Dangers The United States Economy Cannot Withstand

What are the most pressing dangers faced by the United States economy?

1.) A decline in the stock market, even a modest routine correction in stock prices will send the economy into a tailspin. Why? Artificially stimulated asset prices are the only reason the economy has recovered since the Great Recession.

2.) A rise in interest rates, significantly greater than can be managed by our Federal Reserve will cause panic in the government. Borrowers have been subsidized for 40+ years. If for any reason defaults on loans begin increasing, the Federal Reserve will completely lose control over the market for money. When interest rates increase significantly, the United States government will not be able to service its debt and the entire system will collapse.

What is the solution? There is no solution but certain actions will be taken.

1.) Losses at the top will be passed down to the tax payers to the degree it is possible.

2.) Central banks may increase their purchases of stocks in an effort to keep all markets moving higher.

3.) No effort will be spared in trying to create inflation in the United States and around the world. Inflation is needed to take the pressure off of the United States government. The introduction of tariffs will cause inflation but not enough. Although it is seldom mentioned,a decline in the productivity of labor is the most reliable source of inflation. War will create inflation. Don’t rule it out.

All of this will be perhaps the biggest juggling and balancing act in the history of the world. Like is true of any juggling act, eventually there will be an accident and the act will fall apart. Professional jugglers practice constantly and have engaged in many trial runs. Your government is going on stage with its balancing act without much practice and not even a trial run. The chances of an accident are enormous. 

<em>The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.</em>

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