and continue to keep them incredibly low, which will continue to frustrate our creditors in China, India, Australia, etc as they grow impatient with receiving such little interest on their loans. Furthermore, the continued decline in U.S. consumer demand from rising prices, government intervention in labor and capital markets, and spiking REAL unemployment (SGS and U-6 measurements) will create a need for demand to be picked up elsewhere.
China and India will fill this gap, and begin to consume goods largely produced by the savings-intensive and trade surplus-producing countries of Australia, New Zealand, Singapore, etc. The consumption from these countries will further display to the world how U.S. hegemony is not a necessity, and slowly but surely the Fed's easing policies will continue to devalue the dollar to the point that it is removed as the world reserve currency in international trade agreements. The removal of the dollar, coupled with our current $50 billion per month trade deficits (which will grow worse in the near future), will put us in the precarious position of only being able to consume what we produce...which is nearly nothing.
Now saddled with a currency getting more worthless by the day, a lack of consumer demand, out-of-control deficit spending crowding out businesses, further intense regulations and taxes to punish those businesses "responsible" for the lack of economic growth and recovery, and further police-state measures...we will see the true collapse. I can foresee government beginning to take more drastic actions like freezing wages and prices, leading to shortages and eventual government rationing of goods.
Two things will happen in response to this collapse, and I am optimistic the better one will occur which will be a repudiation of super-government and Keynesianism and a return to sanity. Otherwise...we are looking at becoming a permanent debt-laden welfare-warfare state with a frenzied point-of-view on capitalism.
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