Tuesday, August 6, 2013
1995 An American Collapse
Another rainy morning, sigh. I had a few errands to run, namely to pick up a few things from the hardware store for repairing yet another picture frame for my mother and beginning work on restoring that old plow. So since I had to go into town anyway the boy and I car pooled and I dropped him off at class. I knew this would mean a good hour or more of sitting in the car waiting on him after I ran my errands but at the gas prices these days it was worth waiting around.
On my way out the door I grabbed an old friend that I hadn't read in 20 years. It was a book about the financial collapse of the US which was predicted as occurring as far back as 1995.
God has it been that long?
I remember the premise of the book which was written by a CEO of some blanket company that included Rawlings Sporting goods under it and an economist from Arizona State University. This was back when educated people with degrees and teaching positions somewhere besides Harvard, Yale or Princeton meant something.
The premise of the book was that around 1995 the interest on US debt would grow past the point of tax revenue to pay for it. I am only about halfway through it again so I haven't weighed the entire thing yet to go back and see exactly what what went wrong and how the FED and government managed to grow revenues to the point that the predicted collapse didn't happen but I am going to assume here that it was the housing bubble that averted it by and large. I am also going to bet the authors did not fully comprehend the power of the Petro-Dollar either.
Lastly I think one important aspect the authors missed was the willingness of the Chinese to allow us to get in way over our heads in debt. From the beginning the authors assumed a kind of capitalistic value of wealth and figured no one would sacrifice their money in the way I at least believe China did. In the end it was cheaper to destroy us with televisions and bonds than tanks and bombs.
It's simple really had what was once the largest single holder of US debt not been willing to risk that capital we would have had a major crisis in 1995.
I will go back to that particular topic more after I read the book again completely and look for more clues as to what happened. However one interesting part of the book was the opening chapter that briefly defined the changing living conditions the authors foresaw as happening to an average family when things began to collapse.
In truth it could have been written today with things like bank closings and holidays, job loss etc. Like so many predictions we have seen things are beginning to happen as they said it just takes years longer than they thought.
I hope to finish this book once again within the next few days and expand on this post but my key question is going to be just what has kept us going this long?
Keep Prepping Everyone!!!