The Collapse of 1995 cont.

To finish off the musing about the projected collapse scenario of 1995 as promised I needed to go back and try and figure out just what had gone wrong with the authors predicted scenario. Certainly the government did not institute any of the actions the authors (Figgie/Swanson) recommended.

In the book "Bankruptcy 1995" the end game scenario mentioned bank runs, inflation, pension crisis, unemployment and city bankruptcies followed by IMF control of the US economy. In short almost everything the doomsayer economist are predicting for our immediate future now. The question is why didn't these things happen back in 1995 as they predicted?

The date 1995 was chosen because of one simple reason it seems. The interest on the national debt was predicted to rise above what taxes would be collected and remain that way indefinitely afterwards. What the authors could not fathom at the time was the FED intentionally dropping the interest rates. I believe from reading the book this time around that the authors were too much true believers in capitalism to understand how dropping interest rates on US debt could actually bring in more stolen money than honest investments.

In truth since 1995 interest rates on the national debt have almost always declined. There are a couple of exceptions with very minor increases but taken as whole the overall interest rate has fallen from 6.68% in 1995 to 2.24% in 2012. That is a whole lotta interest money saved.

I also believe the authors never thought for a minute that the housing bubble would turn into such a toxic asset investment scam nor that the government would resort to such outright misleading creative accounting.  What we ended up with in a sense by 2009 was the first part of the authors predictions coming true but the government had managed to hold it off for over 14 years.

While the two methods above certainly helped the whole thing limp along the authors also missed the most important aspect which current day doomer economist identified a few years ago. The fact that the dollar is the world reserve currency and the currency of oil or the Petro-Dollar. Those two aspects kept the world pretty much trapped in jail with the US economy and continue to do so but there is one other important feature of the dollar they also did not count on. It is a dollar backed by bullets as well.

US military might has kept the enforcement of the Petro-Dollar going. Until recently no country could challenge that but I believe that is changing rather quickly.

We maybe a bit premature yet but as things clicked into place and I relived the military build up of China and the rebuilding of Russia's strength and then looked at the current Middle East turmoil I began to look to the rather uneasy upcoming G20 summit next month.  Something is amiss with this Summit and rumors are flying about it around several financial boards.

I know financial doomers have been going on and on about the US reserve currency status for years and to date no outward move has been made to remove the dollar from it's status. There have been several moves that looked like they were going that direction though.

We maybe much closer to things coming apart than we realize.

Keep Prepping Everyone!!!