Japan might be a country with the most pronounced set of problems but it might not be the first one to go down because underlying their “democracy” is the ancient foundation of monarchy and religion. As long as they are doing that part right the universe is obliged to support and provide, that’s just the law of karma. I have no idea whether it will be enough to pull them through when their society crashes, obviously not for everyone anyway.
The West proper – Europe and America, have dispensed with their monarchies and religions and put all their trust into science and democracy. The UK is a curious mixture of both but elsewhere monarchy is just for decoration, and religion is in terminal decline all across the board, even in the US. The point is – the universe owes them nothing, even to Christians because they believe mostly in either the afterlife or the second coming, none of which will alleviate aftershocks of US default on its debt obligations.
The issue of US default is a confusing one because there are plenty of people who would argue that it would never happen. I can’t keep all their reasons in my head but, generally, it’s along the lines that the US can simply print more money whenever anyone comes to collect. Greece didn’t have this option, they say, so Greek tragedy can’t happen to the Americans.
Well, this is what the US has been doing so far – issuing new debt to repay the old one, and so people say that since it hasn’t defaulted by now it won’t default forever, it will just keep printing money, much of it on computer screens, which is even cheaper than printing it on paper.
Another popular answer is that the US has a much higher level of debt at the end of WWII and it paid it off just fine. The don’t mind the difference between the situation then and the situation now. Post WWII period was, perhaps, the most productive era in human history. People were breeding like rabbits and everyone was full of hope. That’s not what we have now at all, there’s no prospect of the US economy growing out of its debts. Someone done the calculations – it needs to grow at 6% a year only to pay for creation of new debt, forget about repaying the existing one.
The US creates new debt related to necessary spending every day to the tune of billions. Then it has to create new debt to rollover the old one every four years, too, which also happens practically very day now. All in all, it creates debt the size of Exxon and Microsoft every month. Their economy can’t sustain this black hole.
There’s another issue that is often overlooked – people talk about about 17 trillion in debt but that is not total liabilities of the US government. It does not include obligations under social security and health care. If those are counted in, too, the debt would shoot somewhere close to 150 trillion territory.
Most of these obligations are explicitly tied to inflation so inflation can’t be a solution, if it goes up the debt pile will grow correspondingly.
Another popular argument is that the US debt is manageable, that it’s just abstract money, it keeps the economy going but it can’t harm it in any way. There’s a matter of regular interest payments, however. At this point these interest payments swallow about 10% of the government budget but if the interest rates return to the normal levels from near zero, where they are now, the burden of interest payments will shoot up to 20-30% and that would really squeeze government ability to meet its obligations elsewhere and force it to create more debt to meet them.
The pressure to raise the interest rates is there, the first raise came to pass last month and the US promised to raise rates again at least twice this year. If they fail to meet these expectations they will undermine market faith in its ability to manage their situation and loss of faith will be compensated by demand for higher interest on US bonds to account for risks so the rates will be forced to rise anyway. At some point the US won’t be able to keep up with its commitments either as debt or as its projected image.
The US might not default to other countries but it will inevitably default to itself or to its own citizens when it won’t be able to provide promised healthcare and social security payments.
People don’t plan for it and it won’t happen overnight but when it does there will be no way out. They are like frogs in a slowly heated pot of water. Unlike post WWII there will be no injection of fresh human capital and hopes are not going up, all they have are the ageing baby boomers with mounting health and retirement costs and the millenials who’d rather spend their lives staring into their phones, which is a lot less productive than buying houses and cars and building families.
The West can alleviate some of this inevitable suffering by taking in immigrants who would work their socks off to build good new lives but this solution is only temporary and pretty soon these immigrants will realize they are working not so much for themselves but for golden retirement of the natives. In the past decade even Mexicans stopped coming to the US and decided that they’ll have a better life by staying home. There are also immediate political problems with immigration but I don’t want to talk about it now, they are not helping the West here, that’s for sure.
I don’t want to turn it into an argument against capitalism because that would resurrect the ghost of Marx and strap us into a different framework. I’d rather say that western societies have run out of passion. Passion for life, even passion for sex. They are still oversexed, of course, but they want it cheap and easy, they are not going to put time and energy into it anymore.
The West has seen several hundred years of rising mode of passion but now it’s running out. In Kali yuga it’s unlikely that it will transition into goodness even though they might be able to maintain relatively comfortable lives for a while – until their governments run out of money to pay what they promised their citizens.
This transition might happen very fast, too – in a manner of years and decades, and when it hits a certain point the system will collapse completely.
The international dimension to the US inability to meet its obligations might get real ugly if the US withdraws from providing security to its acolytes. Islamists will figure out that the US has no money to start a real war, NATO will become toothless, too, so Russians can theoretically take as much of Ukraine as they want. Chinese will assert themselves in Asia and possibly beyond and there will be no one to challenge them. So far Europeans think that they are militarily safe but a couple of battlefield losses coupled with American inability to provide a backup will reverse this attitude very fast. As Syrian refugee crisis shows, geography won’t save them. The whole world might go down in flames when the global policeman is forced to retire.
Once again, I don’t think it’s fixable, life as we know it will come to an end and the only hope for us to survive is by chanting Hare Kṛṣṇa. If we do that the universe will be obliged to provide us with bare necessities, it has no choice because chanting is the yuga dharma. Cars, houses, mobile phones and the internet will all go, however. It will probably be back to cows and our own gardens. Personally, I think I’ll be old enough not to notice anyway, but I have to wean myself from modern amenities all the same. This dependence has to go.