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Is the fiscal cliff the first in a never ending series of crises facing America?

Can we really address the fiscal cliff without addressing our structural problems? We have a ballooning deficit that will result in a very real loss of discretionary spending by the middle and lower classes as more money goes to pay the interest on the debt. If our credit rating drops the cost of borrowing will increase dramatically exacerbating the situation.

More advanced medical procedures will result in a greater strain on Medicare and a higher percentage of our income going to health care---meanwhile Medicare is going bankrupt; we must either raise taxes, curb benefits or balloon the deficit. Add to this the grey "tsunami" rampant autism and obesity and healthcare costs can only rise dramatically.

Cheap carbon fuels, coal and natural gas will add to climate change. Water battles between states are apt to increase as population increases but the water doesn't.

A nuclear Iran, a rising China, and the persistent threat of terrorism will sap our resources and our will.

A rise in the standard of living will mean the poor will want more "stuff" straining everything from our ocean bounty to a scarcity of rare earth elements. Battles both military and economic may ensue over them.

The pension time bomb has already gone off in Illinois and will be a huge problem for localities in the coming years. Your parents guaranteed payouts they never had to pay for. Unlike Social Security many pension funds are either bankrupt or will require a substantial input from localities resulting in a substantial loss of services.


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    Nov 11 2012: They will reach a compromise after some saber rattling.

    The debt is 16 trillion if the interest rate goes to 5% the debt service will go from 250 billion a year to 750 billion a year. The government takes in 2.5 trillion in revenue so about 30% would go to just interest on the debt. This would be a huge impact.

    The last of the baby boomers are reaching the 55 yr bracket which means that they will quit spending.

    This also means the unfunded liabilities (SS and Medicare) from the baby boomers are going to grow the debt much more than the 16 trillion dollars.

    The huge implications of the QE's is going to create inflation some way some how.

    Farmers are getting old there may be less food production.

    Technology may change some of this regarding medical as the medical may become cheaper as in the case of insulin production or mri or genetic engineering. But this will come to grinding halt because of mandated healthcare.

    I would predict something on the order of Argentina or Russia for the future preceded by riots and then a dystopian phase. The guy at the wheel is incompetent as was his predecessor as are we but that is the way it is and is not likely to change.
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      Nov 11 2012: Here is my scenario: there will be a crisis, kind of tough, it will burn some people's a**es, but then there will be a rebound. And it is the rebound I fear the most as it will be then that all that money printed will surface. Nothing will save the world then.

      Sadly, only the United States, the biggest economy in the World, can change or at least mittigate the coming catastrophe.

      I say sadly, because the first thing to do should be to increase the savings rate. The best way to do it is to introduce a fully-funded pension scheme. Will, however, president Obama understand this? Judging by his ambition to implement Obamacare he will not.

      So, what are we to do, Pat?

      Let's pray they will find some room for us in the Venus Project.
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        Nov 12 2012: To quote one of the Star Trek movies, one of the Klingon junior officers asking his captain what do we do now sir, as the ship is taking severe damage because of some egregious errors, the captain replies now we die.

        It will be either be a dystopian 1984 or Mad Max either way I recommend investing in can goods and firearms. By the time the shit really hits the fan most people will exit the metropolis areas which will be 2yr on the inside and 10 yr on the outside. If you think I'm being dramatic I would recommend getting your head out of your ass and looking around.
    • Nov 11 2012: Hi Pat,

      I think one of the biggest upcoming issues below the radar is the drop in our credit rating; the way this should be presented to the American public is to take a typical family of four earning $40,000/year and ask, "How much discretionary income will you have left over if your family has to pay $8000/year to pay interest on the debt?"
    • Nov 11 2012: Hi Pat,

      What is staggering is how much money has been printed in the past few years by every country. The total amount of money printed in the past 5 years is several trillion dollars. When will hyperinflation occur? We have had deflation for awhile, when does hyperinflation replace deflation?
      • Nov 11 2012: The total amount of monetary wealth (which is the value placed on existing property world in the world) amounts to over $200 trillion, expanding that with a few trillion more barely keeps up with inflation on a global scale though of course local currencies may see high inflation. All this extra money seems to be mainly making the rich of the world richer instead of pumping a lot of money into the consumer markets (which would cause high inflation), in other words there has been runaway inflation in the price of gold and superyachts, not bread and furniture.
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        Nov 11 2012: I did a thread on that a while back. I think, I don't know, what is happening is that it is being spent on buying bad mortgage debt from Freddy and Fanny and big banks . This way the money never goes to main street.
    • Nov 12 2012: pat gilbert wrote:

      "They will reach a compromise after some saber rattling.

      The debt is 16 trillion if the interest rate goes to 5% the debt service will go from 250 billion a year to 750 billion a year. The government takes in 2.5 trillion in revenue so about 30% would go to just interest on the debt. This would be a huge impact."

      Yes, indeed, there will be a compromise. We can all see there will be cuts to the military, the troops will be pulled out from Afghanistan (saves $90 billion per year), the tax cuts for the rich will be left to expire, taxes on dividends and capital gains will go up and Obamacare will be amended to cut spending on health care more, unemployment benefit extensions will be eliminated, farm and energy subsidies and the mortgage interest deduction will be eliminated, the corporate tax rates will go down, but loopholes will be closed (resulting in more revenue), rich seniors won't get medicare anymore, etc... But it probably still won't be enough to get a balanced budget, you Americans are in for a world of hurt...

      I also wish to add that the US wastes 6% of GDP on health care compared to other developed countries, also cutting $100 billion per year from the military would bring it back to the 3% of GDP level it was in 2000 and still leave it the most powerful military in the world, even staying aheaf of China for many years.

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