Saturday, June 4, 2011

US Economy on Life Support!!

Every system of governance has its own flaws. No matter how well you design the rules by which a set of people are to be governed, there will be loop holes and it is only a matter of time that someone will find those holes and use them in their own interest ( no pun intended guys!! :P ). So, logically the best and comparatively more lasting form of governance will be in which the rules are subject to change as the time demands.

Where ever we have failed to see this form of flexibility in the governance, we have seen revolts taking place and ultimately a revolution changing the root level shape in which the people will be ruled henceforth. Taking instances from history, we can see many great revolutions those have actually changed the face of earth. Talking of recent times, we can see the revolutions in the Arab world, basically due to the rigidity of the ruling set of people over there.
Talking about USA, is it likely that there will be a revolution soon?? Now to this question, many might wonder, what is the need of even a revolt in USA, leave alone revolution. Many might think that most of the revolts going on there are to legalize marijuana and prostitution, and to reduce the drinking age!! :P
But actually the citizens of the USA are perhaps among the most troubled people among the 1st world countries. And very soon, the entire economy might collapse like a standing house made of cards whose bottom most card has been removed!
This is because of the endless loans the government is taking from countries like China and passing on those loans to their citizens without ever worrying about how might they repay the loans. And the average US citizen being high on consumption, hardly does enough to repay that loan back.
Now as we know the Federal reserve prints notes on demand from the Government of the States. This amount is usually many times more than their production within the country which leads to inflation.
This causes the citizens to take more loans and this forces to government to take more. Today the national debt of the US is over $14 trillion!! and it is constantly rising every second!

It is impossible to create an artificial boom with the help of artificially low interest rates and not have a great depression afterwards. The real estate bubble was the largest artificial boom in history. But afterwards the federal reserve prevented a necessary depression from happening by many logically unsound means including the "Quantitative easing"- QE1 and QE2 worth trillions of dollars.

Soon the other countries will not only stop buying the US treasury bonds but also dump the existing lot they have. Then a strong military will be all the States will be left with. Then we may see a big revolt turning into a major revolution happening in the US , or we can see a series of Iraq or Afghanistan wars taking place, some major terrorist activities in the US so that they can attack any country by blaming any person of anything they like.
Lets pray that the former happens so that the world may live a few days more.
I do not want to see apocalypse happening before I die!!