I was just reading up on the US housing crisis, & then after that, followed up reading on the US debt limit default, as well as the effects of the WOT. I read a fascinating book called "Traders, Guns & Money: Knowns and unknowns in the dazzling world of derivatives" by Satyajit Das, & felt very shocked & helpless/powerless by the current crises in the US. Which is why I wanted to start this thread.
The problem in the US structural system is the lack of regulation of the financial market, the derivatives they produce, & how interconnected all the components are with one another (investment banks, investers, stock brokers & lenders), & when one of these components fails, the entire US financial system melts down, & creates a global recession/depression. Which is why the US governments are held hostage to the wishes of the current financial system, & powerless against it.
But with another recession coming inside the US, far bigger than the one in 2008, the question is, can the US be salvaged. The answer is, no. Not with the policies of the US government today. The US has to default either way, because there is no way it can pay off its increasing debt. The US avoided default by increasing the debt limit, but as a result, it will default in a more serious way in the months ahead, through hyperinflation, & an extreme devaluation of the US dollar. The banks will print more & more money to write off US debt, there by devaluing the dollar, & creating inflation. The value of the dollar as compared to real commodities like gold & oil continues to diminish.
The US had a choice to make on August 2: to a) default by not paying off the debt to its creditors, & default by lower credit ratings from agencies, resulting in higher interest rates (similar to subprime loans) on its loans. Or b) by defaulting by inflation in the future. They have taken the second option (defaulting by inflation), & the future for the US looks extremely bleak with the banks still running the government. The increasing debt ceiling will have a temporary, 'manufactured' effect that the stimulus package had, before the effect wears off, & paves way for a recession or possibly a global depression.
The problem in the US structural system is the lack of regulation of the financial market, the derivatives they produce, & how interconnected all the components are with one another (investment banks, investers, stock brokers & lenders), & when one of these components fails, the entire US financial system melts down, & creates a global recession/depression. Which is why the US governments are held hostage to the wishes of the current financial system, & powerless against it.
But with another recession coming inside the US, far bigger than the one in 2008, the question is, can the US be salvaged. The answer is, no. Not with the policies of the US government today. The US has to default either way, because there is no way it can pay off its increasing debt. The US avoided default by increasing the debt limit, but as a result, it will default in a more serious way in the months ahead, through hyperinflation, & an extreme devaluation of the US dollar. The banks will print more & more money to write off US debt, there by devaluing the dollar, & creating inflation. The value of the dollar as compared to real commodities like gold & oil continues to diminish.
The US had a choice to make on August 2: to a) default by not paying off the debt to its creditors, & default by lower credit ratings from agencies, resulting in higher interest rates (similar to subprime loans) on its loans. Or b) by defaulting by inflation in the future. They have taken the second option (defaulting by inflation), & the future for the US looks extremely bleak with the banks still running the government. The increasing debt ceiling will have a temporary, 'manufactured' effect that the stimulus package had, before the effect wears off, & paves way for a recession or possibly a global depression.
