Pretty much how it looks from my POV too.
Now look, this is all playing out very much as we thought it would over here at AFEP, but that doesn’t make it good. Let’s put what’s happening in bullet point form as it is my preferred presentation method.
- We (the “citizens”) can’t pay off our mortgage, credit card, car, student loan, and other debt;
- The Government takes our tax dollars to make the banks and other creditors whole on the loans we can’t afford to pay off;
- The Government then raises our taxes (not yet, but probably will) and cuts our social safety net to make up for the cost of making the banks whole;
- We (the “citizens”) suffer a massive recession and severe increases in unemployment;
- We (the “citizens”) – now because we don’t have jobs or income – can’t pay off even more mortgage, credit card, car, student loan, and other debt;
- Rinse, repeat, all the way down.
Of course, the way to cut off the cycle is to have the Government intervene at step one, and eliminate, or force a major write down of household debt, but, hey banks are in control of the government, and that might mean they would lose a few percentage points (or optimally, a lot of percentage points) to inflation. And we can’t have that.
So, crack open that bottle of tequila you’ve been saving for a special occasion because the great unwind is here.
