Yet Another Predictable Crisis That “Nobody” Could Have Predicted

I find it truly horrific when brilliant individuals get demonized by the mainstream media; all for pointing out how actions taken by governments would lead to crisis. Yet when these crisis finally precipitate, the mainstream media then goes on to claim that NOBODY could have seen it coming… that the people who had warned them were “guessing” or “doom and gloomers” or “conspiracy theorists” or worse, pretended that these true experts simply did not exist.  For  the example, Bush ignored warnings against entering Iraq; he was even told that destabilizing the nation would cause “violent insurgency and rising anti-US sentiment”. He said they were guessing.

In the same way, many financial crisis in the world are simply ” too difficult” to forecast… despite the best efforts of a few economists and great thinkers. The 2008 crisis was probably the best example of these, with several people predicting it, several people even specifying that it was housing that would be the cause… but whom were only acknowledged after the fact.

Now to bring up yet another crisis that everyone on the mainstream media will claim was unforeseeable: The unsustainable nature of state and local government debt, as explained by ZeroHedge. Since 2000, nominal GDP has only risen by 77%, yet state and local debt has grown at twice the rate that the GDP has… 150% as seen in the chart below:

while state and local taxes have also risen by 75%

and state and local spending has also increased by 82%

But what fuels it all? Well, Real household incomes provide the fodder for taxes, which are then used on spending and as a basis for borrowing more… and judging by the fact that income has fallen to levels seen in the 1980s…

Financial crisis are often a mathematical problem that can be summarized as such: when something rises too high above the basic item that sustains it, it must come back down. In the case of the 2008 crisis, housing prices had risen too high above the People’s ability to pay for the mortgages that they owed.  In this case, state and local governments are firstly spending too much- they fund their spending by taxing more and more from the local populace, and borrowing more and more from lenders (which is done by promising lenders that they will tax the local populace even more in the future to pay it back WITH INTEREST). Being a MATHEMATICAL problem, financial crisis are also an eventual one; they are predictable, but because the truth is uncomfortable for many (particularly the politicians who want you to believe that they can always provide something for nothing) the mainstream media rarely provides it to the People.

As debts build, so too does the interest, which contributes to rising tax rates… but if incomes do not rise, then where are you going to find money to pay that debt, unless you pay it off with more debt?

When taxes, spending and borrowing have risen so high and continues to rise, while the People have gained not a cent in the last few decades, either the People eventually collapse or the system does. I’m hoping that the latter happens before the former.

sources: Zerohedge

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