... to turn turtle or at least start to capsize more quickly than perhaps it is now? Some economists used to say as long as the debt was about equal to or less than the annual GDP value, it was "ok" but now the US gov is noticeably above that GDP value and heading for more. How much more debt before the "ship rolls" or could it roll anytime given the right "pushes"...? Certainly, there's at least one generation that has reached adulthood that have never seen double digit interest rates on their major loans, such as on houses or vehicles. Those two parts of the economy would collapse before they could adjust (or were adjusting) to high interest rates. Corona economy pain and suffering is the worse thing seen for a while...? I think just wait...

This economy has been running on hot air for quite awhile in my opinion. One small hole and this balloon is coming down is my opinion. Its been awhile since the economy has really been supporting itself without the government and Federal Reserve keeping it inflated. How long they can keep doing it im not sure. I think inflation will be tell tale sign.

No one knows how much fake money printing is too much to make the dollar collapse. We will know when it does(it will).

Eventually the market and foreign governments will say enough is enough.

so, you think it will collapse quickly when it does or will inflation crank up first as a sign of the big storm to come??

I am not an economist, but I have a feeling that as long as our economy is stronger than our largest competitors, we can afford to carry on in the hole.
Energy independence plays a big role in our economy's strength compared to other major countries.

Once its not tied to oil anymore.
The Saudis/OPEC could scuttle it.

The dollar will likely collapse eventually. When or how, there are many theories. The question is, what can be done to protect oneself?

I believe that a healthy chunk of money in real estate is a good play. Wether the preferred currency is a dollar or a pound real estate holds its value and increases in value year to year. Small amounts of gold and silver if you like it, but typically it has a much much lower return than real estate. Of course I have some cash, can’t get around that, but I feel like the more money you can protect from the implosion of any fiat currency the better.

I think troubles will arise when/if inflation gets above 2.5 percent. When the Fed is faced with a decision about raising rates, I think they will procrastinate.

Can you imagine what an increase in rates would mean for the amount of debt service required on the national debt ? Just a one percent increase will blow any federal budget to smithereens. I suspect they will allow greater inflation to run rampant and use devalued currency as a means to monetize the debt

Last I looked current inflation, 0.62.

Current prediction for 2021, 2.24.

That’s a big jump. If that’s proves true we all better buckle up and hang on.



Owl

What would a one or two percent rise in interest do to businesses servicing their debt? Home prices? Auto prices?

Exactly. The overall result would be that business and individuals will be competing with the federal government for credit. Who do you think will win that contest ?

Eventually, no one would buy US Treasury debt. THEN things will collapse

When China demands to cash in U.S. bonds we'll just sell more bonds to China to get the money to pay them (green new deal "logic").

"green new deal" logic is to print money at will. Basically the FED buying Tbonds.

Without double checking I believe the fed is holding roughly 4 trillion in tbonds.

Land is useless.
The Indians had lots of land.Didnt do them any good.
Rhodesian farmers had lots of land-gone with the stroke of a pen.
If you think your name on a piece of paper that says you own land will mean anything when the shtf,or if a communist government takes over you are sadly mistaken.

Well then boco, what do you suggest? Or do you only offer pessimism without solutions, like on every other post?

Its pretty obvious what will be of value to the community you band with-your skills.
Plenty of wild land to just claim as yours and defend,unless you live in the ratrace.
I always answer questions and offer solutions,you must have me mixed up with someone else.
I even have a couple tutorials in the archives.

I suspect you're right. People, especially the younger generation, have gone through the "only turn up the heat a bit at a time and the frog won't jump out as it gets boiled" sort of how spendy things have gotten without thinking there is no inflation happening from the drag down from increasingly worthless fiat currency. I know 35-45 year old couples who think of nothing of "buying" a 350-450k house to raise their family. Yes, the couples tend to have "good" jobs but they are typically far from "wealthy". We went to an open house a few years back of a newly built home up behind us in "Phase II" of our neighborhood and there wasn't even a finished basement for 410k. Such couples can make payments with really low 3-4% 30-year notes but double those interest rates, and they would be sinking fast. How many 50-60k new pick-ups would be financed at 8% annual interest?? Yeah, buckle up for sure. Sooner or later even the Fed Reserve is going figure out that holding trillions of their own printed paper is unsustainable...

Interest rates can never go up again. Eventually when the market says it's time, it's over.

Unless I'm missing something how is it possible that anyone borrows out money at 2.5 percent interest? The FED has said they are targeting a 2 percent inflation rate or more. Where is the profit motive?