The risk faced by those who are analyzing macro trends is sounding like a broken record. For those younger readers who have no idea what that phrase means, imagine an mp3 song that will stick on and endlessly repeat a random segment of the song you are listening to until you give your device a sharp knock on the side. That’s what a broken record sounded like.
The world economy is on the ropes, and it won’t ever recover, at least not to anything resembling its recent past. Neither the gleeful housing bubble nor the free-flowing credit that enabled that side bubble to emerge will return. The resources simply do not exist to repeat that final orgy of consumption. A new reality is upon us, and while — fortunately — more and more people are choosing to face our predicament rather than pretend the current risks and challenges do not really exist, the absolute numbers of such forerunners are still small, and for the most part they don’t include any of our political leaders.
The macro trends of worsening public and private debt loads, a looming and unaddressed Peak Oil threat, exponentially increasing global population, resource depletion, and an all-too-human tendency to use the money printing machine to deal with tough economic problems all remain pointed firmly towards an uncomfortable conclusion: There’s a future of less in store for most people.
Our best hope is for a negotiated decline to lower levels of economic activity that allow us to gracefully adjust our expectations to a new and lower level consumption that offers an even more enjoyable and purpose-filled existence. Our worst fear is that a stubborn insistence on business-as-usual by our leadership leads to a future shaped by disaster rather than design.
The fundamental Issue is this: You can’t solve a problem rooted in too much debt with more debt. It just doesn’t pencil out.
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