If you are like me you are on Steemit because you are interested in crypto currency, heard about STEEM, and then got involved. Or perhaps you are just interested in new platforms for content creation, with innovative prospects for income earning.
If you fall into the latter group then perhaps you don't really believe in the future of STEEM or blockchain technology, and that is who I want to speak with today.
Too Big to Fail: 2008 Crisis and the Fallout
I got started in crypto currency after learning about how the 2008 US banking fiasco occurred and what factors lead to it, and how those forces are still at work today.
So you could say I have had an increasing doubt in the long term tenability of our global financial systems ever since 2008-2009.
Specifically I doubt that the US can continue printing money, to "stimulate" the economy, and I argue that the global economy will be crippled WHEN the US economy fails.
The banking systems are so interconnected because they lend to one another and count on the incoming interest on those loans, but no one ever pays back the principle, and so that principle keeps growing. Anyone who has had credit card debt should know that if you never pay back principle, and always borrow more, at some point you can no longer pay the mandatory interest, and that is what is coming for the USA.
Is it Too Late?
We certainly could turn things around, but I dont believe we will and the first reason has to do with the fact that policy makers and voters don't seem to agree about the magnitude of this problem.
Strangely it seems most people either don't agree with my conclusions, or perhaps more likely do not seem to care that the US economy is on this path to total collapse.
And yet if Im right, this is perhaps the greatest threat to the well being of your family and their future because if the US economy falls, they all will. If the US defaults the nations that loaned that money will in turn default on their loans: domino effect.
Now, will it happen tomorrow? I doubt it, but we should still be concerned.
Possible Solutions:
We should be concernwd because the current debt growth unsustainable.
Could the governments turn things around? Maybe, but there are only three real avenues to success as I see it, and I find each unlikely to take place, here they are:
- The government could make a concerted effort to pay down the principle today.
- Begin an aggressive tax increase plan to generate more revenue with which they could afford the current spending, or...
- Somehow manage to drive economic growth at a faster rate than debt creation.
The Hurdles to Change:
The problem with these solutions is that they are hard, and the people with power to affect these changes are not incentivized to take such steps. Why are these solutions unlikely?
- Paying down debt means cuts to other budget items, which means complaints from constituents and lost votes.
- Increasing taxes in a meaningful way is never widely supported and will cost you votes.
- Driving economic growth would work but it is complicated and there is no simple way to do this. Printing money is the closest thing to an easy means to economic growth and governments do this, they call it quantitative easing (QE), but this is false economic growth. Although QE leads to more dollars in the system being spent on things, each dollar spent is worth less than before so the true economic growth has not changed.
Here are some alarming facts:
- US debt is now above 20 Trillion dollars
- US GDP is 18.57 Trillion dollars
So barring a massive, multi-year, slashing of expenditure, which would itself hurt the economy they want to save, there is simply no easy way to pay this debt off. Plus the USA adds nearly a trillion every year to this debt, while most economists keep telling us the economy has recovered, and the 2008 crisis is behind us. Well, we haven't recovered, and no it isn't over.
Conclusion:
All this turned me to Bitcoin, and blockchain technology, because I saw that Bitcoin, being a non-inflationary, decentralized means of value exchange could be a real means of economic exchange when the traditional systems fail for the last time.
Our economic systems are not too big to fail, that is a fallacy. Will economic collapse come, I think definitely yes because I doubt the political will to avert it, but the plus side is I doubt it will happen in my lifetime... but what about my daughter's?
Do you agree? Am I mistaken about the underlying economic systems and its future? Want to hear more? Comment, up-vote, and follow.
Stay tuned.