Posted on April 8, 2006
Filed Under Uncategorized |
Navigating to a better world
The year 2000 did not spell the end of the world, but in many ways it has proven to be a significant line of demarcation. A global paradigm shift is in progress. We are already over halfway through the first decade of the new millennium, and it seems that so far we’ve had nothing but bad news: Globally, we have more wars and rumors of wars. Domestically, we are reminded almost daily that China will dominate this century while America’s economy is falling behind. Total US government debt now tops $8 trillion, and the current account deficit is close to 8% of GDP – both new records. Our fiscal sloppiness is pushing the value of the dollar down and the prices of precious metals to record highs. And this has not even begun to address global problems such as peak oil bird flu , or global warming.
As the news of the world looks increasingly bleak, American confidence in its government is crumbling, with 70% of Americans believing the country is on the wrong path. The unanswered questions surrounding 9/11, and the war in Iraq are beginning to take their toll.
Paradigm shifts are painful events, with both winners and losers. Progressives who sense the changes, see the evolving direction and can take advantage of their knowledge can benefit. Those with vested interests in the old way will fight to protect the status quo.
As far as the global economy goes, it seems that we have (at least) two potential scenarios: The first is that, as American dominance wanes, we see a relatively orderly decline of the dollar, leading to long-term, sustained inflation in goods and commodities. Under this scenario, the prices of everything else will simply catch up with the supremely overvalued housing and financial markets of this country. Inflation will shrink debts and allow people (and governments) to pay them off. This appears to be what is going on now. But can it last indefinitely, until the global economy is rebalanced? Such a scenario would likely be unpleasant, what John Mauldin calls “the muddle through economy,” but it would not be catastrophic.
The second potential scenario is a quick, sharp global meltdown that catches just about everyone by surprise. Many claim to see a global financial meltdown coming – that it could literally happen tomorrow – but it would still be a huge shock to everyone, and few are truly prepared for such an event. It would take everyone by surprise and lead to…lead to what? What would the world look like under such a scenario? The sun would still rise. People would still get up in the morning, but what would they do? Would they go to work? How could stocks, bonds or commodities be traded if the dollar loses all support? Would grocery stores be stocked if electronic payment mechanisms locked up? How could truckers buy diesel for their rigs? Certainly a barter economy would arise, but how would it be sustained?
One thing that seems clear is that the current economic status quo – built on debt, consumption, and American world dominance – is unsustainable. How will the world be transformed, and what will the future look like one, five ten and twenty years henceforth? What can we do to prepare for the future? Is it all doom and gloom – all bad news, or are they rays of light?
My question here – and this thread is open for all opinions below – is: Which scenario is more likely? Can the sharp collapse be avoided, and if so, how? If not, what would the world look like after such a collapse? How will people in the suburbs fare, if the gas stations run dry – either through a financial meltdown, or because of peak oil — with no hope of a reliable fuel source? Should people take steps now to get “off the grid,” and if so, how? There would obviously be a massive exodus but where would the people go? What would the government response be? Maybe this is part of the rationale for the big detention centers that the administration has contracted Halliburton to build. Under this scenario, would we inevitably creep towards a fascist, police-state future like the one portrayed in the movie “V for Vendetta”? (On second thought, are we already there?)
Looking forward to the discussion.