alstry (35.69)

We All Fail

July 05, 2010 – Comments (2)

Practically the entire American, and much of Europe's economy is based on consumption.  Our entire culture, livlihoods, and wealth is based on massive credit based consumption.  Without trillions in credit extended each year, we really would not have very much consumption or production. 

It has now become the primary difference between developed nations and less developed nations.  The clearest example of debt driving consumption and production is the over 80% collapse in new home construction once easy credit was pulled from mortgages.

Absent exporting some grain, chemicals, and a little machinery....our primary export by container volume is waste paper and scrap metal....or trash.  The trash of our consumption....which exceeds all of our other exports by volume...combined.

Initially our consumption was based our production, then switched to loaning money to the private sector to consume, and in the last year, the primary borrowing as switched to the government.

Without consuming, America has practically no economy, and without borrowing, we can't consume very much under the current system.  Today government is handing money to tens of millions simply so they can consume.  Without those people consuming massive amounts of health care, food, and other goods and services.....our economy would implode.

The United States of America is like one big condo association, if simply enough members can't pay their association dues.....the entire association fails.  As credit and consumption continues to be cut back, conspumption will evaporate and so will our economy.

Our cost structure is not structured for low consumption......and as more and more fail, the entire system will collapse.

The key question is how are the remaining assets/production of the nation allocated when the entire nation's economy collapses?  When the world's economies collapse?

Will people fight each other for their consumption/production?  Will nations?

As this issue confronts the world.....you think a gun or small farm will address the systemic collapse of consumption.....who do you think is going to support governments, politicians and bankers? 

My guess is governments will be forced to take over production for a period of time and restructure economies until we can settle on a durable sustainable system.  In that environment, money is force......and no one has the power of force like government.

Welcome to the Digital Age...where the world tranforms from debt based consumption industrial economies into knowledge based digital economies. The trend is clear, the process is very uncertain.