Is California the next Japan?
Sridhar-
You exude modesty. However, Bernanke and Greenspan ‘get it’ as well, but their personal prestige is based on maintaining status quo, not openly admitting how asset inflation causes 5x the pain of consumable goods inflation. They know how it all ends and know that history will cast an unfortunate eye on their tenure, but to be noteworthy in your generation for just a moment!
Imbalances in India and China are much different than imbalances in the US. Unhappy people in China still freeze to death in the winter time, unhappy people in the US have only one car. You can’t underestimate the power of an aristocracy derived from the power of two colluding and thoroughly dominant political parties. $100 gas checks are one thing, but when the mortgage cycle cannot continue to inflate the Fed will be forced to purchase everyones home from the FDIC cartel. They will monetize this multi-trillion dollar disaster and of course it will be up to China (and Japan) to whether they want to continue to hold treasuries in a dollar weakening (at least against goods) environment. But as you said, until they achieve export/domestic economy balance, it is a decision they will avoid until they cannot avoid it any longer.
I got off my point, a republicans best friend is a democrat, especially when they can rotate offices and nearly split the vote 50/50 everytime. The last thing either group wants is a third party. Politics will play major role in the reorg. but not the catalyst in the US. So they collude and keep marginal tax rates of the Forbes 400 at 39%, 15% when they sell equity and hand out $100 gas rebates whenever needed. Fiscal deficits as far as the eye can see. Achilles heel every single time: CHINA (and india to a lesser extent). Can’t get around it no matter how hard you try. They enabled the world’s largest credit expansion in history to occur and they will also be the purposeful and accidental cause of the long decent.
Can we get enough intelligent minds wired into the Internet and hope that Metcalfe holds up and Kuzweil isn’t inaccurate by decades to find a solution - 8% productivity gr. to match our 8% debt gr.?
Mark