Government is not going to fix this one.
The problem we are facing is a mathematical crisis not an economic one.
Whenever you try and engage colleagues and friends in a discussion around the forthcoming financial collapse you will get a varied response. A minority can talk eloquently about the dangers of a CBDC while others have no idea what you are talking about but, however the discussion starts, it always ends with the same exasperated question:
“So, what’s the solution ?”
It’s an unwritten rule of debate that before you can claim the right to challenge the system you must also be able to propose a solution. It seems that unless you have an easy-to-understand remedy, every preceding objection is immediately nullified and judged as no more than petty criticism.
This reaction comes down to human nature. When people are faced with scenario that is both scary and threatening they like to know there’s a fix. They may not agree or even understand the points you are trying to make but on the faint chance that you might be right they would like to believe there is a way out. Also, nobody wants to invest time and effort in reading a book only to find the last chapter missing. We all like a sunset ending to a romantic novel or a whodunit with a satisfying conclusion, it’s just that this particular horror story may not have one.
It’s not that there isn't a solution - it’s just that the remedy does not fit into a normal frame of reference. What people are expecting is a set of radical policies, neatly presented as a political agenda, that addresses the underlying issues and heralds a bright new dawn.
Increase this, reduce that, reform this institution, restrict this action, ban this activity, promote this enterprise. The medicine might be unpleasant but at least the problem will be fixed. People believe that government can always find an answer but the problem is this time it can’t, because we are not facing an economic downturn or even a recession. The problem we are facing is a mathematical crisis.
The collapse is being caused because 1+1=2.
Placed in more descriptive terms, the global economy has amassed a level of debt which mathematically cannot be repaid. The only solace a government can provide is to try and convince the populous that by some magic, one plus one can sometimes equal three, but it can’t. It must always equal two, it’s just maths.
That’s why the political system is in such a mess at the moment. Neither the red nor the blue team can provide a solution, they can only create the illusion of control while the electorate becomes increasing frustrated by their fruitless efforts to rearrange the deckchairs.
Perhaps in this context “solution” is the wrong word, “outcome” would be more appropriate because while there may not be a solution there’s always an outcome. In this case the the most advantageous outcome would be a return to an economy based on sound money - a financial asset that represents an energy input that can’t be inflated by government. The jury is out on what that might look like, a classical commodity (gold) based system, crypto-currency or some sort of hybrid of the two. In some respects it’s doesn’t really matter so long as credit can’t be created by borrowing.
The people around you aren’t stupid. They know the house they are living in has a leaking roof, uneven floors and cracks in the walls. The problem is they still believe it can be fixed with some new slates and a a lick of paint. Hey don’t really want to hear that the foundations are failing and the house will need to be rebuilt.
Unfortunately, that is the case and I don’t trust the crew that are bidding for the job. They look a lot like the bunch that built the house in the first place.
I think self-build would be the best option.