[AmericanEmpire]

I don't see how anything the fed does will help to weather this storm. I think complete economic collapse is inevitable.

[strider3700]

prices are way up, savings are down, interest rate hikes are regular, Yet this past weekend consumers spent 22% more then they did last year. I don't think the fed has the ability to stop people from running themselves into the ground.

[Pops]

$this->bbcode_second_pass_quote('dissimulo', ' ')After all, most people who are not aware of peak oil are, at least to some degree, aware of our economic woes. Yet, most people don't see a crash coming. Therefore, there must at least be common arguments for how the US economy will survive these problems. What are they?

[AmericanEmpire]

$this->bbcode_second_pass_quote('', 'Y')et this past weekend consumers spent 22% more then they did last year. I don't think the fed has the ability to stop people from running themselves into the ground.

[MonteQuest]

$this->bbcode_second_pass_quote('DantesPeak', ' ')Right, and keep in mind that by following option #3 interest costs keep accelerating. The $1 trillion that the US takes in during 2005 costs about $40 billion a year in interest - more or less forever - from now. That means the US must finance a greater and greater CAD every year if nothing else is done, or happens.

[DesertBear2]

$this->bbcode_second_pass_quote('MonteQuest', '
')So, where will the money come from to cover this and build an entire renewable energy infrastructure while 88 million baby boomers retire on unfunded entitlements? Hmm?

[NeoLotus]

$this->bbcode_second_pass_quote('dissimulo', 'M')y question is: If the US economy is to survive just the non-PO problems we currently face (such as the consumer debt bubble, inflation, and the national debt) what will it take?

[strider3700]

If you try to do number 1 then those that are corrupt and in power will use that power to crush you and try and stop the movement.

If you try to do number 2 then all of the wealth will simply flee the country and leave behind a used up hulk thirdworld wasteland.

Even if you go through with it and manage to force things through then the pattern will be repeated elsewhere over and over until there is nowhere left. I don't know if a civiliation can be turned to crap and then recover enough to be worth turning to crap again. I doubt it

[Doly]

$this->bbcode_second_pass_quote('NeoLotus', '
')2) Redistributing the wealth from the top 1% to the bottom 80%.

[Daculling]

$this->bbcode_second_pass_quote('NeoLotus', '
')2) Redistributing the wealth from the top 1% to the bottom 80%.

[NeoLotus]

$this->bbcode_second_pass_quote('Doly', '
')$this->bbcode_second_pass_quote('NeoLotus', '
')3) Taxing the crap out of mega-corporations to pay for the deficit.

[Permaculturist]

Seems to me the key to keeping the game going, is to maintain the purchase of US treasuries. Currently that is occuring by Asian countries that have a vested interest in using their extra $US dollars obtained by our Asian purchases, to buy US treasuries. That sops up extra dollars that would hit the forex market and cause the dollar to drop in value. In addition to sopping up dollars (from our huge trade deficit), the Asian countries purchases of US treasuries keeps bond prices up, and therefore long-term interest rates stay low. That keeps our economy putting along (mainly via the housing market, which keeps homeowners borrowing and spendiing). As long as Japan and China keep purchasing treasuries, we keep importing their goods.

What factor(s) might slow down Asian purchase of our treasuries? The only thing I can imagine, would be a willingness of China to become more independent, and not care as much about us buying their cheap goods. They are finding their own sources of commodities and purchasing their own companies which might make them feel more economically independent.

Anyway, for whatever reason that might slow down Asia purchase of US treasuries, my sense is we would find ways to surrepticiously purchase our own treasuries, using electronically issued ("printed") dollars. We could make very deep pockets for "hedge funds" located in the Cayman Islands, to become bidders in treasury auctions and keep the bond prices up.

Monetizing our own debt would of course be very inflationary, but it might keep the game going longer than we might imagine. Because we're not currently in an environment that perceives us to be inflationary (unlike the late '70's,), we might be able to sneak a lot more inflation into the system without people getting wise to is. Only recently has the price of gold become a canary in the mine to point out inflationary trends. Hiding M3 could be part of the plan to anticipate the need to monetize our debt.

Pardon my simplistic views - just my own recent ponderings, don't know how valid they are.

[Doly]

Silly question from somebody who doesn't understand much about economy: what is monetizing debt?